Digital media advertising as you may know it is undergoing a revolutionary change. Digital ads are becoming increasingly more relevant and targeted to the viewer. The secret? Programmatic.

Best known as an automated process of buying and selling ad inventory, programmatic advertising also offers unprecedented targeting capabilities and optimization, which have now expanded to include television, outdoor and voice advertising. 

As Susan Vobejda, the CMO of The Trade Desk, the premier programmatic advertising software platform, likes to call it: “It is the most efficient and effective way to buy media ever!”

While the AdTech space can be complex and confusing, programmatic marketing has managed to become one of the most preferred methods of setting up campaigns. In this overview, we aim to clear up any confusion by including the basics of programmatic advertising, how it works, the types of targeting and media channels available, and how it can help your business.

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In the past decade or so, since the birth of programmatic advertising, it has more than delivered on its claims to revolutionize digital advertising. 

“It is the most efficient and effective way to buy media ever!”

Susan Vobejda, CMO of The Trade Desk

According to the latest report from Zenith Media, programmatic marketing represents 69 percent of all digital media buys in 2020, making it an industry worth $1.22 billion annually. To illustrate the impressive growth of programmatic marketing, ten years ago it accounted for less than 10 percent of all digital advertising. 

Before we get into the nuts and bolts of how it works, it is important to clear up any confusion about the terminology. As technology evolves, programmatic marketing and advertising techniques are constantly improving. From digital display ads to streaming video, digital out-of-home to voice and TV, the sheer volume of buying options can be overwhelming. 

What is Programmatic Advertising?

The purpose of this article is to provide a synopsis of what programmatic is, how it works, and what it can do for your business. Navigating through the jargon is a great place to start, as well as an understanding of what programmatic is. 

While programmatic marketing can apply to anything from digital display ads to television, it is best known for its targeting capabilities on computers and mobile devices. The Display Trading Council defines programmatic as “the automation of buying and selling of media.”

Programmatic advertising enables marketers, brands, or agencies to buy advertising impressions on publisher sites or apps through a sophisticated ecosystem.    

Why Does Programmatic Advertising Exist?

Traditional advertising was always a gamble, at best, as it only assumed that an audience might be interested in a product or service. But even the cleverest of advertising messages will not succeed when delivered to the wrong audience. 

Market research companies like Nielsen Scarborough could provide an accurate picture of the viewing, listening, or reading audiences of traditional media channels, but they could never deliver the right message at the right moment with pinpoint accuracy. Until the concepts of personalization and optimization were fully realized and functional, the programmatic capabilities we have today seemed like a futuristic fantasy. 

Using technology to learn about the online activity of your desired customer and send them messages in real time, may seem like an invasion of privacy, but today it is more widely accepted by consumers. Now that personalization and retargeting have become a part of our everyday lives, many people say they prefer seeing the most relevant ads.

Programmatic began as a way to fill unsold inventory with low-cost ads, otherwise known as “remnant inventory,” and was an effective tool that helped publishers sell leftover impressions. Websites that participated in this marketplace started what is now known as Supply Side Platforms (SSPs). 

The Three Pillars of Programmatic Technology

Programmatic advertising automates the buying process and helps marketers zero in on desired audiences through software that marries these platforms:

  1. Demand-Side Platforms (DSPs): Platforms that let you buy ad space through ad exchanges, such as Google Ad Manager, which includes available inventory from publishers.
  2. Supply-Side Platforms (SSPs): Platforms that allow publishers to offer ad space to marketers, advertisers, agencies, and other parties interested in purchasing advertising.
  3. Data Management Platforms (DMPs): Platforms that allow for the collection and management of user data for the purposes of digital marketing, including programmatic advertising. 

These three technologies that interact, along with artificial intelligence (AI), automate the process of purchasing and bidding on advertising inventory. This marriage of platforms makes for an intelligent, data-driven process to deliver relevant advertising instantaneously. 

