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Programmatic Buying (Part 1)

So what is programmatic buying, and why is everyone talking about it? 

Programmatic buying is 2015’s hottest key term right now, with many people not understanding what it truly offers or what it can accomplish in the realm of marketing. Heres what you’ll need to know and how you’ll look smarter the next time someone bring up Programmatic Buying at the conference table.

The simple answer is Programmatic Buying = Automation. This is easily confused with RTB (Real Time Bidding), but these are intertwined together, so RTB is programmatic, but programmatic doesn’t necessarily mean RTB -We’ll get back to RTB later – Programmatic is simply any ad that is bought and processed through computers. Easy, right?

Why is everyone talking about Programmatic Buying?

The buzzword is hot right now, especially moving into 2015, as this year has been labeled, ‘the year of programmatic buying’ across the internet, with many large agencies predicted to DOUBLE THEIR PROGRAMMATIC AD SPEND IN 2015. but why, you ask?

The term is popular as it can actually save time and money. With automating the process of buying and selling ad space, agencies and clients are able to cut out the middle man and free up resources that were originally needed for the buying process. Ad targeting and verification of shown ads are another reason people are hyped about the new way of buying and selling ad space, as ads can be more effective and efficient in the ‘where’ and ‘to whom’ they appear online.

The large scale automation that the programmatic world provides is based on stronger customer data that allows advertisers to better create, optimize, and target ads across the web.

Will Programmatic Advertising take over the way we currently buy and sell Ads online?

No, at least not entirely.  Although it will have a large effect on the online advertising world, programmatic buying and selling doesn’t account for the brand development and strengthening, nor does it do a great job at content plays and tentpole events, according to Adage. It also doesn’t account for the shortfalls within programmatic, such as the lack of standardized definitions of audience data, unit of measurements, and the creative freedom many agencies have in delivering creative ads.

Back to that RTB term…

Real-Time bidding is the ability to trade online media in an auction based environment that provides ad companies and buyers to inventory at scale, and more importantly, at a price buyers want to pay. It is the buying and selling of ad impressions through real-time auctions that occur all in the time it takes to load a webpage.  With RTB, advertisers no longer need to work directly with  publishers but rather an online ad exchange. Online ad exchanges allow the publishers access to a huge inventory of data and sites which they can ‘cherry-pick’ pages deemed most valuable to advertise on.

To more easily understand RTB in the Programmatic environment, understand that Real-Time bidding is a FEATURE of Programmatic, as RTB was around before Programmatic.

Whats Programmatic Buying again?

Programmatic is automated buying, at a large scale through the use of computers. Some ad platforms allow publishers to sell their inventory for a fixed price or fixed term, as opposed to an open auction, which is often referred to as Programmatic Direct, or Guaranteed buys.

The ‘Simple’ Process of Programmatic Advertising

Step 1

Advertisers create ad campaign with a predetermined market and pricing

Step 2

The advertiser then searches through a list of ad products, then adds them to an Insertion Order (IO) which specifies campaign goals, delivery, targeting, and creative.

Step 3

Programmatic Platform then uses real-time data to identify the best target audience for campaign and buys digital ad inventory through an auction (or Direct Buying).

Step 4

Publishers will approve the insertion order (IO) and insert the creative into the server and track ad delivery and processes.

Step 5 

Campaigns are monitored through specific platforms and advertisers and clients are happy.

Stay tuned to RLC[ppc] for more depth in a Part 2 of this series on Programmatic Buying.


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