Programmatic advertising is a constant buzzword in the world of search engine marketing. It is considered as one of the strongest drivers in the online advertising market.
According to the Swiss “Programmatic Barometer (German)” survey, 43 percent of digital investments in German-speaking Switzerland and 30 percent in French-speaking Switzerland are accounted for by Programmatic Advertising. 90 percent of the respondents stated that they intend to increase their investments in 2019.
In the United States, programmatic spending now accounts for more than 75 percent of the total digital advertising spending and it is expected to exceed $45 million by the end of 2019.
What is Programmatic Advertising?
Programmatic Advertising is the fully automated transaction of buying and selling advertising inventory online. Programmatic combines Real Time Bidding (RTB) with Artificial Intelligence (AI) to determine when and where ads are purchased and placed.
Major players such as Google Ads (formerly known as AdWords), Bing Ads, Facebook Ads or Amazon Advertising appear on the market with their own software solutions, their own Programmatic Advertising tools as well as extensive and specific customer data.
The Players and their Platforms
The so-called DSP (Demand Side Platform) is the purchasing platform for advertisers. On the DSP, advertisers will find the desired inventory (advertising space) and bid in real time.
On the SSP (Supply or Sell Side Platform) publishers offer their advertising space (inventory) for sale.
Both parties are connected by an Ad Exchange Server. This is where publishers meet advertisers. The Ad Exchange is basically a marketplace where auctions take place in real time.
The Formats and Channels for Programmatic Advertising
The providers’ platforms have greatly expanded their offerings in recent years. Nowadays, any advertising format – whether display, video, social, audio or native advertising – can be delivered on desktop, mobile, tablet, DOOH (Digital Out of Home) and Smart TV.
Why you Should use Programmatic Advertising
There are multiple benefits of using a programmatic advertising platform for your digital advertising efforts.
- Targeting: Programmatic allows for targeting of users on a highly granular level. Since it can be optimized in real-time and is connected to concrete user data, targeting accuracy is considerably higher.
- Efficient processes and performance: The automation of processes in real-time allows for smarter usage of budgets and opens up new and efficient perspectives for advertisers.
- Reach: With programmatic advertising, the international audience is within reach via devices such as mobile phones, desktops, tablets and others.
Possible risks and problems
Ad fraud (click fraud) and brand safety are the buzzwords when it comes to the disadvantages of Programmatic. Brand reputation risks are caused by ad misplacements, which means ads that are placed next to inappropriate content such as adult content, terrorism, crime and the like. A well-known example is the scandal over YouTube advertising for L’Oréal, which appeared in video content from terrorist groups.
Another point of criticism is the so-called viewability (visibility in the viewport area) if the advertising medium is not placed in the right place at the right time.
It is best to seek advice from an experienced agency or qualified advertising expert in order to rule out the risks as far as possible.
A Word on the Rise of Programmatic
In the early days of online advertising, the number of publishers grew much faster than the number of advertisers. This led to an oversupply of advertising inventory. As a result, ad networks were created where unsold advertising space from various publishers was bundled and offered to advertisers at a discounted price.
Although premium advertising space was still handled manually, the remaining inventory was auctioned off. Although this approach was cost efficient, there were issues with proper targeting which led to high wastage.
This was the birth of Real-Time Bidding (RTB), a milestone on the road to programmatic advertising.