When it comes to digital marketing, programmatic advertising is a buzzword that’s constantly on the lips of marketers and media agencies alike. It’s also a term that can get confusing, with the use of automated technology and algorithmic tools making it an entirely different approach to media buying. However, it’s an essential tool for reaching target audiences online at scale and driving results. In this article, we’ll define programmatic advertising, examine targeting best practices and look at some examples of how brands are leveraging programmatic to reach their target audiences.
What is programmatic advertising?
The basic concept of programmatic advertising is that it automates the process of purchasing ad space on websites. The process is completed in real-time and happens within milliseconds. This allows advertisers to reach the right people, at the right time and at a scale not possible with traditional methods of media buying.
Programmatic marketing can be applied to all digital channels, including website ads, mobile apps, social platforms and connected TV (CTV). It’s even starting to make its way into traditional offline channels such as print and out-of-home. However, it’s most widely used in online digital advertising to deliver more targeted and relevant messages to consumers.
One of the main benefits of programmatic advertising is that it makes it much easier to target specific individuals based on a variety of factors such as their location, their gender, age and their browsing history. This means that a brand can deliver the exact message it wants to, to the people it wants to, which in turn leads to higher engagement rates and more conversions.
Unlike traditional advertising, programmatic ads are bought and sold using an auction model. This means that each ad impression is offered up for purchase by various advertisers through an exchange which then holds an auction to determine which company will be able to display their ad on the page. The advertiser who bids the highest for the ad space is able to display their ad and reach the audience they want.
This auction model is often referred to as real-time bidding (RTB) and is the basis for most programmatic advertising campaigns. The advertiser signs up with a Demand Side Platform (DSP) which is connected to an ad exchange where the actual bidding takes place. When a person visits a website that’s set up for RTB, the DSP will automatically signal the exchange to see if the visitor fits the advertiser’s target market and if there are any available ads on the site. If there are, the DSP will enter the auction and compete with other companies to show their ad to the visitor.
A successful example of programmatic advertising was used by Turner Sports when they ran a retargeting campaign on Google Ads. They analyzed their data to find the most valuable audience segments and then targeted these specific people with a series of retargeting ads. This resulted in a 47% increase in traffic to their physical stores and a 4.5% increase in sales.