Programmatic advertising is a way to automatically buy and optimize digital campaigns, rather than buying directly from publishers. It’s designed to replace human negotiations with machine learning and AI-optimisation. It is performed through real-time auctions where ads are bought while a visitor loads a website.
Programmatic makes it possible to increase the efficiency and transparency of the purchase of digital campaigns for both the advertiser and the publisher, and to show “useful” advertising for the user.
The history of programmatic took place 26 years ago in 1994 with the appearance of the first advertising banner placed on the site.
The American company DoubleClick, founded in 1995, became the pioneer of online advertising. A year later, in 1996, it opened one of the first banner networks on the Internet. For 10 years, the exchange has managed to become the largest universal intermediary for the sale of advertising. Today, the platform is owned by Google.
Programmatic market has increased to $100 billion in 2021, amounting to 68% of the global digital media ad spending.
Nowadays, programmatic embraces almost all market segments: it is available not only to large advertisers who create their own in-house ecosystems, but also to small brands through advertising agencies and a self-service model.
Programmatic is traditionally implemented in the following channels:
- display (advertising on websites in browsers on different devices);
- mobile (advertising in-app).
However, in recent years there are some more channels to become digitized too:
- Digital Out Of Home;
- Digital Audio;
- Social networks.
Advantages and possibilities of programmatic advertising
1. Automatization
Thanks to the RTB auction, the process of automating the buying and selling of ad inventory is implemented without human intervention. Time and resources are saved because all participants of the process (advertiser and site) are connected to Ad Exchange that eliminates complex direct negotiations and provides a huge choice for displaying various ad formats. Advertising is launched from a convenient and understandable DSP platform — in a couple of clicks, you can set up a campaign, the results of which will also be available to see.
2. Flexibility of price and display ad conditions
It is possible to specify the minimum number of impressions or the maximum budget for a week, month, six months in DSP. Many programmatic systems are self-learning and are able to change the bid themselves or turn off sites to get the best result with the given display conditions.
3. Working with a complex audience and product
When connecting various DMP, the possibility of audience segmentation is expanding, so you are likely to find “the same user”, which is almost impossible to identify with other advertising tools. The accuracy of segmentation affects not only the performance of an advertising campaign, but also the quantity and quality of end consumers. Algorithms of advertising systems calculate not only the interests of the user, but also his purchasing power, i.e. the propensity to purchase a certain type of product, financial situation, and much more.
4. Displaying ads only to live and relevant users
In addition to deep targeting segmentation settings, many DSP have an anti-fraud system that allows you not to display an advertising message in a context that is inappropriate for the brand.
Programmatic ads have a large market share: more than 65% of advertising budgets are spent on it. Programmatic becomes popular thanks to its transparency, ease of setup and high hit in the target audience. This is one of the most promising areas of advertising, as programmatic buying allows introducing and use more and more new technologies and targeting.
