An Introduction to Programmatic Buying
As online advertising technology improves, new methods are constantly being tested to create efficiencies around the buying of ad space. Recently, media buyers are moving to add programmatic buying to their online advertising tool belt. Many agencies are leveraging tech partners with access to ad exchanges, while others have chosen to develop their own trading desks to allow them to buy media themselves. Last year, revenues attributed to real-time bidding (the backbone of programmatic buying) reached $1.6 billion and 34% of all display advertising revenues are projected to come from RTB by 2017. In the near future, programmatic buying will be essential to any media buyer’s digital strategy
What is Programmatic Buying?
Programmatic buying is powerful to advertisers because it automates all of the processes that used to give them headaches. With RTB, a buyer can set parameters such as bid price and network reach. A programmatic buy will layer these parameters with behavioral or audience data all within the same platform. James Moore, CRO for Simpli.fi explains, “This means marketing professionals can define the budget, goals, and attribution model while the platform rapidly adjusts dozens of variables in real time based on performance to determine the right campaign settings to achieve the desired ROI.” Algorithms that filter impressions based on behavioral data allow online advertisers to spend more time being creative and less time reading spreadsheets.
The Value of Programmatic Buying
Automated media planning through ad exchanges and DSPs provides enormous benefits to both direct response and brand advertisers. Programmatic buying offers a 100% transparent pricing model. Buyers can leverage third party data to automatically cherry pick impressions and optimize at the impression level. Programmatic buying automates the placement process by selecting who to serve impressions to based on data an advertiser thinks is pertinent to the campaign. In a programmatic campaign, an ad may only show on a specific website if the correct person is browsing that site.
Chief Digital Officer at OMD, Ben Winkler, weighs in on what this greater control can accomplish for buyers. Winkler suggests running a targeted ad buy based on your existing knowledge of customer traits to create a pool of users interested in your brand. Another option, site-based retargeting, can create a more qualified pool comprised of previous visitors to your site. By building “a custom pool of users who you know will want to engage [with] your brand,” buyers can “use those insights to adjust their site list or creative executions.”
The Myth of Remnant Inventory
Advertisers are concerned that programmatic buying will only provide access to low quality, or “remnant” inventory, but this is simply not the case. In fact, many premium websites accessible through ad exchanges don’t classify any of their inventory as remnant because all of their available ad space is high quality. Skeptics concerned with brand building are hung up on “sure things” like direct ad buys, but some brand-centric advertisers such as Ford have found a happy balance. Buying media requires an integrated approach, and programmatic buying is a vital component.
Is Programmatic Buying the Future?
As the technology advances, buyers’ approaches to programmatic buying will become more sophisticated. Recently, an advanced ecosystem has formed around programmatic buying with specialized providers leading the way and some larger agencies building in-house platforms. It’s safe to say programmatic buying will eventually have a dominant market share of online display buying. With the addition of RTB to social networks like Facebook, new strategies will present themselves that weren’t previously possible. Like many digital advertising trends, programmatic buying has evolved rapidly to become an essential tool.