Programmatic Advertising: The $100 Billion Marketing Opportunity
Advertisers increasingly use programmatic technology to buy advertising across multiple platforms, but the data is still confusing.
Programmatic advertising allows marketers to purchase ads from one source—typically a digital agency or ad network—and then serve those ads across multiple websites. The essential advantage of this approach is its ability to save advertisers money by reducing the cost of each ad. By reducing the cost of each ad, advertisers can buy more ads to promote their business and ultimately sell more products.
However, there is still a catch to this approach that's causing a significant backlash among marketers: it's currently illegal for ad exchanges to serve contextual ads.
Today, we'll be discussing the evolution of programmatic marketing. In particular, we will discuss the growing role of technology in helping marketers better understand and target consumers.
Table of Contents
What is Programmatic Advertising?
Programmatic advertising is a method of selling advertising space online. It consists of placing an order with an auction service to buy targeted advertising impressions based on specific keywords, attributes, or characteristics. The service then displays the ads in real-time on websites.
The significant advantage of programmatic ads is that they enable companies to buy ads relevant to a customer. This helps reach the right audience at the right time and increase sales.
What are the main benefits of programmatic ads?
Programmatic advertising is gaining popularity with many advertisers as it is an effective way to target their ads effectively and increase conversion rates. It allows you to buy specific keywords, attributes, and characteristics associated with your product or service.
In addition to targeting the right audience, programmatic ads enable advertisers to increase conversions by increasing the number of clicks and website visits.
Advertisers can also target specific geographical regions, gender, age, interests, and more.
Programmatic advertising also enables marketers to create dynamic campaigns that can be customised and adjusted to meet changing market conditions. It also saves time and money by allowing marketers to run their campaigns in bulk rather than paying for multiple impressions separately.
How can I use Programmatic Advertising?
Programmatic advertising is used by businesses of all sizes, including large global brands such as Apple, Microsoft, Google, and Amazon, and small to medium-sized businesses (SMBs).
Advertisers can buy the exact type of ad they want at any time of the day or night, including weekends and holidays. It includes video and email, is not limited to display ads, and can help generate leads, build awareness, and increase conversion rates.
What are the major drawbacks of programmatic advertising?
There is no guarantee that the ads will lead to increased sales. You may end up with nothing.
Advertisers are sometimes charged a premium for programmatic advertising, which can vary between platforms.
Other factors affect the effectiveness of programmatic advertising, such as ad placements, the type of device users are using, and the context in which the ad is displayed.
In addition, it does not guarantee that you will receive the exact audience you want. There may be other factors, such as competition or a change in the market, that could affect the outcome. This can be due to the nature of the ads, the audiences targeted, the campaigns being run, and the placement of the ads.
What is an Ad Exchange?
An ad exchange is an online advertising technology platform that enables advertisers to buy and sell ads on a demand-led basis without contacting individual publishers. An ad exchange uses a third-party auction system to find the proper inventory and connect buyers and sellers.
An ad exchange is a powerful way to drive brand awareness, generate leads, and engage customers online.
What is a Demand-Side Platform?
A demand-side platform (DSP) is an advertising network that buys and sells advertising space on the internet. The DSP collects the bids from advertisers and matches them with the supply of available inventory in real-time. The DSP then takes a percentage of the cost and displays the ads on their clients' websites.
What is the difference between an ad exchange and a DSP?
An ad exchange is a form of ad tech software connecting buyers and sellers of online advertising space. An ad exchange is not an advertising network but a platform connecting buyers and sellers of advertising.
An ad exchange operates in real-time, matching buyers with available inventory to run on their websites.
A DSP is a form of ad tech software that acts as a publisher and delivers the ads.
When buying ads, an advertiser does not have to deal directly with the publisher – they deal with the DSP, which then passes the costs and the commission to the publisher.
How is it Different from Traditional Advertising?
The most significant difference between programmatic and traditional methods is that while traditional advertising relies on third-party networks such as Google to place the ad, programmatic advertising relies on publishers to place the ad themselves. This means that the cost of the ad placement depends solely on the publisher rather than the advertiser.