Programmatic Advertising Technology and Participants: (from left-to-right) Advertiser, DSP, AD Exchanges and Networks, SSP, Publishers, finally Audiences

Benefit: Personalization at Scale

Programmatic advertising allows marketers to personalize messages to individuals with specific characteristics, and to do so at scale. It can even deliver different creative messaging to different customer groups, across multiple media channels. Marketers can use programmatic advertising to execute against several different campaign objectives, even optimizing around a different KPI for each audience segment. 

A key element of programmatic marketing is real-time bidding (RTB), an auction-based exchange which allows advertisers to buy impressions individually, using predetermined bids on specific audience metrics. Campaigns can be set up to serve a specific number of impressions over certain time periods, with pacing set to spend a present dollar amount per day on various tactics.

Everything about the programmatic buying process can be customized, even the number of times an individual can be retargeted within a 24-hour period. The technology also can identify what resonates with an individual and optimize against these findings to achieve the best ROI.

What Are the Programmatic Targeting Techniques?

Hit the bullseye with the right Programmatic Marketing Techniques.

Programmatic advertising seems so customizable, it may be daunting to decide on which tactics, and more specifically which datasets, are most useful. Experienced campaign managers will tell you, it is easy to “over target” in the beginning, before gathering insights about audience response. The beauty of programmatic is how it allows campaigns to learn from themselves, even with minimal targeting.

Best practices usually recommend fewer layers of targeting when the campaign begins, building up to more specific targeting as results dictate. The software is designed to optimize against campaign KPIs, but a campaign manager also should manually adjust bid prices, targeting, and other metrics.

The pillars of data-based targeting are as follows:

  • Demographic, or audience targeting, is based on who is viewing the ads. By matching up data IP addresses and device IDs, it is possible to serve ads only to a specified audience, such as Hispanic men, aged 25-49, who are interested in soccer. 
  • Behavioral targeting, which is based on what a person does online. Behaviors could include the sites they have visited, products bought online, apps they have downloaded, games they have played, or the search terms entered on Google. 
  • Contextual targeting, which serves ads on pages with specific content. Rather than targeting the IP address of the user based on who they are or what they do online, contextual targeting serves ads on certain topical pages, such as sports, cooking, or political news. 
  • Predictive, or lookalike targeting, is the newcomer on the scene but is quickly becoming a favorite. This tactic uses internal audience data, along with third-party behavioral data, to target new potential customers. Tools such as Google’s Lookalike Audience use an algorithm that draws correlations between demographic and behavioral data to identify new audiences who are likely to act just like existing customers.
How programmatic advertising helps to target right audience through network planning, ad creation and optimization, remarketing/retargeting and analytics and reporting.

All of the tactics within these pillars can be used in conjunction with location-based targeting, at the zip code, city, or state level. Mobile geo-retargeting on mobile devices, which serves ads on devices when they are within a certain radius of a location, is another popular tactic. Geofencing allows marketers to target people who have passed through a venue, or who are within a certain distance of a store, even days after their visit. 

First, Second, and Third-Party Data

Most digital marketers rely on their own data, often called first-party data, to drive insights such as site pages visited, downloaded documents, or abandoned carts. By placing pixels on every page of their site, publishers might sell advertisers the ability to retarget their audience on other websites. 

  • First-party data is what comes directly from your customers and it is generally considered the most valuable form of data. Not only is it free, but it is also relatively simple to collect and manage. Privacy concerns are minimal, and you know exactly where it came from.
  • Second-party data is like first-party data, but it is owned by someone else because it comes from their audience. While you can feel pretty confident about its accuracy, it is not free. Similar to your own data, most second-party data comes from website visitors, mobile app users, social media, and customer surveys.
  • Third-party data is the kind you buy from external sources, where the source was not the original gatherer or owner of the data. Data aggregators pull their info from a variety of platforms, where they pay the owners for access to their first-party data. After aggregating the data, data companies organize it into categories based on demographics, behaviors, and interests. 

