Nowadays, it is hard to imagine a world of online advertising without programmatic marketing. Once this technology entered the industry, the landscape shifted towards automation and the whole process of media-trading became more effective. To use this mechanism efficiently, it is not enough to have only tools and solutions. The key element here is knowledge. One should understand what is programmatic marketing, how it works and, most importantly, how to use it in accordance with business needs and goals. In this article, we are going to answer these questions and explore what are the most important steps you should know in order to start trading programmatically.

What is programmatic marketing?

Our initial point is programmatic marketing definition, as a clear understanding of this term will serve as a fundamental ground for our further analysis and exploration.

So, what is programmatic marketing?

In simple terms, programmatic digital marketing includes a range of technological solutions that enable the digital advertising trading process. Instead of sending numerous proposals and spending hours negotiating, marketers can now focus on ads improvement and targeting. With programmatic, digital ads are purchased with machines and algorithms, while humans focus their work on planning and optimization of their advertising.

Programmatic advertising has multiple benefits such as more precise metrics and targeting, transparent pricing and cost-efficiency. The technology helps to achieve higher profits for both advertisers and publishers, providing them with automated media-selling/media-buying solutions. The usage of programmatic has been rising steadily since 2015 and this trend doesn’t seem to be slowing down. Thus, let us now have a brief look at the history of programmatic marketing, its current state and top predictions for the future.

Programmatic digital marketing: from 2012 to 2019

It all started with display media auctions powered by real-time bidding (RTB) in 2012. Around 2012 the first RTB auctions were launched too. They were initially created to trade remnant inventory, but things have changed when the efficiency of automated trading became obvious, so marketers started to use it for any kind of inventory.

This led to the creation of demand-side platforms (DSPs). In contrast to the marketplace for everyone, these platforms were created specifically for advertisers and were focused on media buying. As the market was growing, the prevalence of programmatic did too. In the following years, private marketplaces were established making a shift from remnant supply to premium inventory. Programmatic marketing wasn’t a narrow niche anymore and brands just couldn't ignore it.

Within just 3 years, the US programmatic digital display ad spending leaped from 73% of all display ad spending in 2016 to 84% in 2019. To put it into more practical numbers, in 2016 programmatic ad spend equaled $25.4 billion. In 2019 this number reached almost $60 billion, (more than 2 times increase). Nowadays, this complicated system of algorithms defines an ad spend of countless brands and is constantly improving. So where are we heading now?

Current state and the future of programmatic

Programmatic trading continues to grow. The US is leading the race, as its programmatic ad spend is expected to exceed $80 billion by 2021 which will account for 87.5% of total display ad spend. The second place is held by China where $16 billion is expected to be spent on programmatic digital marketing by 2021. In the meantime, European marketers have also shifted their attention to programmatic -- more than 80% of the UK digital ads are traded programmatically. By 2021, the same number will be reached by France, Germany, and Denmark.

US programmatic ad spend

The industry is growing not only in terms of quantity but also in quality. Although algorithms are already advanced enough to determine, monitor, and improve your ad spending strategy, new trends are emerging to make this process even more profitable and sophisticated. Traditional manual ad trading is not likely to revive, so it is now a perfect time to learn and integrate programmatic digital marketing into your business model. To make this process easier and more convenient, let's break it down to a few simple steps.

Where to start with programmatic marketing?

Gather knowledge

No matter if you are just a beginner who wants to start trading programmatically, first things first - you have to know what you are doing before actually starting. It might take some time to grasp lots of new information, but once you’ve got this, it will become so much easier to put your knowledge into action. In the case of programmatic marketing, the most important thing is to understand parties of the trading process, what tools they use and how they interact.

The parties:

There are two parties involved in the programmatic media buying process - advertisers and publishers. Advertisers are choosing sites for their ads, provide creatives and execute advertising strategy they’ve created. Publishers, in turn, offer their inventory, provide valuable traffic and collect data about their audience. Both sides are taking part in the process via specific platforms that belong to the programmatic ecosystem.

The tools:

At first glance, the programmatic ecosystem is huge and complicated, but in reality, things are much simpler once you get to know some terms:

DSP

Demand-side platform is a tool for advertisers that allows them to buy traffic. Within DSP dashboard advertisers can upload creatives, choose pricing models, set campaigns’ options, monitor campaign effectiveness, and make necessary adjustments. The platform is also used to set targeting or retargeting based on the company’s marketing needs, as well as options provided by the specific platform.

SSP

Supply-side platform is a software platform designed for publishers who want to automate media-selling. It helps publishers to find specific buyers for their inventory based on criteria they set, such as price floors or preferable ad formats. SSPs accumulate inventory from publishers and send bid requests to DSPs (with information about an ad slot and user cookies).

DMP

Data-management platform is a platform where data about users is accumulated and segmented. It can then be analyzed by advertisers who want to build programmatic strategy based on the brand's target audiences and their behavior.

Ad Exchange

Ad Exchange is an open marketplace where demand and supply meet. Based on their chosen criteria as well as RTB algorithms, advertisers and publishers are matched so that both parties get the best offers.

