Question

Programmatic advertising: the efficient way to advertise online

Answer 1

What is programmatic advertising?
Trajectory: from cost per thousand to programmatic advertising
Who is programmatic advertising relevant to?
How are auctions produced in programmatic advertising?
Programmatic advertising and real-time bidding
Segmentation methods: what criteria can companies establish?
Technology: How does programmatic advertising work?
What are the advantages of programmatic advertising?
Dissemination in business practice and vision of the future

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Programmatic advertising: the efficient way to advertise online

The term programmatic advertising is very likely to be familiar to online marketers. But, although this method has been around for a few years, there are still many companies that are wasting the possibilities of intelligent online advertising, perhaps because for many it is not clear what is behind this concept..

Index

1. What is programmatic advertising?
2. Trajectory: from cost per thousand to programmatic advertising
3. Who is programmatic advertising relevant to?
4. How are auctions produced in programmatic advertising?
5. Programmatic advertising and real-time bidding
6. Segmentation methods: what criteria can companies establish?
7. Technology: How does programmatic advertising work?
8. What are the advantages of programmatic advertising?
9. Dissemination in business practice and vision of the future

What is programmatic advertising?

Since the beginning of the 21st century, and especially in the US, programmatic advertising (? Programmatic advertising? in English) is replacing traditional advertising methods within online advertising.

Advertising spaces are sold in fully automated real-time auctions (real-time bidding) on ​​digital platforms. For this, user data is taken into account, in such a way that advertisers can determine which ads are shown to each user, in what place and at what time and can thus reach their target audience in the most efficient way possible. . Using big data and algorithms, real-time auctioning with segmentation was not possible in previous display processes. This is the main distinguishing feature of programmatic advertising compared to other forms of display advertising..

Definition: Programmatic Advertising

Programmatic advertising is a method based on artificial intelligence and machine learning to buy, deliver and optimize online advertising in live auctions through specialized platforms. This form of visual advertising is also called real-time advertising (RTA).

Trajectory: from cost per thousand to programmatic advertising

Previously, companies reserved advertising space online after individual negotiations with the website operator (publisher). Advertising prices were typically calculated in cost per thousand , that is, the price per thousand views . But this process was not automated and required time and manpower. Also, no segmentation was possible. The ad was displayed in the ad space, regardless of how many users visited the website..

Some time later, advertising networks were created , which showed advertisements on different websites of the same network. Advertising space that had not been sold was mainly offered here. Instead of fixed prices, auctions were being held on networks for the first time, but segmentation was not yet possible.

Programmatic advertising has been introduced in the last ten years in the field of advertisers and online marketing professionals in Spanish, and since then it has not ceased to acquire relevance. However, the method has been around for almost 20 years. It appeared in the late 1990s in the US, drawing inspiration from automated stock trading that had long since become the standard. The acquisition by Google of the DoubleClick advertising network in 2008 is considered a milestone in the history of programmatic advertising, with which the method went from niche to mainstream in the North American country.

Who is programmatic advertising relevant to?

Programmatic advertising is interesting for all companies that want to advertise online (desktop and mobile versions), as well as for media agencies that are in charge of online marketing for these companies.

Programmatic ads are especially suitable when you want to reach only partial segments of your target audience. Since, based on various criteria, it is possible to decide to which users, when and where a particular ad is shown, the effect of this personalized advertising is considerably greater than in other types of methods in which an ad is shown to All the group.

How are auctions produced in programmatic advertising?

While the website is loading, the auction process for programmatic advertising takes place in the background.

When a user visits, for example, an online store, the user data is sent to AdExchange (platform for buying and selling programmatic ads). The data is compared there with the criteria of the advertisers and an auction is carried out in real time . These processes are carried out in a matter of milliseconds, while the website loads. Average load time is 2.6 seconds. An auction generally lasts between 50 and 100 milliseconds.

The highest bidder can then display their ad in the ad space on the website. The price of the ad serving follows the Vickrey auction principle , meaning the bidder pays 1 cent more than the second bid.

If the advertiser states that they only want to show ads for women between 30 and 50 years of age and the user is 60 years old, their advertising will not be shown (but probably a different one). However, the requirements can be more extensive.

