7 Benefits of Programmatic Buying That Change Digital Advertising

Reading time: 6 minutes

By the end of 2019, programmatic ad spending reached a global 85 billion dollars. What’s more, programmatic ad buying (and selling) has seen steady growth since algorithms allowed for ad automation, making the benefits of programmatic buying[1] crystal clear to all parties within the ad tech[16] ecosystem.

It won’t be long now before digital advertising goes completely programmatic. This is even more true now that the General Data Privacy Rules (GDPR[2]) have come into play. Now advertisers are investing more in their data infrastructures and media quality assessments to reduce costs and protect brand image — which has only led to the improvement of data management, targeting[17] capabilities, and algorithm processing.

As these things evolve, programmatic display advertising[8] evolves as well, becoming more effective for advertisers and publishers alike. How, you ask?

Let’s take a look at seven of the top programmatic buying benefits that make all of this possible:

1. It Transforms All Digital Channels Into One Channel

Programmatic advertising[3] comes with a ton of advantages but creating an omnichannel approach is what really makes this evolving technology stand out. Essentially, the number of channels that a typical user spends time on has grown exponentially, from websites to social media to apps and so on. 

Advertisers need to be able to address the users that fall into their target audience description wherever they are. 

This is where programmatic buying works for both the demand and supply-side parties, as it allows advertisers to address their audience on virtually all devices (smartphones, tablets, desktops, and even TVs) at the same time and through each channel. By allowing for this type of “cross-marketing,” campaigns can be coordinated according to where their target audience is most responsive. Additionally, the programmatic platform can collect data for publishers regarding where their inventory[18] sees maximum monetization.

Here’s an example: The Starbucks marketing released they could bring in even more customers by accessing users through various channels. They decided to launch the company’s user loyalty program (now an app) based on personal user cards which were linked to personal accounts on the users’ smartphones. 

Not only did this make ordering quick and convenient for the coffee-loving customers, but the marketing team was also able to collect data based on user behavior — such as how long it would take the user to pick up their coffee. This ensured that the coffee was already prepared and ready for the customer, which positively impacted the customer experience and increased ROI. 

2. It Gives Advertising an Individualistic Trait

Real-time bidding[4] (RTB or header bidding[9]) supports the trade happening between supply and demand partners in real-time. This allows the programmatic advertising technology to deliver ads accurately and correctly based on the trading criteria and audience segments.  

In other words, AI and MA algorithms deliver a very specific ad unit[19] to a very specific user at a time when they’d be most likely to see it. This allows brands to use programmatic advertising to interact with certain audience segments and target them according to device geolocation, demographics, content, and much more.

Think of it this way: Every time a user opens an app or visits a website, a bid request[10] is sent through to an ad exchange[11] with that user’s personal data. In simpler terms, it’s like the bid request is saying “Hey, user X is 25 years old, lives in New York City, has an iPhone, likes makeup and fitness and cute animals, is likely single, and works for a large company. Who wants to advertise to her!?”

Using the data collected on the user in question, the advertisers’ demand-side platforms (DSPs) will assess the value of her potential view, bid on it if it’s suitable, and then serve up an ad. 

3. It Benefits Programmatic Ads Via Audience Extensions

Programmatic advertising comes with a very unique feature — the ability to automatically reach highly convertible audience segments. Of course, the primary benefit of this is that things like look-alike modeling and user acquisition come relatively cheap.

What this means is that programmatic algorithms work to define the audience segments with the best track records for engagement based on various types of advertising. Essentially, it’s a system that can detect new audiences who may also be interested in the products or services being advertised based on user behavior from past campaigns.

4 It Also Benefits Programmatic Ads and User Data

Another noteworthy benefit of programmatic ad buying that has changed digital advertising for the better is its holistic approach to data management. All the moving parts involved in the programmatic ecosystem are well-integrated, keeping information organized and stored in one accessible place.

For instance, there are data management platforms (DMPs) involved that collect the necessary first- second-and third-party data[5] on existing customers. This data comes from various channels, devices, and even offline sources. This allows the DMPs to analyze and convert the data into audience segments in real-time.

DSPs and SSPs also use these segments to customize the advertising criteria according to behavioral factors, interests, personal preferences, and more.

