Programmatic advertising is the automated buying and selling of online advertising.
By the end of 2019, Google is aiming for 60% of digital advertising budgets to be spent on programmatic advertising. In addition, Forrester predicts that programmatic advertising will account for the majority of all digital advertising spending over the next few years.
The only hurdle to the success of programmatic advertising is the uptake from digital marketers. As it is a relatively new idea, marketers have a lack of knowledge around the process, combined with a reluctance to change their tried and tested methods of purchasing ads.
Predicted to be the future of digital advertising, digital marketers who understand and implement this now are one step ahead of the competition.
What Exactly is Programmatic Advertising?
Programmatic advertising is basically an algorithm that instantly bids on ad auctions during page loading times to present an ad to the customer when the page appears. It uses data in its inventory to pinpoint which ad to show to which customer, at the right time.
When someone clicks on a web page that has designated ad space configured for programmatic advertising, the owner of the web page puts up an ad impression for auction in an ad marketplace. This ad marketplace then runs an auction among advertisers that are interested in displaying an ad to the customer that just clicked on the page. Often, there are several advertisers competing in the auction, so it comes down to which advertiser bids the most. This ad is then selected and shown to the user.
While this seems like a very complex process that should take time to implement, in actual fact the whole thing happens in a matter of milliseconds. This is because the process is automated and the maximum bid for each advertiser is already programmed into the system. As such, programmatic advertising works in real time.
What are the Benefits of Programmatic Advertising?
Programmatic advertising gives digital marketers a number of opportunities that are not possible with manual ad placement. It allows digital advertisers to secure digital media spots without first having to negotiate a price, which means that they are only paying for relevant impressions. It also makes digital advertising more flexible as it gives advertisers the option to sign up for a minimum number of impressions or choose a minimum budget. In addition, advertisers can use programmatic marketing to buy digital media across publishers, which reduces time and admin costs and makes the whole process easier.
But the opportunities are much greater than just making ad buying easier and more flexible. With programmatic marketing, bids are arranged based on each individual accessing the site, so advertisers can target individuals much more effectively. Programmatic technology uses the customer data that it collects to identify what resonates with each individual so that it can then target them at a time they are most likely respond, on the websites they are most likely to engage with, with content that resonates with them.
This can dramatically increase the relevance of your campaigns, which in turn can improve conversion rates. As such, programmatic advertising is likely to take off in the coming months and years as an effective tool in any digital marketing campaign.
An Example of Programmatic Advertising in Action
Car manufacturer Audi used programmatic advertising when it launched its customizable vehicle, the Q2. The company’s objective was to personalise its marketing through an innovative digital marketing campaign.
The car manufacturer worked with Google, using analytics to identify and analyse key customer touch points. This involved setting up comprehensive tracking on the Audi website and creating remarketing lists of website visitors. In addition, Audi used in-market segments to identify users whose online behaviour indicated that they were looking to buy a car. The brand also made use of a car configurator tool on the website that gave users the opportunity to customise their dream car to gather information on user preferences, which was used to dynamically generate ad creatives.
Combining all of this data, users would then be served highly targeted, customised ads based on their position in the sales funnel – from someone with no previous contact with Audi to someone who had completed a configuration of the new Q2. For users who had completed the configuration, the company used dynamic ads with an image of the visitor’s individually configured car (chosen from over 6,000 combinations), to show with the model and colour that they created; ensuring maximum relevance.
The brand used programmatic advertising to buy their ads, which they reported led to an average conversion rate four times higher than those bought using traditional methods.
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