- 1. Programmatic advertising turns multichannel into omnichannel
- 2. It makes advertising individual
- 3. Increased audience reach
- 4. Data advantages of programmatic advertising
- 5. Flexible deal types in programmatic advertising
- 6. Safer advertising ecosystem for everyone
- 7. Programmatic advertising benefits in reporting
By the end of 2022, programmatic digital ad spend in the world will reach $123.22 billion. Programmatic advertising explained as algorithmic ad buying, demonstrates steady growth ever since it became possible to place ads automatically.
The benefits of programmatic advertising are obvious to demand and supply partners, that's why programmatic campaigns account roughly for 70% of total display campaigns.
As more data becomes available, data-driven algorithms improve, the targeting capabilities evolve, real-time optimization and other factors come to play, programmatic advertising becomes more effective and worth investing in.
Let's discover the benefits of programmatic advertising. Then let's get practical and see how a programmatic advertising platform can be useful (supply side platform for publishers and demand side platform for advertisers and marketers).
1. Programmatic advertising turns multichannel into omnichannel
The benefits of programmatic advertising are endless but the omnichannel approach is what really makes this technology unique.
The number of channels customers spend time at has grown radically, and the advertiser should be able to address customers anywhere they are.
Programmatic allows advertisers and marketers to address customers on smartphones, tablets, desktops, and even TVs at the same time.
The automated process of programmatic advertising helps to coordinate campaigns on various devices while delivering ads to the right audiences. The automated algorithm also helps publishers. It gives them more control over inventory selling — they can participate in the open auction or sell premium inventory in a private marketplace through the preferred deal or programmatic guaranteed.
Example of omnichannel approach
Programmatic ads can bring you an additional share of customers. For example, the digital marketing team of Starbucks launched a user loyalty program based on personal user cards.
Such cards were linked to personal accounts that the user accessed via smartphone. If coffee was ordered via smartphone, the app calculated what time it would take the user to get to Starbucks. By the time of arrival, the coffee was already prepared for the customer.
With programmatic advertising, such ads could be delivered to the right audience, at the right time, and across many channels — mobile, CTV devices, desktop, and more.
2. It makes advertising individual
Programmatic advertising offers precise audience targeting and immediate ad serving based on real-time bidding.
Programmatic advertising works based on data insights about potential customers (target audiences). In simple words, AI and ML algorithms channel a particular ad unit to the specific user at the time when it will most likely be seen.
The message reaches a potential audience by taking into account target options and trading parameters that advertisers and marketers set on the programmatic platform (DSP demand-side platform, ad exchange, or ad networks).
For example, a brand can use programmatic to interact with specific segments of consumers, targeting according to the device, geolocation, personal interests, and content.
Example of real-time advertising individualization
Every time the user opens a publisher's app or a website, the bid request along with user information is sent to an ad exchange.
It's like saying “Hey, user X is 35 years old; lives in Montana; uses iOS; is interested in cars, football, and traveling; possibly married; and most likely self-employed. He is about to see an ad. Who wants to advertise to him?”
Judging by the user's characteristics, advertisers' demand-side platforms determine whether this view-through is valuable to the advertisers.
If yes, they bid on it. A display ad is served. Publishers earn money from showing ads to niche audiences, while brands get the chance to reach prospects with relevant ads anytime and anywhere. Here's an example of how it all works:
3. Increased audience reach
One of the key benefits of programmatic advertising is the ability to automatically reach the user segments that are most likely to convert.
Advantages also include look-alike modeling that makes user acquisition reasonably cheap.
This means that AI and ML algorithms have earlier defined that certain user segments have a good history of clicks on this or that type of ad space. Here's an example of how DSP works:
An example of increased reach
A clothing brand that manufactures sportswear for snowboarders found out that their sports accessories, especially sunglasses, are regularly bought by a completely new target audience — cyclers, hikers, and teenagers who know that sports glasses turned into a fashion trend.
This way programmatic advertising offers the product in a new category — fashion.