Traditional media models typically involve paid media: the publisher earns a fee by placing ads on websites and social media. Paid media models rely on third-party networks like Google or Facebook, which place the ad and collect the fee.
The other significant difference is that programmatic advertising does not allow users to block ads, so advertisers can more effectively target specific demographics or geographic locations.
Programmatic can also be much more efficient than traditional methods, as advertising takes place online and does not require large teams of workers to place ads manually. Publishers can choose which keywords and placements are the most suitable for their business, meaning there is more competition for available inventory. This results in a more competitive price for the publisher.
Why it matters to B2B Marketers
The programmatic advertising market is one of the fastest-growing segments of digital media, thanks to the increased flexibility it affords advertisers as well as the ability to target users precisely and achieve lower CPMs.
At its core, it is built around the auction model of buying media from publishers. Publishers sell inventory (display ads) to buyers that bid for space. Bidding is generally conducted across several ad exchanges, where advertisers can select keywords or phrases to target and pay for each impression based on the value of the click and how many other advertisers are bidding for that impression.
Programmatic ads have revolutionised digital marketing, giving marketers better control and access to advertising dollars. By allowing advertisers to buy media directly from publishers, programmatic allows for greater targeting of audiences, improved ROI and cost savings.
Additionally, programmatic platforms allow for the delivery of multiple formats — such as mobile, video, and social — across multiple screens, helping marketers reach more customers.
According to an Interactive Advertising Bureau (IAB) survey, programmatic spending on the US display ad market was $106 billion in 2021. The US is expected to grow to $150 billion through 2025.
Programmatic advertising allows marketers to:
- Improve the quality of their marketing efforts. This is essentially a result of the ability to target specific audiences.
- Lower the costs of marketing. Advertisers can achieve lower CPMs and other benefits, such as a higher return on investment.
- Increase transparency. With programmatic advertising, marketers can see the cost of an audience and have more visibility into the performance of campaigns.
The programmatic market is still in its infancy, and there are a variety of challenges marketers face when working with this new channel.
- Adoption: Adoption is slow, especially among agencies, as they must understand the technology's complexities and the marketplaces' intricacies.
- Trust: There are concerns over data integrity. For example, publishers can potentially sell impressions to multiple buyers, making it harder for advertisers to verify and track their media inventory.
- Fraud: While the programmatic advertising market has experienced a decline in fraud, fraud still poses a threat. Some programmatic platforms are more robust than others, but it is still incumbent upon marketers to perform their due diligence and maintain the highest levels of security.
How to Build a Programmatic Advertising Campaign
Advertisers spend a considerable amount of money on promoting their products. Advertising is one of the most important and effective marketing strategies to reach the target audience. With the advancement of technology, many platforms are available that help builds advertising campaigns.
The most important thing is to build a campaign to make the most of your budget. There are many platforms which are helping the advertisers to reach the target audience. The platform will help you to increase the ROI by providing the best quality traffic.
There are some steps which will help you to build a campaign that is going to drive the desired sales.
1 – Research and Plan the Ads:
You need to research and plan the ads. The ads you will use for your campaign will depend on your products and services.
2 – Set the Budget:
The budget for the advertising campaign is crucial. You need to set a budget and divide it into different categories. You can spend less on the ads, which you will use to promote the products and services.
3 – Set the Target Audience:
It is essential to set the target audience. Your ads should target the audience interested in the products and services.
4 – Choose the Platform:
Choose the platform that will make the most of your budget and will be helpful for the audience.
5 – Select the Adverts:
Now, you need to select the adverts. It is an essential thing that you need to select the right advert which will be effective in increasing the sales.
6 – Design the Ad Copy:
Once you select the right advert, you must design the copy. You need to write the content that will interest the audience.
7 – Create the Landing Page:
After designing the ad copy, you need to create the landing page. This will be the best place to connect the audience and the advertiser.
8 – Run the Ads:
The next step is to run the ads. You need to run the ads and keep a close eye on the results. If you get the desired results, you will need to increase the budget for the next campaign.
So, these are the essential steps that will help you to build a programmatic advertising campaign. It is imperative to make the most out of your budget and get the best results.
