What Exactly Is Programmatic Advertising?

You may have heard the term “programmatic advertising” being tossed around in the last few years. And with the onslaught of marketing buzzwords, you may have tuned it out. What’s worse, you may have investigated it and given up due to its dense and complex nature. Either scenario is understandable, but there’s a reason practices become buzzwords in the first place. The concept is picking up steam with no signs of slowing down. In fact, more than 80% of digital display ads in 2018 were purchased programmatically, generating over $46 billion in revenue. What’s more, this number is expected to reach $65 billion by 2020.

These numbers may be staggering, but they don’t answer the billion dollar question: what exactly is programmatic advertising?

Instagram’s Product Director Ameet Ranadive describes it as “the practice of implementing an automated set of business rules to efficiently target your most valuable customers and prospects with personalized ads.” Still sounding vague? Let’s strip it back a level. According to the Oxford Living Dictionaries, it means “of the nature of or according to a program, schedule, or method.” This simple explanation may provide more clarity than that of a leading expert. Programmatic advertising is essentially the use of automated computer programs to procure the purchases of digital ads. While it does not fully automate the digital ad-buying process, it removes some of its more time- and labor-intensive elements, including proposals, quotes and negotiation. This frees up time for marketers to devote to planning and optimization.

The software used in the programmatic advertising process uses complex algorithms which can help decide where advertising resources are best allocated in a manner much faster and more objectively than the human mind. What’s more, it can launch your campaign and monitor how your ad spend is performing while looking for areas that could improve.

One of the most common forms of programmatic advertising is Real-Time Bidding or RTB. RTB acts as an auction where ad publishers are linked up with ad buyers who want to buy and use their ad space. This is a speedy and efficient method of completing transactions, but since there is no real face-to-face interaction quality cannot be guaranteed and advertisers may find their content popping up in some unsavory places. For example, Verizon and AT&T found their ads being run alongside extremist hate groups as a result of programmatic advertising. Conversely, Programmatic Direct allows buyers and sellers to transact via a third-party. This allows for more accountability on both ends since each party knows with whom they are interacting.

This may be a lot of information, but it’s becoming increasingly critical to understand. Just look at the numbers listed above! A great glossary of programmatic advertising related terms can be found here. Stay tuned to our blog for more industry tips and insights.