Programmatic Advertising
New media and communication technologies have made a significant impact on the advertising industry with the rapid advancement in technology such as mobile phones and the internet. Prior to the internet, advertisers relied on traditional media outlets, such as television and radio, to reach their audiences. The growing and every expanding internet has and will continue to provide advertisers with numerous new opportunities and challenges. Yet the mission for every advertiser has remained the same: to deliver the right message to the right people at the right time. This is why programmatic advertising has played a key role in the success of digital advertising.
According to AdAge, programmatic advertising covers a wide range of adtech which utilize data to develop algorithms and automate the buying, placement, and optimization of advertising. Programmatic advertising operates on the premise of real-time bidding. When an online user opens a new page this creates an opportunity for an ad display. Then this display instantaneously bought and sold to be matched up with an advertisement.
As internet users we may encounter it as a banner ad, a recommended post on Instagram, or a pop-up video on YouTube. These ads heavily rely on technology such as cookies, which have allowed advertisers to see and track their consumers’ behavior and provide consumers with ads for products that more closely align with their other interests. Programmatic advertising is mostly associated with digital advertising mediums, however, has made additional impacts on traditional media as well.
Since the rise of the internet in the early 2000s we have seen a shift from traditional advertising media (television, newspaper, and radio) to digital media (computers, mobile phones, etc.). Television commercials were extremely competitive, expensive, and dominated by big companies. The average 30-second commercial on prime-time TV in 1972 cost $25,090. With the growing use of the internet, new doors have opened for advertisers to reach smaller, niche markets and appeal to consumers through the online cyberspace. This has helped to disperse ads across multiple platforms, thus lowering the costs of traditional media outlets.
Advertisements do a great job at making you think about a product but how well do they convince you to go out and buy it? Many people believe they aren’t influenced by ads, but the research disagrees. In a survey by Clutch, they surveyed 1,030 U.S. consumers to determine their trust in advertisements and their influence on consumers’ decisions. They found that 90% of their surveyed consumers were influenced by advertisements to make a purchase. Programmatic advertising has helped to create this sense of trust by utilizing consumer behavior data to predict which audiences are most likely to be interested in a product.
Programmatic advertising has a large impact on addressing niche markets online. Before, mass communication involved sending a single message out to as many people as possible. New technology has enabled users’ easier access to information and content on the internet. Because of this, advertisers also have an abundance of data collected from consumers on a daily basis through cookies. Cookies provide key insight on consumer search behavior as a direct measure of an individual’s product or brand awareness and popularity, and broad patterns of search behavior is predictive of social movements and trends. This has greatly increased ad relevancy because it allows advertisers the ability to reach consumers with a message or product that is better suited for their interests and other relevant content.
Simultaneously, advertisers are able to reach a wider intended audience with one message just as they have before, except now they are able to do it smarter. Advertisers are capable of using adtech software on various different social media platforms, apps, website, etc. Due to the nature of programmatic advertising, an advertiser’s target audience is no longer simply the masses but a more relevant audience. This target audience is identified through their online behavior on other outlets and then an ad is quickly assigned. This ensures that, in the case of a tv commercial, the ad is not outdated and is relevant to its viewers.
Programmatic advertising has undeniable brought advertisers into new, unmarked territory. Consequentially, it has also brought on new concerns regarding an internet user’s right to privacy. Already the European Union and the U.S. have developed privacy laws set to protect internet users’. Despite using no identifying information, the use of cookies and other consumer behavioral data is currently facing potential extinction. This is a possibility which advertisers are afraid to face, many are already looking into alternative sources of data and Google is one of them. Instead, many advertisers use device “fingerprinting” by looking at a user’s IP address, extensions, and other browser settings to create a unique user profile without any use of cookies.
According to an article by Adweek, Google has announced it will begin to phase out the use of cookies on its internet browser in the next two years. Google announced they have already developed a replacement, called “Privacy Sandbox”. Google claims it will allow advertisers to target ads to consumers without violating any privacy laws. Other browsers have also taken extra measures to block these third-party cookies. Safari, for example, has automatically blocked third-party cookies as the default setting. These changes are all still in the making, it will be interesting to see how much of an impact this switch will be on programmatic advertising, and advertising as a whole, in the future.
The advertising industry is one that is heavily influenced by changes and developments in technology. This has allowed for new opportunities and challenges for advertising professionals as they continue their endeavors to reach their targeted audiences. These opportunities and challenges are addressed and greatly influenced by new adtech such as programmatic advertising. However, with the nature of these new capabilities, advertisers are now faced with different challenges.
