It’s estimated that programmatic advertising will grow at an unprecedented speed of over 30% in 2017 alone. Not only is this channel growing at a faster rate than any other within the digital industry, but it’s also completely dominating the market. With spending set to reach heights of over $60 billion in 2018, it’s safe to that programmatic ads are here to stay. Today I’m going to help you decrypt this area of digital advertising and educate you on every aspect of programmatic.
Programmatic advertising definition: what is it?
The programmatic advertising meaning includes the following: The process of using technology to buy and sell ad inventory through an automated and data-driven procedure. It also represents most types of ad spaces on all screens including video, mobile, native and display ads. The term gets used a lot within the digital advertising industry and often relates to areas such as real-time bidding (RTB), remnant inventory and open auctions.
Programmatic advertising is a unique and complicated beast. It requires a huge investment of time and resources to really capitalize. If you’d like to learn how your business could employ a more lucrative ad optimization strategy, sign up to MonetizeMore today!.
How it got started: A brief history
Before we get into the technical details, it’s best to show you how programmatic got started in the first place.
Let’s rewind back to the early stages of the internet. Buying an ad space online was a much simpler process than it is today. It originally started with a relationship between publishers and advertisers.
The advertiser is also known as the buyer and the publisher as the seller.
The goal of the Advertiser normally was to reach their target market or audience and to influence them to perform some action. This action could be to make a purchase, build brand awareness, promote an event, etc.
The goal of the Publisher was to build a web property that contained intriguing, entertaining and useful content to attract an audience the advertiser would want to reach with their marketing campaigns.
Agencies then started helping advertisers to achieve their marketing goals and communicate with their target audience. It was the job of media planners to create media plans to target the right audiences and subsequently to communicate with the publishers that had access to those audiences. However, the internet started to grow at an unprecedented rate, and a massive oversupply existed.
It resulted in a lot of ad inventory left unsold and not being monetized. Publishers grew at a much quicker rate than advertisers and it was getting harder for advertisers to consume the supply available to them.
Next, a new group within the advertising ecosystem emerged and called themselves Ad Networks. What this group did was categorize a publisher’s unsold ad inventory making it easy for media planners to consume, access and include it within their media campaigns.
It resulted in online media evolving into premium and remnant ad inventories. Premium ad inventories were sold the original way with a direct relationship between advertisers and publishers. Remnant ad inventories were the unsold or leftover ad space of a publisher that got sold through ad networks.
This meant that agencies had more than one channel to source ad inventories for their advertising partners. This video explains it in a similar manner.
With this new development, the selling process became more complicated for publishers, and they had to find a way to manage who was gaining access to their inventory for resale to agencies and advertisers. That is how an SSP or Supply Side Platform was invented.
An SSP helps publishers maximize their revenue earned through ad networks by acting as a layer between publishers and third-party advertising networks. Supply Side Platforms give publishers control over their ad inventory and help them dictate how it is sold and delivered to ad networks. With SSP’s, a bidding environment was created to help publishers extract the most revenue possible for their ad inventories.
At the other end of the spectrum, DSP’s or Demand Side Platforms started to emerge to assist agencies and advertisers with the buying side. A DSP is defined as an infrastructure that enables advertisers and agencies (buyers) to manage their media buying via a single platform.
DSP’s and SSP’s developed and improved their technology leading to an infrastructure integrating both platforms and allowing buyers and sellers to perform programmatics with real-time bidding or RTB.
Using all these automated and data-driven techniques resulted in a programmatic way to buy and sell digital media. Which created the term programmatic to categorize the industry.
Real-time bidding (RTB)
RTB is an integral ingredient within the programmatic industry. Originally advertisers would buy impressions in bulk, but it was hard to differentiate one particular type of audience from another. If the advertiser was promoting a travel product aimed at the senior market over 50, but within the impression range, there were also audiences within the 20-30-year-old range not interested in traveling it would mean that the whole audience would see the same ad.
You can imagine that this is not a very efficient way to spend your advertising budget.
With Real-time bidding, an auction environment was created where advertisers can show specific ads to a particular set of audiences based on data points about that audience. As a result, the advertiser can now programmatically display his travel ad only to senior audiences older than 50 and who is interested in traveling instead of losing impressions on an uninterested or non-targeted audience.
