Since its inception, programmatic advertising has allowed brands to reach prospective customers in real time. The ad buying experience is now faster, cheaper and simpler for companies that run digital advertising campaigns. Given that programmatic uses algorithms to better position an ad, it saves time and money for advertisers and enables better campaign optimization. The innovations around the field of programmatic encompass mechanisms that aim to improve targeting and instantly notify advertisers on the needs of their customers. Programmatic advertising is expanding way beyond online banners, to encompass new digital channels such as interactive TV networks and wearables.
Let’s dissect in depth the concept of programmatic, where it holds value for marketers and what its future is.
What is programmatic?
On a publisher’s website, there are pages on which ad slots are available. The inventory of all these available ad slots can be sent out to ad exchanges and put up for auction. The highest bidder that meets the advertiser's criteria wins that impression. This is what has given rise to the flourishing of data management platforms, DMPs, that are destined to give advertisers the data they need to make intelligent buying decisions. Getting first-hand customer data within moments of a customer activity, enables advertisers to show ads to those future customers who matter most.
In order to elucidate it further, let’s consider this example. If I can recognize that one of my customers has abandoned their shopping basket with a television set, I'm willing to bid more on him than any other regular bidder, because I realize that if I can win an impression and convert that user, I can generate a high value sale.
In short, DMPs are facilitators that help advertisers, through valuable customer data, to target the right customers through the right channels with the right message.
What are the benefits of programmatic
If we look at the major impediments that advertisers faced prior to the emergence of programmatic, it won’t be difficult to acknowledge the gains that programmatic provides.
The online ad market is very innovative yet fraught with many inefficiencies. Programmatic tackles these inefficiencies and makes it much easier for digital marketers to do their job.
To start with, advertisers no longer need to call the publishers and negotiate rates, email orders back and forth, or wait for signatures to appear. Right now, an advertiser can start to engage in what is called ‘programmatic direct’ or ‘programmatic guaranteed’ whereby using their DSP (Demand Side Platform) and clicking a few buttons, they can actually start to reserve this media space directly.
It’s no wonder that this amazing technology has moved beyond standard display advertising. Indeed, programmatic is now embracing mobile and video ad formats as well as innovative media channels. Let us see what and how.
Programmatic hits TV networks
One of the exciting things with the future of programmatic is addressable television. For example, Dish Network in the US is now trialing systems whereby the set-top box of the user can be queried. Right now, it's being done on an offline basis but they're moving towards online and even real time.
When the ad break comes up during a television program, data from a user’s set-top box can be sent out to the ad exchange to help buyers make an informed decision, in real time, based on the analysis of this user’s behavior. Based on this, they are able to narrowcast rich media video content directly to a particular set-top box. This is something that wasn’t available to marketers before, but with the advent of programmatic, a customer’s set-top box could be reached instantly with targeted content. This has a clear impact on campaign efficiency.
This is, in my mind, one of the most exciting developments coming out of programmatic. Sky TV in the UK is actually starting to do this in a limited format and I see this right for expansion throughout the world. Programmatic has enabled marketers to efficiently perform throughout a wide variety of digital media channels.
The future of programmatic advertising
One of the potential developments for programmatic will be about innovations dedicated to wearables. I can definitely imagine that you're walking down the street and you go past a shop and they can send you a personalized ad if you are carrying their loyalty card, for example. Programmatic will make it possible for such retailers to target these loyal customers directly, pending their approval and the respect of privacy rules, and entice them to come to the store more often or at particular times.
As a conclusion, technology has empowered marketers to improve their targeting skills dramatically. It’s quite clear now that programmatic is unavoidable to be ahead of competition.