4. Data advantages of programmatic advertising
Programmatic advertising work is based on data. For instance, data management platforms collect first- and third-party data on existing consumers from different channels, devices, and offline and online sources.
The platform can gather and analyze user segments in real time and then serve ads based on this data.
The entire ad-buying process is based on the information — behavioral factors, personal preferences, and tastes of the potential customer.
Analytics is also one of the benefits of programmatic advertising. It is used to analyze the media trading on day to day basis to reveal patterns and get actionable insights about impressions, ad dollars spent, win rates, video completion, and so on.
Example of benefits in campaign analysis
Traditional means of advertising don't provide a precise measurement as programmatic advertising, especially on CTV.
Programmatic gives advertisers a simple solution with many benefits — campaign reports generation in real time.
As well, advertisers and marketers can be making adjustments based on campaign data.
Having a robust dataset at their fingertips, advertisers can also launch high-precision geo-targeting campaigns and channel ads to people who stay nearby their physical store.
5. Flexible deal types in programmatic advertising
Another benefit is that programmatic advertising provides immediate access to the pool of digital inventory excluding the chance for human error. There are several deal types in programmatic and each of them has particular perks.
Programmatic advertising means ample opportunities for advertisers to start buying digital media inventory from a myriad of publishers worldwide.
The publisher can sell both premium inventories (private marketplace) and remnants (RTB auction) — this all becomes available through platforms like SSP.
Meanwhile, publishers enjoy the benefits of the increased demand during programmatic buying, which allows them to sell impressions at competitive prices and successfully monetize their traffic.
Example of how ad space can be bought and sold
Marketers can buy ad space on a per-impression basis through real-time bidding auctions, or they may opt for programmatic direct deals and buy guaranteed ad impressions from specific publishers.
Alternatively, there are private marketplaces (PMPs) where premium publishers offer exclusive niche audiences to members on an invitation-only basis. Finally, there are preferred deals that are fixed price agreements between publishers and advertisers.
6. Safer advertising ecosystem for everyone
Ad fraud affects all digital marketing, creating malicious traffic. As a result, the ads are seen not by people but by bots that never convert into customers, so the ad budget is typically wasted.
Brand safety risks also appear when the ad is served near inappropriate content. Another issue with transparency is related to inflated prices and commissions inside the chain during the process of media trading.
Today programmatic advertising solutions should be characterized by increased transparency during trading and the chance to secure the ad budget from fraudsters.
How programmatic advertising makes campaigns safer
One of the critical safety solutions that appeared last year was ads.txt. It authorizes individual media-sellers that are eligible to sell the inventory.
Also, in 2019 IAB Tech released ads.cert, which is responsible for delivering clear and detailed information about ad space.
The big step towards transparency and safety of programmatic advertising is the adoption of the first blockchain-based ad platforms, which are safe, secure, and incorruptible by design.
7. Programmatic advertising benefits in reporting
Another benefit of automated media buying is that it provides robust reporting and granular analytics of campaigns, budgets, and the media trading process in real time.
Programmatic platforms offer a variety of analytic tools to provide users with insights into the process — what is going on, how campaigns perform, and how the budget is getting spent. No need to calculate everything manually, machines handle all calculations.
How campaigns can be analyzed
Media buyers can access reports through dashboards and track ad performance according to key marketing metrics such as click-through rate (CTR), traffic, conversion rate, bounce rate, consumer engagement rate, brand awareness, and overall ROI.
As digital advertising is hitting its stride, it is essential to include programmatic into your overall marketing strategy. Programmatic media buying benefits are focused on personal message delivery instead of serving mass ad campaigns.
This way, you keep your advertising relevant and reduce the percentage of wasted impressions. The programmatic mechanism is like an ever-evolving autopilot for your advertising that constantly controls ad campaign workflow based on pre-selected data.
Essential knowledge basics in this area today are enough for mastering the art of professional digital advertising that's efficient, timely, and up to a point.
Contact us now to find out how to achieve all your ad goals with programmatic!
Irina Kovalenko, CMO of SmartyAds