In other words using data, machine-learning technology and a set of tools RTB makes sure that ads are delivered to the right audience via programmatic inventory.
You can also watch this video from the IAB to learn more about Real Time Bidding.
Different types of programmatic advertising explained
Before we expand on different types of programmatic explained, let’s take a quick look at the benchmarks defined by the (IAB) which is also known as the Interactive Advertising Bureau.
This is when a particular area within a web property gets allocated to a publisher for a settled rate. This could include an agreed upon ad size, a frequency of ad display and time frame.
This is the exact opposite of reserved inventory where a publisher makes a particular location on his website available for ad spots since inventory is only sold directly. The unreserved or remnant inventory gets sold through third-party ad networks and other ad exchanges via Real-time bidding (RTB).
Originally fixed price was the way to go through human interactions and negotiation. Even though programmatic rules the online media buying industry fixed price negotiations still exist.
This is when RTB comes into play, and the ad inventory of a website is categorized and set up for sale to advertisers.
Now that you understand the standard of industry criteria let’s take things further and dive into the different types:
This is also called automated guaranteed and happens when a buyer gets a hold of a publisher’s ad inventory at a fixed price. This inventory also happens to be reserved and is very similar to the old way of trading inventory where a direct sales team is involved. Third party companies and a particular set of platforms are required to add control and ensure delivery.
Preferred deals are also referred to as unreserved fixed rates and relate to the ad inventory not being reserved, but the price agreed upon beforehand. As with programmatic direct, there needs to be a direct line of communication between the advertiser and the publisher. You can read more about this programmatic ads example classification here: Private Marketplace or Preferred Deals Explained.
This is also referred to as invitation-only auctions and covers private marketplace deals where inventories are sold by a group or single premium publisher. An auction takes place between exclusive advertisers that only gain access by invitation.
Open auction RTB environment
This is when a technology-based bidding environment is created for advertisers to bid on remnant ad inventories of publishers. This option can give advertisers and agencies quick access to a wide range of publisher inventories on a global scale.
Programmatic video, mobile, and native advertising
Programmatic advertising isn’t just being utilized within display advertising, the likes of video, mobile, and native ad formats have also started to adopt this technology-driven approach to marketing.
The proof of this is obvious within the advertising industry. According to Veinteractive.com the use of programmatic video advertising has gone from less than a billion dollar spend in 2014 to over $6 billion. As the use of mobile devices continues to grow the use of programmatic video within mobile will also soar.
Mobile video ad spending is set to triple from 2015 to 2020 going from over $3 billion to more than $13 billion.
Programmatic native advertising continues to grow its reach with more publishers enabling native ads on their websites. This advertising channel is affected by ad blockers much less than compared to display advertising which serves as an enormous benefit to the programmatic industry.
Currently, this format is used by some of the biggest advertisers and publishers in the world. For more information on the world of Native Ads read our article on 5 Missed Opportunities in Native Advertising for Publishers in 2017.
Companies and platforms
Although not as significant to understanding programmatic terms, it’s good to be aware of and interesting to see that some of the top programmatic advertisers include companies like Target, Google, L’oreal, Unilever and Netflix as talked about in this AdExchanger.com article.
For a list of some of the best Demand-side platforms, programmatic buying platforms, trading desks and media buying companies serving many devices (mobile, video, display, social) take a look at the top ad network reviews by MonetizePros.com.
Examples and case studies
In an article from Econsultancy.com titled Four creative programmatic advertising examples: case studies, Ben Davis of Econsultancy goes into detail about four highly successful programmatic tech ad campaigns and shows just how effective a data-driven approach and targeting can be. In one of these examples of programmatic advertising a campaign serving ads from The Economist resulted in over 600 000 prospects and a whopping ROI ratio of 10:1.
Benefits & features of programmatic advertising
Programmatic ads present an almost endless amount of advantages to both buyers and sellers. Making data-driven decisions removes the guesswork advertisers had before programmatic trading existed. Here are a few benefits you should be aware of:
#1 – Good for your budget: Programmatic advertising makes use of data to serve impressions to a chosen audience. This increases chances for conversions and means less money lost on ineffective advertising.
#2 – Improved targeting: Many different data points and key performance indicators can be used to target an audience which makes reaching the right audience much easier.
#3 – Advertising campaigns are managed efficiently: Campaigns can be adjusted and monitored as needed with very little time and effort.
