In other words, programmatic advertising is the most innovative and efficient way to place your ads on any service that’s powered by the Internet.
Now that we’ve given you the dictionary definition, what is programmatic advertising in practice? What makes it so lucrative for marketers today? We’ll address all of this and more.
How Does Programmatic Advertising Work?
Programmatic advertising works by utilizing two elements: AI technology and a user’s online behavior. The AI technology analyzes that behavior to determine what ad content will best resonate with the user and inspire conversion.
Once that algorithm determines the best ads to show the web visitor, then it’s time for the bid.
The actual ad placement process works in the following steps:
- An individual visits a website.
- Brands that have been deemed likely to inspire conversion make a bid for the placement.
- Whoever bids the highest wins the impression.
- The ad of the winner is shown to the visitor while they browse the website.
How Does Connected TV Advertising Work?
While the above process is largely used for web banner ads, it can also apply to programmatic TV advertising. To understand how programmatic TV advertising works, we just need to make one small change to the above process:
- An individual starts a streaming video.
- Brands that have been deemed likely to inspire conversion make a bid for the placement.
- Whoever bids the highest wins the impression.
- The ad of the winner is shown to the visitor before or during their video content.
When Did Programmatic Advertising First Start?
While online advertising dates back to 1994, when the first internet banner ad appeared on Wired’s website (formerly hotwire.com), programmatic advertising is a relatively recent development.
While an exact start date is a little murky, programmatic advertising started around 2010 when Google and other companies developed ad networks to manage digital ad requests better. Finally, the modern approach of bidding for those spots became widely used between 2014 and 2015.
For a while, programmatic ads were limited to banner ads. But now, it’s expanded to video ads thanks to the likes of YouTube, Hulu, Pluto TV, and a plethora of other video content providers. This allows brands to programmatically place their ads during their audience’s regular TV time.
Therefore, aside from print media, programmatic advertising can be applied to all forms of media consumption. This effectively allows brand messages to follow their audience through their day, no matter which platform they use.
How Can You Use Programmatic Advertising?
There are many different ways you can use programmatic advertising to place your ads. Here are just a few use cases exploring the audiences you can target:
- People who visit your site: The average lead must have multiple interactions with your brand before they are willing to make a purchase. By tracking when they’ve visited your online store, you can tell who is already interested in your product and start making more points of contact.
- People within a geographic location: If you have a location-specific message, programmatic advertising can pull people’s geographic data so you can target them. That’s how Adidas got the word out about their Adidas Deerupt launch party to their Chicagoan following.
- People who visited similar sites: Programmatic advertising can promote your services to people who visited your competitors’ sites, too. This lets you take advantage of their web traffic, especially if they attract more visitors than you.
Need more ideas? Check out our case studies to see how we’ve helped countless businesses harness the power of programmatic advertising.
How Does Programmatic Advertising Compare To Other Advertising Strategies?
Programmatic advertising may be a major focus in many brands’ current digital advertising strategy, but how does it compare to other tried and true marketing methods?
Programmatic Vs. Display Advertising
Display advertising comprises visual ads that contain a mix of video, images, text, and audio. These often appear in the form of banner ads, videos, and various forms of native advertising.
The major benefit of display ads is that they can be posted virtually anywhere—from search websites to social media channels. But how does display advertising vs. programmatic compare?
Truthfully, there isn’t really anything to compare. Programmatic advertising is the process of placing the ad, while display advertising refers to the form that the ad takes. In fact, companies use programmatic advertising to play display ads—they are two sides of the same coin.
Programmatic Advertising Vs. Direct Buying
Direct buying is the process of choosing specific websites, negotiating a price to show your ad, and placing the ad on that specific website. This manual process translates to other forms of media, including broadcast and cable TV, and print media.
This strategy makes sense for advertising vehicles that have a set production schedule—you can’t freely swap out ads in a newspaper to target unique customers. However, the process is slow and expensive, requiring a lot of man-hours to communicate between the advertising agency and the desired channel.
When looking at programmatic advertising vs. direct buying, programmatic advertising can be seen as a direct response to the drawbacks of direct buying. Now, advertisers don’t have to spend a lot of time and money on ad buying—they can simply click a few buttons and let the algorithm take care of it.
The Privacy Concern
However, while programmatic advertising seems like the clear winner, there is one scenario where direct buying is still the best option: customers who value their privacy.
Many of today’s online shoppers don’t want social media apps or other websites to track their data or hold onto personal information. This is mostly out of fear of that information falling into the wrong hands. But if websites can’t track that data, how can programmatic advertising target those people?
For the most part, it can’t—or at least the algorithm can’t do a good job. When the algorithm doesn’t have much information about an online user, it can’t offer valuable, conversion-optimized suggestions. So, direct buying is a way for these privacy-sensitive people to still be reached.
Is Programmatic Advertising the Future?
While you never know what’s around the corner for the marketing strategies of tomorrow, we do know one thing: Programmatic advertising is here to stay.
This is thanks to how much easier it’s made digital advertising placement by:
- Cutting the middleman from the ad-buying process
- Offering brands more control over their audiences
- Allowing access to websites and online publications that brands may have never used previously
- Utilizing heaps of customer data to more accurately target ads
We don’t see a better way to buy ads coming onto the scene in the near future, so if you haven’t adopted programmatic advertising yet, it’s time to start now.
The Future of Programmatic Advertising
As programmatic advertising algorithms continue to develop, there are still several areas we hope to see improvement. This includes developing a better understanding of search intent.
Search intent is a tricky thing for advertisers and algorithms to grasp. For example, say Apple announces a new model of the MacBook Air. After the announcement, you may notice that searches regarding older models of the MacBook Air take a jump. This isn’t because people suddenly want to buy a used MacBook Air—they want to see how much money they’ll get for a trade-in.
However, due to programmatic advertising’s nature, those people will probably still get unwanted ads for Apple products. If the algorithm figures out how to read search intent, programmatic advertising will be all the better for it.
See Programmatic Advertising in Action
Now that you have a better idea of what programmatic advertising is, it’s time to put it into practice for your own company. What is the best way to do that? By working with Brandzooka!
Our programmatic advertising management system has helped some of the biggest brands make better ad placement decisions to reach their audience. Sign up for a demo today, or contact us with any questions you may have about programmatic advertising.