Data analytics itself is a great benefit of programmatic advertising as it’s used to reveal user patterns and gain unique, actionable insights that help businesses make better marketing decisions. The machine learning involved also allows for the prediction of outcomes of advertising campaigns to help marketers avoid potential dead ends.

5. There’s Potential For Infinite Supply and Demand

If there’s one thing that advertisers and publishers alike can appreciate about programmatic advertising, it’s that it provides immediate access to all kinds of ad inventories, buyers, and sellers. 

By using a DSP[6], advertisers can jump into the market immediately and begin buying digital media inventory from publishers that exist all over the world. The inventory in question can come in all different formats and qualities as well, from premium to remnant[20], suiting all kinds of budgets and other needs. 

At the same time, publishers get to reap the benefits of a higher demand during programmatic buying. This allows them to sell their ad impressions at more competitive prices so they can optimize their own monetization strategies. 

The programmatic world offers several methods regarding ad buying. For example, marketers can buy inventory on a per-impression[12] scheme via RTB auctions, or they can opt for direct deals and buy premium inventories that are guaranteed from specific publishers with whom they’ve created a relationship. They can also try out private marketplaces (PMPs) to find inventories that cater to their niche audiences or they can enter into preferred deals that have fixed-price agreements. 

6. It’s Safer For All the Players Involved

Ad fraudsters don’t sleep, which is why we’re always looking for solutions in terms of preventing them from entering into our marketplaces. Ad fraud hurts everybody, especially the brands trying to build a good reputation for themselves. They weasel their way into user browsers and redirect those users to irrelevant and often inappropriate content. 

This not only lowers conversion rates but it ruins trust. It can also be dangerous for the users themselves. 

However, programmatic ad buying comes with increased transparency[13] during the trading process, making the entire ecosystem that much safer for everyone involved.

7. More Robust Reporting and Dynamic Analytics

With automation in media buying comes better reporting and real-time analytics. Now both advertisers and publishers can access data reports through their DMP[7] dashboards and track their ad performance[14] and impressions according to critical metrics, such as click-through rates (CTRs), traffic, bounce rates, conversion rates, customer engagement rates, brand awareness, ROI, and more.

Virtually all programmatic platforms come with a variety of analytics tools that provide users with valuable insights as to how their websites and campaigns are performing. There’s no need to calculate everything by hand or invest in expensive software to generate reports.

Last Words

Programmatic media buying is in full swing, and it will only continue to evolve and improve. At this point in time, if you’re not including programmatic ad buying and selling into your marketing strategy, you’re missing out on, well, everything.

There are so many benefits to programmatic buying, from personalizing brand message delivery to automating the entire process that it’s the only way to monetize your website or put on a successful advertising campaign[21]. It allows you to keep your ads relevant and minimize the potential for wasted impressions — all while allowing you to remain in complete control of everything. 

The bottom line: Advertisers everywhere can more effectively reach their target audience and will continue to see improvement when it comes to the accuracy and precision of audience targeting with programmatic ad buying. This means its greatest benefit is higher ad quality[15] and a higher ROI.

Terms
1. programmatic buying. Programmatic buying is the process of executing transparent media planning and buying using automation. In most cases, programmatic buying is fueled by the use of advanced audience data through digital platforms such as exchanges, trading desks and demand-side platforms (DSPs), which helps create operational efficiency for both the buy and sell sides. Agencies use programmatic on behalf of their advertiser clients to increase marketing efficiency, helping them get more out of media budgets.
2. General Data Protection Regulation [GDPR] ( GDPR ) GDPR which is also known as the General Data Protection Regulation is a set of personal data regulations created for EU citizens. It changes the way businesses stores and collects data from its users from the EU.
3. Programmatic advertising. Programmatic advertising entails using machine learning and technology suites to buy and sell ad inventory with a data-driven process.
4. Real-time bidding. Real-time bidding is a technology-driven auction process where ad impressions are bought and sold almost instantaneously. Once an advertiser wins a bid for an ad impression, their ad is shown on a website. Real-time bidding plays a crucial part in the digital advertising ecosystem together with other players such as ad exchanges and supply side platforms.
5. third-party data. Third-party data is any information collected by an entity that does not have a direct relationship with the user the data is being collected on. Often times, third-party data is generated on a variety of websites and platforms and is then aggregated together by a third-party data provider such as a DMP.

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