The interaction:

Advertisers sign up at the DSP and set their campaigns’ options and budget, while publishers add their inventory to the SSP. Based on campaign settings, targeting segments in DMP, and bid request information, DSP defines the relevance of an impression. If the impression is relevant, DSP bids on it in the auction takes place at ad exchange. The highest bid wins and the winner’s ad is served to the user. Finally, after the campaign ends, an advertiser measures and analyzes the campaign’s effectiveness and, if necessary, optimizes it in DSP. Let’s discover how to create your first campaign.

Set your goals

Before jumping in your first programmatic marketing campaign, it is important to consider which goals you are aiming to reach and what are the best channels for doing this. Despite the fact, that many consider conversions to be the ultimate goal of programmatic advertising, in reality, programmatic should be used throughout each stage of a customer's journey. Here are some common advertising goals:

1. Raising brand awareness - these campaigns are aimed at attracting potential customers to the company’s products or services. Their main goal is to drive brand awareness among users that have not yet visited your website but may be potentially interested in what you have to offer. Usually, such campaigns include attractive creatives and intriguing messages addressed to the target audience segments, based on the analysis of existing customers' behavior.

Their performance can be measured by various metrics, such as click-through-rate (CTR), cost per action (CPA), and return on investment (ROI). Brand awareness campaigns are usually adapted and modified throughout campaigns by advertisers who want to make sure that the audience is correctly identified.

Pro tip: make sure that the design of your ads matches the landing page of your site - this will make your brand recognizable from the start of your customers’ journey.

2. Activating leads - once your brand is already known and established, it is time to activate your potential buyers by encouraging them to purchase from you. Make your customers feel welcomed, educate them on your products or services and share useful tips on how to successfully use them.

This type of advertising will not only spark more interest in your offers but will be useful to your customers which is a very good move to build trust. This stage is especially important as it moves your clients to the actual purchase.

Pro tip: pay attention to your calls-to-action - they should highlight the value of your offer.

3. Retargeting - You probably noticed those visitors who expressed interest in your website, but abandoned their carts? In fact, there is a whole separate type of advertising campaigns aimed specifically at returning the users who already visited you, but never took action.

These campaigns are designed to turn them into buyers by showing them more attractive and relevant ads based on user behavior, extracted from your first-party data. They are especially useful considering the fact that targeting interested people is more effective than reaching those who haven’t even heard about your brand yet.

Skillfully arranged retargeting campaigns can awaken lots of dormant customers and improve your ROI dramatically.

Pro tip: make sure your retargeting campaign doesn’t include products already purchased by the customers, as it is often perceived as annoying and might alienate them.

Pick the right channel(s)

Perhaps one of the most important decisions to make is to choose the channel through which you are going to deliver your messages. Due to the recent technological advancements in the industry of programmatic marketing, the number of available advertising channels has significantly increased. Let us now take a look at the three most popular ones to discover what they are used for.

Display advertising (also known as banner advertising) is one of the most popular advertising channels. This was the first type of ads to appear online and its popularity doesn’t seem to decline any time soon. There are lots of sizes and formats of banner ads, designed for all kinds of messages. Display advertising is very versatile and can be used for almost any campaign, be it brand awareness, leads activation or retargeting. After the users click on the banner, they get transferred to the landing page or a page with relevant information regarding the advertised brand, product or service.

Video advertising. Along with the recent technological enhancement of browsing experience, the quality of advertising content rises. Although not new, this channel gains huge popularity these days, especially after the introduction of 5G networks. Video ad formats are usually divided into in-stream and out-stream ads. In-stream ads are displayed before, within or after video content, such as Youtube videos or content from streaming services.

Out-stream ads include video ads embedded into the website’s content or banners. Video advertising is specifically useful for brand awareness campaigns and reaching new audiences.

Native advertising. This channel is one of the most effective as it mimics the environment and content around itself. This way ads don't seem annoying to most of the users. In fact, native advertising is one of the best performing channels with 35% higher CTR, as well as 40% better engagement.

Apart from this, the usage of native ads helps to get around adblockers. Paired with the methods of contextual targeting, native advertising promises to be one of the hottest trends in online advertising for the coming years.

Set up the campaign

Now that you have clearly set your goals and picked the right tools, it is time to set up your programmatic marketing campaign. The process is simple - all you need to do is to sign up at the DSP and follow the instructions in order to start bidding. Usually, after the registration, you can pick the most appropriate channels and targeting options in accordance with your goals, as well as a comfortable budget. Upload your creatives and start advertising, but don’t forget to monitor the performance of your campaigns. Timely data analysis and campaign optimization may save you lots of money and bring a lot of new customers.

The Takeaway

Although programmatic digital marketing may look like a complicated process, understanding its mechanics is what makes it quite simple and effective. Start with analyzing your business needs and setting attainable goals. Once you’ve got the vision of what you need - choose the appropriate channels and build your advertising strategy. The final and most important step is to set up a campaign - all you need to do is to sign up at a DSP and create your perfect campaign.

Start marketing programmatically with SmartyAds DSP - sign up today!

Written by
IRINA KOVALENKO, CMO OF SMARTYADS
June 2020