Programmatic marketing is used by digital marketers to replace the traditional way of purchasing advertising online. Sophisticated software algorithms carry out an effective, automated bidding process that allows marketers to better reach their target audience when and where they want to reach them.
It allows the placement of advertisements on websites that reach audiences based on many kinds of demographic data, including age, geographic location and online behavior (to name just a few). Adjustments can be made quickly based on success rates.
It’s far more effective than traditional marketing efforts. Programmatic marketing is trend that shows no sign of slowing in the coming years. Forbes reports that more than 80% of all ad buys online were programmatic in 2018.
By 2020, a projected $65 billion will be spent on digital programmatic digital display advertising.
The Advantages of Programmatic Marketing
The shift into programmatic marketing would not be so great without clear benefits for marketers. The following takes a closer look at areas where programmatic marketing offers a clear advantage:
Automated Buying Decisions
Not too that long ago, agencies and advertisers only had the opportunity to choose from a few partners among the big websites to purchase and place digital ads. It had much more in common with traditional advertising than what has now evolved. The digital world is a complex ecosystem with complexities on both the marketer and publisher sides.
Thanks to technology advances and an openness to experimentation among digital marketers, the process of ad buying is democratized. These advances have also made it easier for marketers to create ad campaigns that target specific groups, reaching the optimal audience for every individual product or service.
Direct versus programmatic buying differs in many important ways. Direct publishing involves creating an RFP (request for proposal), negotiation and then manual insertion orders with each individual publisher. In another words, it is the traditional way of approaching ad buying.
Programmatic purchases involve buying digital ads in real time, which can increase the chance of reaching the targeted audience by 30%.
Most advertisers now have access to almost all the same inventory – that increases competition. That’s another factor that allows programmatic advertising to have the capability of teaching the targeted audience at the most efficient price.
This is especially true with millions of people now moving to shopping online via mobile, where most touch points with consumers are now expected to take place.
With programmatic marketing, software can collect and analyze data in real time. This helps to quickly develop insights that are used to optimize campaign performance.
Access Leads to Lower Price
The more publishers who opt into programmatic ad networks that sell premium advertising, the more of a shift to programmatic marketing takes place. With big chunks of the market adopting the ability to use programmatic advertising, more buyers have been able to make a purchase. This increased access to inventory has led to decreased prices. This has led to a rapid increase in programmatic transactions and strategies, leading to more efficient and effective ways to purchase premium inventory.
At one time most programmatic inventory was limited to what is known as remnant inventory – the space on a site that publishers were not able to sell and therefore you are able to place an ad there at a lower cost. This is sometimes still the case, but it is not necessarily the case anymore with programmatic advertising. Each publisher’s site must be considered on a case-by-case basis.
Today, some publishers might only sell their inventory through programmatic channels because smaller publishers likely do not have the team in place to negotiate buys directly with potential advertisers. However, there are ad platforms in use that help to offer buyers a wide range of diverse types of inventory.
Improving Success with Targeted Campaigns
Data and technology have helped marketers create more targeted marketing campaigns. This, in turn, has allowed businesses to be more efficient in how they approach marketing. Lower cost and higher efficiency are the hallmarks of digital marketing, and programmatic marketing is part of that improvement.
Programmatic also allows marketers to reach the target audience in real time – no waiting weeks to reach an audience through traditional marketing channels.
There are many ways to target potential customers with programmatic marketing. Software analyzes potential customers in many different areas, including the following.
- Audience Demographics. These include statistics such as age and gender
- Online behaviors. These actions can help you determine what customers are interested in.
- Context. This includes the online content topic users consume
- Intent. This includes data on the keywords that users search and the products they have viewed
- Location. Geographic location of users
- Beacons. This involves more detailed data, such as the aisle of a grocery store where the user is located
With programmatic marketing and the expansion of mobile use, advertisers can now reach potential customers wherever they are in the world, rather than with a static ad display on a website. That saves marketing dollars by reducing the amount of wasted media, all while creating a more effective and target campaign.
Programmatic marketing also allows advertisers to combine data from different areas, creating a fuller picture of the target audience. They can use first, second- and third-party data to maximize opportunities and optimize for precision. For example, your brand can combine its first party data with publisher first party data to granularly target the audience you’re after.
Al this adds up to campaigns that lower cost and increase efficiency.
Programmatic Vs. Direct: The Cost
Programmatic ads are typically a fraction of the cost of a direct buy. As noted above, they also offer unprecedented levels of targeting.
These ads are either sold on a CPM (cost per thousand impressions), CPC (cost per click), CPA (cost per action) or CTC (click through conversions) basis. However, most programmatic ads are sold using the CPM model.
The CPM cost can vary. Those with better targeting and higher quality will get the best price. The industry can also dictate price, as can the device being used, the format of the ad and the publisher’s popularity. On average, programmatic CPM’s are within the $0.50 to $2 range, versus the average $10 CPM of a direct buy.
This lower price allows advertisers to expand the reach of their campaign, which obviously has an advantage for both big and small marketers. But for those with limited budgets, it creates a better way to use limited funds.
Typically, inventory is purchased on a reserved (guaranteed to show) or unreserved (contingent upon excess inventory available to satisfy a request) basis. Pricing can be fixed or determined by the highest bidder in an auction.
The advantages of programmatic marketing are easy to see. While challenging, it is far more efficient and effective than traditional methods. Using automated systems to quickly crunch the data and find the right ad at the right place to reach your targeted audience leads to more focused campaigns at a cheaper price.
