When programmatic made its debut in 2014, Jimmy Kimmel made a very cheeky comment saying,
"Programmatic buying is the gluten of advertising."
So here’s the elephant in most marketing rooms: you’ve heard of “programmatic” as one of those advertising buzzwords. But, like gluten, you don’t totally understand it, though you do know that it is important.
In this article, I discuss how the advertising of the past got to where it is today and give a very basic introduction to what programmatic is and can do.
How Advertising Changed for the Better
We should start from the beginning. A few decades ago, an advertiser would pick up the phone to contact publishers to get their ads in front of a target audience. These communications often included RFPs, human negotiations, and manual insertion orders. According to NBC Universal's former Executive Vice President,
"Sellers and buyers used to spend all day faxing change orders on deals they were actively optimizing for performance or delivery."
Automotive companies would place ads in car magazines, while cosmetic companies would place ads in beauty magazines, and so forth.
Everything changed with the birth of the Internet, and the subsequent birth of digital advertising. Still, it was not nearly as complicated as it is today. For the most part, the advertising process was pretty similar, except now, automotive companies would begin placing ads on car websites instead of magazines and so on... meaning advertising still relied heavily on humans bidding on publisher real estate.
The old strategies of advertising with reservation buying and ad networks were proving inefficient and obsolescent. Then came the new era of advertising that we call programmatic.
It's Just a Robot
With programmatic, brands use data and automation to buy ad space. In other words, it's just a robot—programmatic utilizes real-time bidding and advanced algorithmic technology that automates digital advertising purchases and sales.
The 10-second elevator pitch on programmatic used by AOL's Chief Marketing Officer explains:
"Programmatic takes multiple data points and makes decisions [about] what screen an ad should be on, what is the most effective strategy at a given moment, and lets you do all the non-manual decisions."
So what’s the most lucrative promise of this robot? Audience targeting. With the enhanced targeting capabilities of this technology with its expansive data-rich user insights, advertisers can deliver more specific advertisements for even more specific audiences.
Programmatic Isn't the Future, It's the Now
Programmatic is all about efficiency. It poses greater return on ad investment thanks to comprehensive targeting and a streamlined buying process. Programmatic allows for data-driven user targeting, for decisions to be made in real time based on audience data, and for centralized buying points and channels.
With this technology, advertisers can reach the right users with the right ads at the right times at maximum value.
Aside from cost and time efficiency, programmatic offers a variety of other benefits for all parties with incredible versatility:
- Transparency with greater real-time campaign reporting and insight capabilities
- Targeting precision leading to higher quality ads and, most importantly, ROI
- Personalized messaging for audiences based on access to psychographic data
- Streamlined sales processes
- More money for both top-quality and low-quality inventory
Programmatic essentially marries advertising inventory with technology, data, and insights, to help marketers more effectively and efficiently win over the right audiences.
In the future, I will whip something up on how programmatic buying and advertising actually works and how your company can leverage this ever-changing technology—but only once I better understand it myself. This will likely include information on second priced auctions, DSPs and SSPs, first party vs. third party data segments, and header bidding.
For now, the truth is that I am in no way an expert on this topic as this space continues to grow. We are on a journey to discover programmatic together. A lot of what I have learned about programmatic is thanks to some super smart folks at Google that I am lucky enough to call partners and friends as well as very kind LinkedIn connections. Special shout out to Hana, Spencer, and Ana from Google and Jeff from Leaf Group!