If you or your business uses online advertising, you will have heard people raving about how programmatic ads have changed the landscape.
And if up until now, you have nodded sagely while people have made that proclamation but not really understood it, you’re in luck.
In this article, we will break down just what programmatic advertising is, explain targeting best practices and look at who is doing it right.
What is programmatic advertising?
Programmatic ad buying, put simply, is the use of software to buy digital advertising. Whereas the traditional method includes requests for proposals, tenders, quotes and human negotiation, programmatic buying uses machines and algorithms to purchase display space.
However, it is not the complete automation of the ad buying process. Traditionally you would have manually prepared insertion orders or ad tags, which can be menial but labour intensive. With programmatic ads, humans have more time for the optimization and improvement of ads.
Humans will always be needed to plan and optimise advertising, but programmatic advertising will mean there will be fewer ad buyers.
What the software will mean, however, is that those who are doing the job will be able to better plan, better optimise and better target their advertising.
That doesn’t mean it’s perfect, however. Earlier this year, major advertisers pulled spending from YouTube over concerns that the video platform could not guarantee ads wouldn’t be seen on extremist content.
Cellular behemoth Verizon, for example, ended up on videos of extremist clerics.
Is it successful? And why?
Quite simply: Yes and because it’s efficient.
EMarketer’s 2017 estimates put the US spend on programmatic ads at €33 billion. That accounts for 84% of all digital display ad spend. And in that, 74.5%, or $24.25 billion is done through private marketplaces or direct setups.
eMarketer principal analyst Lauren Fisher says that this is because private exchanges offer buyers more control over their spend.
"Private setups give buyers and sellers greater control over their automated buy."
They may have initially served to bring in reticent buyers and sellers, but now private setups drive much of the change and momentum in the marketplace, as both parties seek greater control from their programmatic efforts.
The system works, and is used, because it is an efficient use of both time and resources.
"Programmatic advertising is designed to do away with old-fashioned, hit-or-miss campaign design. That system was notorious for costing marketers way too much money."
Now, you can rely on an algorithm that will determine where your ad money is best spent. All you have to do is feed your programmatic solution some info about your campaign as well as key performance indicators and you're all set.
“The system will not only launch your campaign, but it will also monitor your ad spend to look for areas of improvement.”
Tim Webster, co-founder of The Exchange Lab, concurs. Writing on AdExchanger, he said:
The effectiveness of programmatic advertising cannot be disputed. Programmatic allows us to understand the media journey better than ever before and have one-to-one conversations with individuals.
How can I do it?
1. Know your marketplace
The first thing to do is a pretty simple one: get to terms with what you’re doing. As a person on a venture into a new area of advertising, you will be faced with a number of new ideas and terms, take the time to get to know them.
AdTagMacros has a handy and comprehensive list of programmatic ad terminology that will have you able to tell your SSP from your DSP.
2. Set your goals
As with anything in digital marketing, it is important to have your goals set from the off. Use existing data to determine what type of advertising awareness you need and set a fitting strategy. This will allow you determine short- and long-term goals.
Don’t feel the need to jump to programmatic advertising unless you know why you are doing it.
3. The human touch
Just because programmatic advertising relies on algorithms and machines, it needs human investment. There are different types of platforms, some of which offer fully or half-managed services. Others simply provide technical platforms, allowing you to run your programmatic buying activities on your own.
From there, you will need to allocate skilled people planning, controlling, and optimising your buying.
4. Protect the brand
As discussed, one challenge of programmatic is that its reliance on algorithms can lead to ads appearing in the wrong place.
Ensure that your demand-side blacklist is constantly updated and monitored for inappropriate sites. Some platforms allow for the exclusion of entire categories from ad spends, which can be particularly helpful.
Another option, which is important if your product is sensitive, is to use a whitelist. This will give a list of approved sites rather than denied. It will narrow your ability to reach your audience and possibly make it more expensive but will ensure no unsavoury material is associated with your ad.
If using an agency, ensure that they are doing all they can to exclude low quality and sensitive sites from having your ads served on them.
5. Watch for fraud
However, programmatic ads have an industry-wide standard of 16% fraud, which is lower than other display ads.
Who does it?
Charity Missing People moved to programmatic ads as a reaction to a lack of resources.
The move to programmatic allowed the charity to move from issuing one appeal ad a week to targeting people by targeting users by area that children go missing.
This, their director of funding Ross Miller says, has even enabled the charity to save lives.
When we first started using out-of-home, 50% of children we appealed for were found alive, when we switched to a more programmatic use of out-of-home our response rate went to 70%. People respond to a message that is relevant to either where they live or a location.
The Economist’s award-winning campaign saw a huge return on investment in 2015/16.
Using the magazine’s content along with provoking, witty or humorous headlines, the ads were able to target intellectually-curious readers whose cookies showed they hadn’t spent much time on the magazine’s website.
The results were impressive, to say the least. According to eConsultancy they included 650,000 new prospects, 3.6m people taking action and a campaign ROI of 10:1, on a £1.2m media budget.
This was allied with a jump in “awareness” in the US of 64%.
Hotel group IHG, which owns the Holiday Inn and Intercontinental chains, began running programmatic ads to encourage users to book direct, rather than with third-party sites like Expedia or Booking.com.
In the travel industry, third-party sites can take commissions of between 15% and 24%, so direct spend can be a huge deal to hotel chains.
IHG’s ads targeted consumers who were thinking of making a reservation with an ad including a “book direct price” option.
As COO Matt Luscombe told Marketing Week, the campaign was a major success.
"By using advanced targeting capabilities through programmatic, we are able to find a broader range of people looking for accommodation and target them with our book direct message."
“Buying lots of banners online just didn’t have any effect except for surge marketing, which has been tremendously effective."
Luscombe says that IHG’s plan was a shot in the arm for hotel brands.
“The hotel industry has now woken up,” said Luscombe, who claimed other hotel brands including Hilton and Marriott are now following his company’s lead.
“They say imitation is some serious form of flattery and we have been getting lots of flattery in recent weeks.”
- eMarketer’s podcast “Where Are The Programmatic Ad Dollars Being Spent?”
- 10 signs that programmatic advertising is reaching maturity – eConsultancy
- The Drum’s article “The trials and tribulations for brands in-housing their programmatic advertising”
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