If the user leaves the online store without making a purchase, on the next visit to an information page, advertising for this store will appear if the advertiser has established a criterion of this type for their ad:? Show the specific ad to all website visitors leaving the site without making a purchase ?.

Programmatic advertising and real-time bidding

The concepts of programmatic advertising and real-time bidding are partly used synonymously. However, this is not completely correct: real-time bidding is a main part of programmatic advertising , but it only refers to the technical part of the real-time auction. Describes the process for determining the price. The processes and technical structures for automated and dynamic control of individual ads such as Demand-Side Platform (DSP) and Supply-Side Platform (SSP) would not be included.

Segmentation methods: what criteria can companies establish?

There are different targeting methods that advertisers can use to reach their intended website users through programmatic advertising platforms. Among the most important methods are:

Contextual Targeting - In this case, ads are placed based on keywords and semantic context. Financial service providers, p. For example, they decide to show their ads only on business magazine websites. In this case it is not necessary that specific keywords appear on the website, but rather that they are semantically similar.

Keyword Targeting - Advertisers target specific keywords. As soon as these keywords appear on a website with an ad slot, this ad option is bid on.

Data Targeting / Behavioral Targeting - In this case, ads are displayed as soon as a user meets certain criteria or exhibits specific behavior. The necessary user data is collected in cookies. In this way, for example, advertisers can show ads only to users who have already visited their website.

Geotargeting (segmentation by geographic data) : Above all, local companies benefit from geotargeting. Ads are only shown to users who are located in a certain region or city.

Technology: How does programmatic advertising work?

Advertisers and website operators access the AdExchange through different platforms, where the auction is carried out in real time fully automatically.

At the core of programmatic advertising are AdExchanges , the online marketplaces where real-time auctions take place and where advertisers (merchants) and website operators (publishers) meet.

Some of the most important AdExchanges are:

• AppNexus
• AOL? S Marketplace
• Microsoft Ad Exchange
• Google Marketing Platform
• OpenX

Note

Most AdExchanges trade ad space for both desktop and mobile versions.

To use an AdExchange, advertisers register with a Demand-Side Platform (DSP) that pools the demand of advertisers. When a user visits a website connected to AdExchange, the website issues an auction signal to the AdExchange. The platform automatically asks the DSP if the advertiser wants to place ads suitable for the ad space. If so, the DSP sends a signal to the AdExchange informing that the advertiser (merchant) participates in the auction.

For their part, website operators register with a Supply-Side Platform (SSP), the counterpart of the DSP on the advertiser side, to sell their advertising space through programmatic advertising. To do this, you can indicate the minimum sale price of an advertising space and also establish criteria for buyers and channels. To get the highest possible price, SSPs can be connected to different AdExchanges.

Note

From a technical point of view, Google Ads is a DSP, but the ad space is limited to the Google Display Network websites. The network covers a large part of the world's websites, but it has some blind spots, for example, it is not possible to place Facebook ads through Google. Therefore, Google's independent programmatic advertising providers sometimes offer better coverage, depending on the advertising objective.

What are the advantages of programmatic advertising?

One of the biggest challenges for e-commerce companies is complex customer purchase decision processes. This reaches the company's website through different channels, search engines and social networks, leaves, visits it again from the smartphone or never returns.

Rather than placing advertisements solely on related-themed websites, programmatic advertising significantly reduces dispersion losses from online advertising. With this method it is possible to show the user personalized advertising on the websites actually visited, also regardless of the channels and taking into account certain activities or demographic characteristics.

The use of programmatic platforms with their learning algorithms generates a considerable increase in the efficiency of online marketing measures and a significant reduction in costs compared to previous advertising processes.

Dissemination in business practice and vision of the future

Programmatic advertising is the new gold standard in display advertising. In the US, companies invested more than 80% of their online advertising budget in programmatic advertising in 2018, and this approach is gaining in importance in the rest of the world as well. According to a study by the Interactive Advertising Bureau (IAB), around 65% of European companies opt for programmatic advertising.

Anyone looking for efficiency in online advertising cannot ignore programmatic advertising. In a Google study, this system was already called a few years ago as the new operating system for online marketing. And the potential of this method is far from being exhausted : with the development of artificial intelligence and machine learning, advertisers will in the future have more and better possibilities to direct their ads to the right user at the perfect time and through the best channel.

Please, take into account the legal notice related to this article.

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