The Future of Programmatic Advertising
With the advent of programmatic advertising, there has been much controversy about what this means for marketers and how this new technology will affect how we advertise.
As the marketing world becomes increasingly digital, programmatic ads (also known as ad tech) have become more prevalent. It allows advertisers to target ads to specific individuals based on their online and offline activities. This advertising method is known as “programmatic” because it allows for the use of automated processes that trigger ads based on internet searches, social media posts, web browsing, and other interactions of consumers.
This has changed the face of advertising, and now many companies use this technology to their advantage. Google, Facebook, and Amazon have become some of the most prominent players in this field. While these companies provide much of the infrastructure that the programmatic market relies on, the process of buying and selling ads is still largely decentralised.
Many experts predict that the programmatic market will continue to proliferate over the next decade. Many people have predicted that this market could reach $150 billion by 2025, up from $35 billion in 2017.
This rise in growth, as well as the increased adoption of programmatic by more and more companies, has led to several challenges for marketers and advertisers. These challenges include:
Increased transparency.
The most apparent problem with programmatic is that it is not always clear who buys and sells ads. Because of this, many users have questioned whether they should even be using this form of advertising. However, more and more companies are adopting this type of advertising, and many argue that it is less expensive than other forms of advertising.
Increased competition.
Another primary concern with the growth of the programmatic market is the increased competition. With many companies competing for the same audience, it can be challenging for an advertiser to market to potential customers effectively.
The increased adoption of programmatic advertising has also led to a shift in the way people view the internet. Rather than a place where people go to get information, the internet has become a place where people connect and shop. As a result, programmatic has affected the way businesses are marketed online. For example, in the past, people searched for products and services online and then visited brick-and-mortar stores to buying. Now, people visit brick-and-mortar stores and look online for deals and discounts.
As programmatic becomes more common, the way people purchase goods and services online will also change.
Programmatic Adoption Challenges for Marketers
One of the biggest problems with the rise of programmatic is that there is no single standard for the way programs are set up. As a result, it can be difficult for businesses to integrate multiple programmatic platforms. Because of this, it can be hard to determine the effectiveness of a marketing campaign.
Furthermore, ensuring that a company's brand is being advertised correctly can be very hard. Because there is no standardised platform, measuring the performance of campaigns can be difficult.
There are many different ways to set up a programmatic advertising strategy. Some companies rely on automated bidding, and some rely on manual bidding. It can be challenging for a business to know which method is best for them, especially if they have no experience in programmatic.
While a few standards exist in the industry, such as DSP, many differences exist. As a result, it can be tricky for a business to know what to look for when choosing which DSP to use.
Programmatic Adoption Challenges for Consumers
For consumers, the increased use of programmatic advertising has negatively affected how they view the internet. While it can be great to view the latest trends or the hottest products, it can also be overwhelming. As a result, many people are wary about the content displayed to them.
Programmatic Adoption Challenges for Businesses
With the rise of programmatic, many businesses have been concerned that the internet has become too cluttered.
Programmatic Adoption Challenges for Brands
For brands, the rise of programmatic advertising has been a mixed bag. Some brands have seen a significant increase in sales, while others have had a much smaller impact.
A brand's success with programmatic advertising can sometimes depend on the company's size. While large companies often have the resources to develop their system, it can be difficult for small businesses to afford.
Programmatic Adoption Challenges for Advertisers
While many companies have taken advantage of programmatic, there have also been some significant problems. One problem is that the lack of transparency in this field makes it hard to identify which companies are doing a good job.
Another challenge is that some consumers do not like being tracked. As a result, companies that use programmatic advertising may decrease their customer base.
Some people are concerned about the privacy implications of allowing companies to track what they do online.
Conclusion
To understand the importance of programmatic advertising, you must first understand why people are turning to programmatic advertising. A recent study found that 68% of people are concerned about data privacy.
As more and more companies begin to use online marketing strategies to drive traffic to their sites, they will be putting this user data at risk. The good news is, with programmatic advertising, you're only putting your customer data into a database once, and then you can pull out relevant data as you see fit.