When combined with first-party data, second- and third-party insights are especially powerful. Programmatic display advertising allows access to many layers of data, which can be used to identify potential customers for your business.

Which Media Channels Are Included in Programmatic Marketing?

A decade ago, programmatic marketing was primarily focused on digital display ads, but now there is a broad range of advertising formats available.

Display – Display ads might be the oldest form of programmatic advertising, but they have not remained static. Thanks to advances in technology, data, and optimization, display ads are now dynamic. In a nutshell, dynamic display is a new way to ensure that the right ad is being served to the right person at the right time.

Video – Buying digital video programmatically, and serving it across multiple channels, is now a preferred strategy for marketers. In fact, it now accounts for more than 76 percent of the digital video spend, exceeding $13 billion in 2019. 

Social and native – These platforms offer a unique and engaging way to reach potential customers while they are browsing on social networks, including a broad range of sponsored content. What’s more, it is now possible for advertisers to buy social advertising programmatically on DSPs. 

Audio (or Voice) – The newest entry in the programmatic space is the development of Amazon’s Alexa, leading to a rise in streaming apps, such as Spotify. This format offers marketers contextual and user-focused targeting options for buying programmatic audio advertising. 

Digital out-of-home (DOOH) – As programmatic enters the world of outdoor advertising, it has taken advantage of advances in digital signage. Here, the advertiser has the ability to target audiences in real-time using optimization to cross-pollinate DOOH with other programmatic platforms. 

Television – The rise of OTT (over-the-top) advertising is happening quickly in the United States, where viewers are served ads directly through streaming video services, or through “smart “connected TV’s. Many of the major streaming services, such as Netflix, Amazon, and Hulu, have ramped up their infrastructures to allow for programmatic ad placements. 

OTT (over-the-top) advertising is advertising delivered directly to viewers over the internet through streaming video services or devices, such as smart or connected TVs (CTV).

Five Benefits of Programmatic Advertising

Understand the 5 Benefits of Programmatic Advertising

As more and more companies take the programmatic plunge, it is easy to understand why this automated marketing tool is so attractive. Here are five of the most notable advantages of programmatic advertising.

  1. Reduced advertising costs
    For many businesses, this is the biggest perk. Because programmatic marketing is based on a bidding process, it is possible to modify your CPM rates and keep the campaign within a fixed monthly budget. Efficient ad buys also reduce wasted impressions, and optimization improves ROI over time. 
  2. Less time-consuming
    Once a campaign is set up properly, it requires very little monitoring. An experienced campaign manager can manage the campaign optimizations and provide you with reporting on a weekly or biweekly basis. This gives you and your team more time to focus on the day-to-day operations of your business.
  3. Simplified media buying
    Whether you manage your advertising in-house or through an agency, the task can be overwhelming. With automated media buying and optimization, your marketing efforts are streamlined and efficient.
  4. Robust customer insights
    One of the most compelling reasons to use programmatic advertising is the ability to learn more about your prospective and existing customers. By understanding what makes your target audience take a desired action, your marketing intelligence is vastly improved.
  5. Meets ROI objectives
    ROI can be measured in many ways, but digital marketers prefer to use KPIs, or Key Performance Indicators. KPIs inform programmatic platforms about your unique success metrics and optimize the campaigns automatically to achieve these goals. This translates into a measurable return on investment. 

Before embarking on a programmatic marketing campaign, it is important to answer key questions about your brand and your business objectives. By taking a hard look at what is most important, the campaign KPIs become apparent. 

Are you looking for clicks? Conversions? Traffic to your website? Is there a specific action you want people to take on your site? The answers to these questions will provide a roadmap for getting started. 

Ready to take the next step? Let our team of programmatic marketing professionals pull the levers for you. Give us a call toll-free at (888) 885-3995 or email us at [email protected]. Our experienced team of digital marketers will help you identify your targeted audience and meet your marketing goals. 

To learn more, visit our Programmatic Services page

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