“Today’s constantly connected consumers have changed the way they purchase – how they
find out about products and services; how they engage with brands; how they review and buy; and how they recommend.”
What is Programmatic Advertising?
Programmatic ad buying typically refers to the use of software to purchase digital advertising, as opposed to the traditional process involving RFPs, human negotiation and manual insertion orders.
It is the automation of decision making and placement, all achieved in real-time, targeting specific audiences and demographics.
It’s the right message to the right people at the right time.
In general, the Programmatic Ecosystem can be compared to a stock exchange, with parties bidding on impressions/stock and depending on the competiton, the price either goes up or down. Programmatic Advertising combines advanced buying algorithms with data, to bid on online ad inventory based on multiple variables such as location, demographics, income level, 3rd party data, browsers and device.
Programmatic Buying can be divided into 3 categories.
- Programmatic Direct: Using various DSPs (Demand Side Platforms) to bid on available inventory on the open exchange.
- Programmatic PMP: Bidding for impression in a Private Marketplace.
- Programmatic Guaranteed: Reserve a guaranteed inventory at a pre-defined cost.
Bridging the gap between publishers and advertisers.
How Does Programmatic Work?
Programmatic automates the selling and buying of online ad space across a vast number of websites across the world.
In a competitive marketplace, the buyers are bidding for impressions which fit within their budget and targeting parameters, while publishers are looking to fill 100% of their ad space at a rate
that the market dictates.
Programmatic algorithms use real time data to identify the best online audiences for each individual campaign and bid on each individual impression across multiple devices.
Programmatic advertising bridges the gap between publishers and advertisers by facilitating the buying process, while automation makes the transaction more efficient. Programmatic algorithms analyse audience data, allowing for real time campaign optimisation and helps advertisers target prospects who are more likely to convert.
In a way programmatic is like an iceberg. What we can see is really only the tip of the programmatic mountain. A human mind can only go through and comprehend a fraction of what is being measured and optimised in an instant by automated algorithms. It is this sheer volume of data and indepth reporting that gives programmatic the edge in online advertising.
The Programmatic Fallacy
There is a perception amongst some marketers that Programmatic Advertising is only associated with buying low cost inventory (aka remnant) that no one wants. While this may be how programmatic began years ago, it has now evolved into a fully transparent and multifaceted tool that is capable of implementing multiple strategies and optimising performance across many platforms.
Programmatic uses the latest technologies available to deliver the best performance and reach the right audience at the right cost.
The Programmatic Fallacy
- DSPs: Demand-side platforms (DSPs) enable the buyer of digital advertising inventory to trade on multiple ad exchanges via a single buying platform. The system allows marketers to buy ad inventory on the open marketplace while layering various targeting options.
- DMPs: Data Management Platforms are centralised systems that gather first-party data, integrate with third-party data, and apply the accumulated data to advertising strategy. It means pinpoint targeting. Advertisers can profile their audience and target them directly with minimal wastage.
- SSPs: Publishers manage their ad inventory through SSPs (supply side platforms), which are designed to help maximise fill rate for the publishers. Publishers can now reach a global audience.
- RTBs: RTB (real-time bidding) is the buying and selling of advertisements in real-time through auctions held in DSPs, SSPs, or ad exchanges.
- PMPs: PMP (private marketplaces) are an invitation-only RTB auction where publishers invite a select number of marketers to bid on their inventory.
- Programmatic Direct: Software allows advertisers to buy guaranteed ad impressions in advance from the chosen publisher sites. This is referred to as Programmatic Direct.
Understanding the Metrics
- CPM (cost per thousand): In this ad model advertisers are charged every time their ad is displayed to a user, regardless of the click. Advertisers pay on every 1,000 impressions.
- CPC (cost per click): This ad model charges advertisers every time their ad is clicked.
- CPA (cost per acquisition): This is a performance-based model that requires advertiser to pay when an action is completed as a result of the ad. e.g. user completes a sale or makes an enquiry.
- CTR (click-through rate): The term expresses the rate at which users click on an ad. Clicks divided by impressions and is expressed as a percentage.
- Viewability: Industry standard; if 50% of your display ad is in view for 1 sec of more or if 50% of your video ad is on view for 2 secs or more.
Understanding Programmatic: A New Zealand’ Perspective
- Doubleclick Bid Manager (DSP), a subsidiary of Google, tells us there are 10.3 billion biddable ad impressions in New Zealand every month!
- There are 18.8 million unique devices in New Zealand
On average, a Kiwi uses 3.5 unique devices or browsers, like an iPhone, iPad, smart TV, desktop, laptop, wearable technology, etc.
47,106 sites Kiwis browse every month
This kind of scale and reach is only possible using programmatic advertising!
Why embrace Programmatic?
Programmatic buying is one of the fastest-growing segments in media. Greater efficiency is the obvious upside, though it holds several deeper and long-term ramifications:
- Makes ad buying highly targeted
- Opens up new environments for business
- Improves results and efficiency
- Automates ad buying making life easy for marketers
- Creates value, efficiency and performance
- Facilitates better monitoring of campaigns
- Helps marketers connect with audiences faster and smarter
- Promotes qualitative inventory
- Provides an opportunity for scale
- Measurable ROI to predict the outcomes of future investment
The advantages are set to become more apparent as technology develops and as marketers and publishers gain more experience in programmatic.
How to Deploy Programmatic?
Although ‘programmatic’ has been a buzzword in recent times, companies have a hard time comprehending the concept and figuring out how to blend it into their marketing strategy.
Like all marketing endeavours, programmatic campaigns begin with creation of a buyer persona. It is essential to know the challenges, pain points and preferences of your audience.
With an insight into their demographics, behaviours and interests, you will be able to better spend your marketing dollars. Diving into customer data will enable you chart out a strategy to target the audiences that fit within this persona.
The Reach of Programmatic
You need to go beyond real-time bidding (RTB) to garner maximum profits from programmatic marketing.
A data management platform (DMP) aggregates, segments, analyses and distributes data in one central platform. It allows advertisers to define their audience and has the ability to directly power media forecasting as well as power creative personalisation based on granular user history and behaviours. It also gives the marketer the ability to track user interactions in a unified manner across multiple touch points.
Programmatic advertising isn’t limited to online. This year will see New Zealand’s first programmatic ads
for electronic billboard advertising. In the USA and Europe, programmatic is set to be the new platform for buying TV ad space.
Programmatic has well and truly arrived. It will deliver more efficient and effective advertising campaigns to segmented audiences, with clear predictability of ROI.
With programmatic advertising spend in New Zealand increasing by over 50% between 2015 and 2016*, marketers and media agencies are embracing programmatic for the future success of their brands.
Based in Auckland and operating since 2012, Acquire Online is New Zealand’s largest independent trading desk. We will make it easy for you to start reaping the performance and ROI rewards that only programmatic can deliver. For the team at Acquire Online, the focus is on results first.