Programmatic advertising can often be extremely profitable for businesses, with a high return on investment (ROI) and minimal financial risk. The main barrier preventing many businesses from taking advantage of this form of advertising is the often confusing and alienating language used to describe the process.
TellyJuice has compiled an easy-to-understand guide to the basics of programmatic advertising and the ways in which it can benefit your business.
So what is programmatic advertising?
In its simplest form programmatic advertising is the process of buying online advertising space, either directly in a guaranteed sale or through what is known as real time bidding (RTB).
Purchasing ad space has become far simpler thanks to programmatic advertising. While in previous years it was necessary to research individual ad spaces and contact sellers directly, a process that would take up valuable time and resources, business owners can now use programmatic advertising to quickly and easily reach potential customers.
Additionally, programmatic advertising allows business owners to target more specific demographics, including people of a certain age or gender.
Adverts can take the form of a still image, a moving image, or a short video explaining the product or service. While still images have traditionally been more popular, faster internet speeds are helping video and moving image ads to grow in popularity.
Direct vs RTB
Direct programmatic advertising is an automatic service for purchasing guaranteed online ad space which can be delivered almost instantly. Marketers have control over the amount they are willing to pay and can access various performance analytics.
RTB programmatic advertising involves business owners or marketers bidding in real time for display advertising. As the webpage loads, lightning-fast auctions are taking place to decide which adverts will be displayed on the page.
Similar to the process of automatic bidding on sites such as eBay, you can set the maximum price you are willing to pay for specific ad spaces and your bids will be placed automatically if they become available.
In direct advertising marketers might purchase several thousand “impressions” (ad spaces), whereas RTB advertising takes bids on a case-by-case basis. This can benefit businesses because they don’t have to make a long-term commitment to an ad space and have more flexibility when targeting potential customers.
A bit of jargon busting
If you are investigating programmatic advertising then there are several unfamiliar terms that you may come across, including A LOT of acronyms!
DSP: Demand-side platform. Software which allows buyers of advertising space to keep track of their interactions, accounts and transactions.
SSP: Supply-side platform. Software which allows sellers to manage their ad inventory and increase their efficiency and media revenue.
PMP: Private marketplace. An online space for buyers and sellers to communicate in a closed environment. This provides a forum for negotiating more specific transactions, such as ones which only target certain sections of a site rather than the whole domain.
KPI: Key performance indicator. KPIs are a way of measuring the success of an organisation or of a specific activity within an organisation. Generally a KPI will take the form of an element which can be measured and compared to previous data.
DVA: Digital video advertising.
Ad inventory: The amount of available advertising space.
Using video in programmatic advertising
The advertising industry as a whole is arguably going through a period of rapid change, with businesses increasingly abandoning traditional advertising techniques in favour of programmatic.
Spending in the industry is predicted to exceed €2 billion in the next five years, with much of that advertising revenue coming from the use of video and moving images.
Marketers can expect to pay 2 or 3 times as much for video as they would for static advertising. However this expense can pay off, with video adverts prompting a click-through rate (CTR) which is 18 times higher than that of static ads.
Using a video production company to create an attractive and engaging video for your business can be a wise investment, not only in terms of programmatic advertising but also by creating a unique and recognisable voice for your brand.
Thanks largely to Facebook, which began trialling autoplay videos as early as December 2013, video ads often do not need to be clicked to begin playing. An effective video can hook customers in the first few seconds and encourage clicks with a strong call to action.
Why programmatic advertising?
As previously mentioned, programmatic advertising has the ability to target very specific customer demographics. This can result in a lot more website traffic than traditional blanket advertising strategies.
Businesses in the UK are increasingly using programmatic advertising for targeted advertising campaigns. The Internet Advertising Bureau (IAB) found that almost half (45%) of online display ads bought by UK businesses in 2014 were bought using ‘programmatic’ technologies, up from 28% in 2013.
Programmatic advertising is a relatively young industry but it has undeniably been effective in revolutionising online advertising. For a more in-depth look into this complex form of advertising check out the IAB’s Mobile Programmatic Playbook, published in March 2015.