What Is Programmatic Advertising, And How Does It Works
What is programmatic advertising, and how does it work? How to make the most of it to increase your users/customers?
Specially designed software purchases banners and other forms of online advertising to send the most effective message at the right time to a specific type of user identified through a targeting operation: Programmatic Advertising, ” computerized advertising. ” It is such an effective tool that increasingly, companies are choosing it to optimize and automate their online advertisements. The reason? The ability to show content to a target that is genuinely interested in receiving them.
But let’s see in detail what Programmatic Advertising is and how it works.
What is Programmatic Advertising
The world of advertising, in recent years, has experienced an incredible evolution. Initially, companies bought directly from publishers (a system still in vogue today), obtaining advantages such as transparency on costs and always checking that their ads were placed on the right media.
Then came the Ad Networks, which act as intermediaries between those who want to buy online advertising spaces and those who sell those spaces. In this way, times are shortened (there are no long negotiations for direct purchase from the publisher), and it is possible to reach different types of users: in general, a network is able to coordinate campaigns on several different sites aimed at different targets. However, the company, in this way, has no control over the sites on which it gains visibility.
Programmatic Advertising, on the other hand, is more complex, based on a fundamental concept: that of Dato. Complicated algorithms continuously analyze the online behavior of consumers, extracting as much data as possible, and based on this, the company provides its target type, taking into consideration both the demographic and behavioral aspects. But there is more: the campaigns are optimized in real-time: the contents are shown only to users potentially interested, at that particular moment, in what is told/offered/proposed.
Programmatic Advertising: how it works
After having seen what Programmatic Advertising is, we can analyze how it works. Starting from three concepts: DMP, DSP, and SSP.
DMP is the acronym for “Data Management Platform” and indicates those platforms that collect and sort the data that publishers and advertisers need to optimize the methods of selling and purchasing advertising: they are big data relating to consumer behavior and are essential information for those who sell online advertising space as well as for those who buy them.
DPS (Demand-Side Platform) instead indicates those platforms that companies use to buy advertising space programmatically: the company makes its offers and, thanks to DPS, reaches the target of its interest.
Finally, the SSP (Supply-Side Platform) is used to place offers in the different sites, based both on the space that they have free and on an analysis of those same sites (from the number of visits to the average residence time).
Working continuously and in real-time, these three platforms are the soul of Programmatic Advertising: it is through them that the purchase of advertising space takes place, and it is here that those who sell impressions (the publisher) and those looking for spaces to reach your message to a specific target (advertiser). Operations are all based on data and are automated, which makes this advertising purchasing system a targeted, efficient and economic system.
Among the examples of Programmatic Advertising, the simplest requires that a web page is loaded and shows that it has a free advertising space: the information on the page and on the users who frequent it are passed from the SSP to an Ad Exchange, the platform that manages the auction and which grants space to the highest bidder (these are auctions that take place in thousandths of a second, so much so that those who visit the page do not notice anything).
What buyers are willing to pay in real time determines the price of the impression, which is generated each time a web page is loaded: to evaluate which impressions to bet on, DPS helps.
There are three ways to purchase advertising space online :
- private exchange – the private exchange with which the publisher can control the access of advertisers;
- open auction – auctions open to multiple advertisers;
- guaranteed direct – sale of spaces in stock through a platform that manages supply and demand.
The latter, also defined as programmatic direct, is, therefore, an automatic purchasing process that does not involve participation in an auction.
Its main advantage is that? Suppose, in traditional planning, the number of impressions decides the purchase of space without considering users in Programmatic Advertising. In that case, the advertising company can choose the type of user to aim for. Thus, its communication is more targeted and can actually translate into sales.
Before the advent of Programmatic Advertising, the guaranteed direct system involved a very long time: the account sent the request to understand prices and availability; if its offer had been accepted, the publisher would have proceeded with the insertion of the order on the platform.
Now, everything is automated and fast: the advertiser has real-time access to a large amount of data and can check the immediate return on investment to correct his campaign if it doesn’t work.
The KPIs of a Programmatic Advertising campaign
The KPI (Key Performance Indicator) is an indicator that allows you to measure the performance of the campaign implemented to achieve your business goal.
Programmatic Advertising platforms are based on intelligent algorithms capable of segmenting the most qualified leads: today, in fact, the company no longer aims to obtain the maximum number of leads at the lowest price but to obtain the most qualified leads that they can. Really translate into value.
The goal of a Programmatic Advertising campaign is not to reach users who would have equally converted into quality leads (and therefore customers) but to reach users who – due to demographic and behavioral characteristics – may be interested in that product. / service (which perhaps they had not considered, or which they were not aware of) and become value for the company that offers it. Only in this case can we speak of a successful campaign. And this is where the KPI must aim.
Advantages and perplexities of programmatic advertising
The main advantage offered by Programmatic Advertising is the ability to reach very specific users: the ads are not simply “thrown” on the web. Still, they are directed to the right visitor who can really click on them because they are interested in what the ad advertises. In addition, the prices are transparent: companies can choose exactly how much to spend on an offer.
However, there is also some doubt about programmatic advertising. The first concerns the quality of the networks and the placements that the brands obtain; if the target is segmented incorrectly, the audience reached by the ad is not useful to the company, which, thus, risks wasting budget on ineffective advertising. For this reason, relying only on platforms that ensure transparency, data, and precise information on targeting methodologies is fundamental.
Furthermore, many publishers believe that Programmatic Advertising can lower the value of their spaces: they fear losing control of the sales processes of not being able to verify what is published. And some are dubious about having a direct relationship with buyers.
Even companies, for their part, still have some doubts. Being a completely automated process, they fear that Programmatic Advertising could create a different image from the one they would like to give to potential customers: the quality of the advertising spaces available varies greatly, and we don’t always talk about high-level spaces. Here, then, the human factor comes back into play: only humans can choose which DPS, Ad Exchange, and SSP to turn to prevent this from happening.
Therefore, we must ask ourselves what is your goal: is it better to publish an ad at a lower cost or reach a potentially interesting target by publishing that same ad on a non-high-quality site?
Programmatic Advertising, on the other hand, allows you to make yourself known (effectively) with limited budgets and to hit the right users without focusing on the quality of the sites. Rather, what counts is the quality of the audience.
Finally, some consider Programmatic Advertising a violation of privacy: users are “followed” by ads if they see them appear from one site to another, which can create some annoyance. The fear is always that of receiving complaints and that the sensitivity of the consumer who is – online and offline – the soul of marketing is hurt.
Some see the future of advertising in Programmatic Advertising, it probably is. However, it still needs to be perfected. And that we only turn to professional platforms.