Everything You Need to Know About Programmatic Buying

Tips & TricksWhat Is Programmatic Buying? A Detailed Guide
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    As the general public looks to watch, listen, and interact with media in a variety of ways, advertising methods have needed to evolve accordingly to take advantage of new technology. Advertisers should rethink how they deliver advertising campaigns, and one of the terms that come to mind when discussing these changes is programmatic media buying.

    It is not a secret for many that linear television no longer dominates the market and is losing its consumers. For instance, 90% of young viewers from 18 to 24 years favor streaming services over traditional TV. Audiences can now view high-quality video on a range of mobile devices, listen to music on-demand, and absorb information in quick, bitesize formats. That is all great, but experts should come up with an approach to managing and capitalizing on new market opportunities. Programmatic advertising is seen as one of the possible methods that would bring the best results. After all, tech solutions are ever-improving.

    To make you better understand the topic, we will provide an in-depth overview of this new method of delivering ads, allowing advertisers to run campaigns across different devices, publishers, and formats simultaneously without having to do these tedious tasks manually. 

    So, without further ado, let’s consider what programmatic advertising is.

    What is media buying and why is it growing in popularity?

    From the very start, programmatic advertising has constantly adapted to deliver ads via mobile apps, desktop browsers, social media platforms, and various other mediums across a wide range of devices. As such, we can now benefit from these developments on CTV as well.

    Using smart algorithms, a programmatic media buying platform means the purchasing process can be automated based on the criteria set by the user, with relevant advertising inventory purchased in real-time to create effective campaigns which reach the target audience.

    Managing a large number of advertising campaigns on a manual basis can be extremely time-consuming, sometimes requiring far too much human negotiation, manual requests, and waiting periods. Not only this but measuring the success of campaigns can almost be impossible, meaning future campaigns cannot be optimized to achieve better results.

    A programmatic media buying platform not only launches campaigns on the client’s behalf but performance metrics are also provided to measure success, providing the opportunity to tweak campaigns in the future. Many platforms also provide a managed service, so a dedicated account manager can analyze and improve campaigns to improve visibility and engagement.

    Various approaches to programmatic media buying

    Primarily, the process is available in three different formats; however, the terminology can be somewhat confusing if you’re new to the business; therefore, we will try to break this down into simple terms. 

    Here are the three main methods of programmatic media buying:

    Real-Time Bidding – This open auction/marketplace allows media buyers to purchase advertising inventory in real-time, as the name suggests. Using a programmatic media buying platform, this can be done automatically using algorithms developed to purchase relevant advertising space at the best possible price. However, anyone can buy inventory via this method. 

    Private Marketplaces – Differing from an open auction, only a select number of advertisers are allowed to participate in these auctions, and access is usually granted via an invite. Participating advertisers will generally be handpicked for the system based on a range of criteria that determine whether their advertising is relevant to the available inventory. In some cases, advertisers can join the auction following an application process.

    Direct – Using this method, media is sold directly, avoiding an auction scenario. This means inventory can be purchased quickly and easily in a programmatic fashion. This allows content publishers to achieve a set price (CPM or Cost per mille/ thousand) for their ad space. There are two main types of programmatic direct: programmatic guaranteed (a type of deal when prices, impressions, positions, etc. are reserved and cannot be changed) and preferred deal (implies non-guaranteed ad inventory, e.g. the prices can be set but the quantity is not guaranteed).

    To use the power of programmatic advertising to its fullest, you need to choose the right media buying method. Your decision will depend on your goals and preferences. For instance, take into account that real-time bidding provides more segmentation and bidding control compared to programmatic direct where the level of control is lower. However, the latter includes guaranteed buys. 

    What is programmatic advertising? – The options

    Next, we will focus on the types of programmatic media platforms that enable the above buying methods that link marketing experts to content publishers, and eliminate third parties from the equation. 

    Supply-Side Platforms (SSPs) – Using this type of platform, publishers can monetize their video content and sell display advertising to be shown during playback. This advertising space is sold in real-time and allows publishers to control what appears alongside their content to guarantee ads are relevant and suitable. Selling inventory in this manner is usually priced on a CPM basis. 

    Demand-Side Platforms (DSPs) – This type of programmatic service allows marketing specialists to purchase display advertising across a range of different platforms for maximum exposure. It is the best programmatic model for advertisers who wish to create diverse campaigns and discover new opportunities. 

    Ad Exchange – This platform provides an interface for the auctioning process, allowing advertisers to place bids for advertising space. Connecting the SSP and the DSP without any third-party interference creates a quick and streamlined method of placing programmatic advertising across a range of publishers. Budgets can be set to prevent overspending, while smart algorithms can also do the majority of the work for you!

