Programmatic Advertising Explained

Technology within digital advertising and marketing is currently undergoing a broad and significant disruption thanks to a data-driven automated technology called programmatic advertising.

The arrival and convergence of advancements in data aggregation, artificial intelligence and automation are already impacting many, if not all technology verticals presently (fintech, edtech, autonomous vehicle development, retail etc.)

Any industry capable of benefiting from the aggregation and mining of massive amounts of data in real-time are realizing operational efficiency improvements, campaign optimization and real-time decision making advancements. The same technologies supporting the backbone of programmatic technology are prime tools for a near limitless application across all enterprise level operations.

So, what is programmatic exactly?

According to Birger Bardowicks and Oliver Busch, programmatic advertising describes the automated serving of digital ads in real time based on individual ad impression opportunities.

This means serving ads (imagine any content type on nearly any medium) and reaching a targeted end user or audience is possible through aggregating the most specific i.e. granular data.

Purchasing ad inventory to reach the right customer at the right time with the right message is now possible in an automated fashion transacting in a magnitude of milliseconds. The need to select any given ad impression is no longer contingent on analyzing low price data based on the value assessment of potential ad inventory in targeting a singular end user or audience. Instead, advertisers are able to pinpoint in the most direct (efficient) route possible at the exact right (appropriate) moment to achieve successful outcomes reaching their intended audience given a narrow attention span and the dynamic nature of following the consumer journey (online or offline).

To recap, advertisers are only just recently able to tap into programmatic based on the convergence of several significant advancements in technology:

  • Extreme computing power
  • Cheap data storage
  • Advancements in algorithmic development (automation)
  • Stock exchange, auction-like structure
  • Improvements in global advertising infrastructures
  • Personalization associated with an end user’s ‘real identity’ (granularity)

Imagine a hub and spoke design where the spokes reinforce the central hub as well as all of the nodes of the entire wheel structure. This is the design of a programmatic platform.

Below is the real-time illustrated cycle of an ad impression bid, at auction, in real-time (200 milliseconds).

Source: Media Crossing

Programmatic is built on a digital platform or exchange where automated buying and selling of ad inventories across mobile, desktop, search, display and video allow the demand side (advertisers) and supply side (publishers) to transact in real-time. Public as well as private ad trading platforms referred to as DSPs (Demand Side Platforms) and SSPs (Supply Side Platforms) are available for institutional-like advertisers and smaller independent customers to access ad inventory and auctions directly from the platform or alternatively from an ad trading agency on behalf of creative and media agencies or other customers. Much like buying or selling a stock with stock brokers and traders, programmatic advertising utilizes ad trading desks and specialized ad traders fluent in automated systems responsible for automating a stream of transactions each of which is occurring in milliseconds.

The technological advancements in data and artificial intelligence allowing advertisers to automate serving the right target audiences with the right messages at the right time and track not only online but offline data produced by these users. This data tracking allows unprecedented campaign optimization, retargeting using pixels or cookie-like tracking codes set within a user’s IP that are fed back nearly instantaneously to pinpoint the exact behavior, intent and location of a targeted audience in the most efficient timeframe, ever.

Recent advancements in Google’s new adtech offering coined Attribution enable consumer credit and debit transaction data tracking with additional offline activity obtained from smartphone location and timeframe data of a consumer’s visit to a physical store. Combining this offline data with online activity across mobile, desktop, search, video and/or display yields further consumer insights as to purchase intent, influence (CTAs), and finally action (conversion). This synthesis of data points is programmatic strategy.

Programmatic is the new digital form of globalization. The borders, walls and obstacles once capable of preventing holistic customer tracking online and offline are now forever demolished.

The personalization associated with tracking and actualizing a campaign based on the real identity of a targeted user across multiple devices and channels (search, display, video and mobile) both online and offline is already evolving to include television viewership metrics (linear (traditional) and non-linear (Over-The-Top i.e. Netflix), radio and outdoor advertising for inclusion into data-driven marketing initiatives.

The availability of programmatic technology is now capable of satisfying the demand for value-added initiatives in business development. In other words, efficiency gains are the new currency. Given the time constraint of a user’s attention span reaching a user at the moment(s) that most influence their buying decisions is best enabled in delivering the most relevant offer to that consumer. This is where programmatic trumps once sought after performance-based campaign metrics and traditional campaign tracking metrics based on CTR or CPM. Those old technologies are already dead on arrival.

Programmatic welcomes you to the fold.

Ian Herman is a digital advertising and marketing specialist with a background in programmatic (automated, data driven, real-time marketing). Read more on Ian’s programmatic advertising blog AxialX