If you are still trying to figure out what programmatic advertising is you are not alone. Programmatic advertising is a current hot topic in digital advertising and there seems to be a wide variety of definitions out there as well. Programmatic advertising generally refers to the process of real-time bidding on advertisements using behavioral and intent segmentation. Computer algorithms are used to eliminate the inefficiencies that naturally occur in any market making process. This form of advertising is continuing to grow in importance. eMarketer predicts that advertisers in the U.S. will spend $3.36 billion on a thing called, “real-time bidding,” up from just shy of $2 billion in 2012.
At its core programmatic advertising is an extension and digitalization of the traditional responsibilities historically executed by media reps. However, don’t mistake this computerization to mean that advertisers and media buyers will soon be looking for new jobs. Think of it as a tool that advertisers and media buyers will use to increase their productivity. By helping to eliminate the redundancies that naturally occur when buyers and sellers search for each other. A bit like how automated video surveillance frees a policeman to fight crime instead of watching a video feed, programmatic advertising will provide the foundation for advertisers to focus on understanding the data and developing actionable strategy from it.
How programmatic advertising works
Every time a website loads a micro-auction takes place for available ad space on the page. Information from the visitor and page is passed on to an ad exchange such as Google Adwords. This exchange then takes into account multiple data points (like an open trade exchange for ads) where the winning bidder will have their ad served on the page. According to Allie Klien, CMO of AOL networks, “Programmatic takes multiple data points and makes decisions [about] what screen an ad should be on, what is the most effective strategy at a given moment, and lets you do all the non-manual decisions.” These algorithms are able to do what humans cannot, piece together and make decisions based on millions of pieces of fragmented data.
Essentially, the mission of programmatic advertising is to make the process of media buying more efficient and effective. The traditional goal of any good marketing campaign is to put the correct advertisement in front of the correct customer at the correct time. Using information from millions of different touch points programmatic advertising expedites the process. As the technology continues to evolve the importance of programmatic advertising will continue to rise in the digital marketing universe. It is vital that any good marketer understands this technology and how to use it best.