    How do these platforms work together? A publisher uses SSP for the inventory to go live, and “connects” to an ad exchange. An advertiser also connects to an ad exchange but with the help of a DSP, and picks the right impressions according to the setup criteria (e.g., the type of inventory, targeting, etc.). So, SSP and DSP work together for the impression purchase to be suitable both for the publisher and advertiser in terms of pricing. They create a kind of balance in the situation when a publisher wants to set the highest rates for the inventory and an advertiser is looking for some cost-effective solutions. With the help of SSP, DSP and an ad exchange, the bid prices of an advertiser and the floor prices of a publisher are both considered before the purchase.

    Main channels of programmatic advertising

    We want to show you examples of programmatic advertising formats and the ways they can be used to get greater benefits, awareness, and profit. So, among the main channels are the following:

    • Video. Video is becoming one of the top chosen channels of content consumption, and numerous sources prove it. In the US alone, digital video advertising spending was estimated at $55.34 billion. Experts expect this number to increase to 78.5 billion by the end of 2023. Video ads can be in-stream (pop-up in the video player), out-stream (show up between articles), and in-display (appear in search results or video recommendations).
    • Display. Display advertising relates to commercials located in such places of a web page as the footer, header, or sidebar. Content publishers generate profits with the help of the clicks and ad impressions information gathered by the display network.
    • Audio. Programmatic audio advertising is the process that allows media buyers to automate the selling of ads into audio content. With programmatic audio, you can reach an audience in screen-free moments through various devices, including mobile, tablet, and desktop. This channel also offers unique targeting options that can boost revenue generation significantly.  
    • Social. Social media platforms possess tons of valuable information that users share to use for advertising purposes. Thanks to this data, advertisers can define who will see their content, the perfect time for the content to be shown, and even proper frequency caps. That is how marketing experts can optimize their campaign spending. 
    • DOOH. This abbreviation stands for digital out-of-home. Programmatic DOOH has all the benefits of the traditional DOOH but is improved by the richness of its data. This allows advertisers to reach customers with highly targeted ads with such features as geofencing. 
    • CTV/OTT. CTV stands for connected television while OTT refers to over-the-top. CTV advertising allows media buyers to launch highly targeted campaigns that will be shown on connected devices, including smart TVs, gaming consoles, and streaming boxes. With targeted options like geofencing, demographics, and consumer behaviors it is possible to reach a target audience on any chosen vertical.

    What are the main perks of programmatic advertising for OTT/CTV campaigns?

    Programmatic OTT and CTV advertising is on the rise, as proven by multiple sources. eMarketer noted the speedy growth of connected TV and over-the-top in programmatic advertising spending – roughly 53 percent in 2021. According to Pixalate, CTV and OTT ads reach almost ¾ of households in the United States, and the most popular CTV platform in the USA devices dominate. 

    Why does this happen? One reason is more trust between purchasers and sellers, meaning more loyalty to brands. Most ads today have more meaning to users as marketers have access to data that allows them to create highly targeted ads. Secondly, programmatic approaches make it possible to benefit from proven ad strategies and increase their potential in real time.

    So, what are the benefits of programmatic advertising? Below are some key points that everyone involved in CTV marketing should consider. We’ll try to outline the main reasons why leading organizations worldwide are modernizing their processes to deliver programmatic marketing to CTV/OTT audiences. 

    • Programmatic advertising reduces the need for manual input when building advertising campaigns, meaning resources can be put into other aspects of the business to maximize output. As a result, using a programmatic media buying platform can result in a much better return on investment, with no drop-off in the effectiveness of CTV/OTT advertising campaigns. 
    • Why is programmatic advertising successful? Smart algorithms can ensure your advertising is only placed where it will be seen by your target audience by using advanced targeting to analyze suggested ad inventories to reduce the chances of wasted impressions. Such algorithms do the whole job in a matter of milliseconds. Moreover, advertisers can get an idea of how consumers see their commercials as they realize their ad destination.
    • Media buying platforms provide usable analytics and metrics to measure the performance of programmatic campaigns so they can be optimized and improved in the future, ensuring your campaigns are constantly evolving and adjusting based on trends and viewing habits. It is possible to keep an eye on updates in real-time for better decision-making. Connected television advertisers have obtained more tools to successfully come up with new campaigns.
    • These programmatic methods cut out the middleman, making it the quickest way of purchasing advertising inventory with minimal human interaction. 
    • Programmatic advertising also encourages more transparent transactions, helping you know exactly what you are paying for and how it will be delivered. 

    A brief summary

    In summary, programmatic media buying is a process that makes it possible for marketers to advertise on a wide range of devices, including over-the-top and connected television platforms. Programmatic advertising is about removing middlemen from the process and providing an automated experience. The time saved from this solution means these man-hours can be redistributed to other parts of the business while still maintaining effective, targeted campaigns. 

    In addition to this, media buying platforms also provide real-time analytics so campaign performance can be monitored and improvements can be made going forward. A benefit that is not available when placing advertising manually by traditional means. 

    Was this post helpful? We hope that it has answered any questions you may have had about programmatic media buying. Now, you know what benefits it has for those who create, publish, and advertise content.