#4 – Quick access to inventories: Within the programmatic advertising ecosystem buyers and sellers efficiently connect to each other. Advertisers can reach audiences via publisher web properties faster than ever before and on multiple devices and platforms.
#5 – A time-saving approach: Programmatic ad buying aims to cut out the human element as much as possible which means less time spent making deals and brokering specific price points.
#6 – Greater reach: With programmatic software, you can reach potential customers worldwide by placing ads within multiple ad networks, partners, channels and geographical locations.
See more benefits knowonlineadvertising.com.
Software and tools
The list of Ad Tech companies, software, and programmatic advertising tools within the programmatic spectrum are almost endless. Some of the most widely use programmatic advertising software and tools, as employed by MonetizeMore and advertising companies, including Google’s range of DoubleClick tools such as DoubleClick For Publishers (DFP) and DoubleClick Ad Exchange.
Trends for 2017
A few months ago MonetizeMore published a blog post about the top programmatic advertising trends for 2017. Here’s a summary of the top trends for 2017 and a look at what future holds for the programmatic industry.
More money spent: According to predictions from industry leading research institution emarketer.com the programmatic display ads market is set to reach over $32 billion in spending for 2017 alone. Both advertisers and publishers are starting to see the benefits of this approach and adoption continues to grow.
A programmatic approach to multiple types of devices: As the use of multiple forms of devices, not only desktop, grows, publishers will adopt a programmatic approach to more of their ad inventories. Favorite channels on the rise include video. The likes of Econsultancy.com have reported a sharp increase in mobile programmatic trading.
Header Bidding gets the respect it deserves: Traditional waterfalling has started to fade away and make way for a more efficient and fair auction process via Header Bidding. Publishers are starting to benefit significantly with increased revenues and will only continue to do so as heading bidding technology improves. Find out more about header bidding and MonetizeMore’s very own header wrapper PubGuru here.
Ad Blockers continue to develop, but there is a shift coming: Adblocker won’t be able to kill the digital advertising industry altogether. Instead, a change will be made to relevant and non-intrusive ads. The biggest adoption of this is within Google Chrome’s very own ad blocking feature and their partnership with IAB to contribute to making the internet a better place for all. Read more about it here: Google Aims To Improve Web Experience & Help Publishers With Adblocker Issue.
According to current trends and industry developments, it’s becoming apparent that advertisers and publishers who don’t make use of programmatic are either leaving money on the table or wasting time on ineffective practices. As the online advertising industry gets more technology driven it’s best to adopt these practices and get with the times or else your business might fall behind, stagnate or even go under because of it.
If you’re a publisher and want to see first hand the advantages of an optimal programmatic advertising strategy, go ahead and sign up for a Profesional account at MonetizeMore and let our ad ops team help you get the most from of your ad inventory today!
Our CEO, Kean Graham tips for publisher success in 2019
2017 was a big year for publishers. Header bidding ruled the programmatic industry, the thorn in many publisher’s side (ad blocking) continued to grow and ads.txt became the standard.
Whether 2017 was challenging or exceptional for your business, it’s best to learn from experiences and move on. You can’t go back in time, but you can work towards making 2019 your best year yet.
That’s why partnering with the best ad tech company in the industry will make all the difference.
Why partner with MonetizeMore?
- We help publishers get more revenue from their existing ad inventory
- We can advise and assist on all fronts whether it’s header bidding, DFP, Ad Exchange, choosing ad networks and much more.
- We’re a leading Google Publishing Partner and offer a range of publisher solutions that help our clients hit their revenue targets and solve ad operations problems.
If you’re a publisher and want to see first hand the advantages of an optimal programmatic advertising strategy, go ahead and sign up to MonetizeMore’s Starter publisher plan and let our ad ops team help you get the most from of your ad inventory today! Higher ad revenues are only one call away.
How do you explain programmatic advertising?
Programmatic advertising is the process of using technology to buy and sell ad inventory through automated and data-driven procedures. We provide a lot more information about programmatic advertising in our blog post.
What is programmatic revenue?
It is ad revenue derived from selling your ad inventory programmatically to advertisers.
What is inventory in programmatic?
Inventory in programmatic refers to the ad inventory a publisher makes available programmatically on the open market. Advertisers bid on the inventory with the end goal of displaying their ads on publisher websites.