What is Programmatic Advertising? Learn Basics and Benefits

The ecosystem of digital advertising is ever-expanding, which is great news for brands because it permits them to vie for consumer attention across several platforms simultaneously. However, in this complex and dynamic context, advertisers need systemized approaches to utilize their budgets as effectively as possible.

This is where programmatic advertising comes in. It’s a specialized system of buying and selling various kinds of advertising via automated platforms. Programmatic advertising allows brands to choose how they reach their target audiences through sophisticated strategies that can be executed instantaneously.

In this guide, we’ll give you an overview of programmatic advertising and its potential benefits for brands both large and small.

Programmatic advertising 101

Programmatic advertising or programmatic marketing is the process of buying and selling ad inventories in real time through an automated bidding system. This intricate system allows brands or marketing agencies to buy ad impressions on sites, apps, or social media platforms. Programmatic media, as it is also known, encompasses ad spaces for digital out-of-home, online, streaming, TV, video, and voice ads.

Programmatic media buying leverages artificial intelligence (AI) algorithms, machine learning, and predictive analytics to deliver results. And since it relies more on programs and less on humans, the expensive and paperwork-laden practice of traditional marketing negotiations is eliminated. Instead, the bidding process and the purchase of ads are automated based on preestablished parameters.

Programmatic advertising analyzes a consumer’s behavior, demographic, cookie data, purchase history, etc., to determine which ad should be shown to a particular website visitor or social media user. ‍

Common approaches to programmatic advertising

Below are some examples of programmatic advertising platforms.

• Real-time bidding: This is an auction environment supported by a demand-side platform (DSP) where ad impressions are sold and bought programmatically. Real-time bidding (RTB) processes hundreds of thousands of ad opportunities in milliseconds. And when a bid is won, the publisher’s site shows specific ads to a segmented audience based on data points about that audience.
  

• Private marketplace: This platform is a digital private auction setting where ads are bought and sold programmatically between exclusive parties. A private marketplace (PMP) is an invite-only environment that offers premium ad space to advertisers.
  It was created because publishers wanted more control over what ads run on their sites and how their audience data points are utilized. This is a huge draw for marketers because they get audience data directly from publishers, helping them to make informed decisions about their messaging and content optimization.
  

• Ad exchanges: This is a technology-driven platform where multiple ad networks sell their ad inventories to the highest bidder. Ad exchanges are known as the supply-side platforms (SSPs). These use real-time bidding technology to establish prices on a per-impression basis. Marketers use ad exchanges to reach a large portion of web users, with ads customized using advanced targeting technology to focus on the right audience and ensure a higher conversion rate.

• ‍Preferred deals: These are arrangements between sellers and buyers where the buyer gets early access to the ad server’s inventory before it’s auctioned in the open market. A preferred deal is arranged when an advertiser looking for an ideal webpage to market their brand finds a publisher who agrees to the marketing campaign requirements and price.

Popular programmatic advertising channels

Here’s a look at popular channels and how ad buying is utilized as a part of a brand’s digital marketing strategy.

• Display ads: Display advertising can be text-based, image, or video advertisements meant to entice users to click-through and take action. These digital displays are placed at the header, footer, or sidebar of websites, social media platforms, apps, and other digital mediums. Display ads are commonly charged on a cost-per-click (CPC) basis, which means as an advertiser, you’re charged an amount every time a user clicks on your ad. For reference, the average cost per click for a Facebook ad is $1.72.
  

• Social media ads: Social media platforms collect an extensive amount of third-party data from users. This data is then used by programmatic social media ads to find their target audience and determine ad placement, format, and frequency. For this reason, social media ads are deemed profitable and versatile because marketers can effectively use their ad spend. Facebook is the world’s largest social media platform, with 2.45 billion monthly active users.

• Video ads: Videos have become one of the most popular and preferred formats of content consumption in the digital media world. In fact, there were 232 million digital video viewers in the United States in 2020. In response, 85% of businesses use video ads as a marketing tool to reach their audience, drive website traffic, build brand awareness, and get more sales. Video ad formats can be classified as skippable in-stream ads, non-skippable in-stream ads, video discovery ads, out-stream ads, and bumper ads.
  

• Podcasts: There are 100 million monthly podcast listeners in the U.S., hence the reason marketers are eager to inject programmatic ads in the space. Aside from the intimate feel of podcast ads, advertisers can refine their digital campaigns and include specific criteria, such as geotargeting and in-depth demographics. These tactics come across as authentic, but they also put relevant ads in front of the right audience.

Programmatic advertising advantages

Traditional large-scale advertising, such as commercials and billboards, have been reserved for big brands with big advertising budgets for some time. Well, until the internet and AI came along. In a way, media buying worked that way, too, in the beginning.

But with the creation of various systems and programs, smaller brands are getting increased access to technology as well. This allows them to be in the same ad space with larger brands without spending a lot on ad tech. Below are the potential benefits of programmatic advertising to brands, both big and small.

Assess and adapt to incoming data

The ability to access real-time reporting on how ad campaigns are performing is every marketer’s dream. A benefit of programmatic advertising is not only that it impacts the return on ad spending, but it also allows marketers and advertisers to make better informed and data-driven decisions to manage or tweak their digital ads.

With online advertising, marketers can track the location of the consumers they’re attracting, the devices their audience is using to engage, the ad formats with the most clicks, and the demographics with the highest conversion rate, among others.

Engage the audience more effectively

As much as marketers want an engaged audience, the goal is to convert said audience to buyers. Programmatic advertising works for retargeting users as well. Retargeting lets you focus your advertising dollars on users who’ve indicated an interest in your products previously.

This marketing strategy is also a way to increase your brand awareness since consumers who see retargeted ads are 43% more likely to convert. With AI technology’s increased flexibility, big and small brands can use programmatic displays to reach their target markets directly.

Access new advertising opportunities

Since programmatic technology relies on consumer data, it’s easier to modify campaigns and run them across various channels. You can also pre-set criteria into the algorithms for instantaneous data-based decisions on what online ads to show to attract and engage your target market.

Although AI technology can play a large part in your marketing success, make sure you also have the right people running your campaigns. Utilize Upwork’s platform to connect with independent professionals with specialized training in marketing, machine learning, and other skills you may need for your digital advertising endeavors.  

Hire independent experts in programmatic advertising

Programmatic ad buying was born because advertisers needed to get more return on advertising dollars and reach target audiences more effectively. The technology has been growing ever since, as evidenced by its widespread use.

Spend your advertising dollars wisely by ensuring you have the right talents and skills driving your digital automation campaigns. Find skilled, independent consultants and professionals experienced in programmatic advertising on Upwork.