Programmatic Advertising: What You Need to Know

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Programmatic advertising is a system of real-time automatic bidding on digital advertising inventory. It allows the advertiser the opportunity to show an ad, such as a banner, to a specific, targeted customer within a specific context.

The market for programmatic advertising has been almost breathtaking in its rate of growth. In a recent forecast, eMarketer estimated that almost four out of every five U.S. digital display dollars will transact through programmatic advertising. By the end of 2019, that share will rise to 84 percent.

B2B programmatic advertising is equally on the rise. According to a study conducted for Dun & Bradstreet, 63 percent of B2B marketers currently buy advertising programmatically and almost two-thirds said they plan to increase their spending on programmatic in 2018.

For an industrial marketer, B2B programmatic advertising can be especially effective when the target user comes from specialty sites (such as GlobalSpec.com). The users are identified by their cookies—without personal identification, of course—and can be recognized and addressed outside of the target site.

Before you dive in head first, make sure you’re familiar with how programmatic advertising works, as well as the benefits and potential challenges.

How Programmatic Advertising Works

  1. Advertisers work with publishers to determine target groups and to bid for available advertising inventory.
  2. A visitor arrives on a web page and the page publisher auctions off an ad impression.
  3. Among advertisers who compete for that space, the one willing to bid the most wins.
  4. A complex yet extremely efficient set of algorithms automates the bidding process and the display of ads.
  5. The ad is delivered to the user in real time as the page loads.
  6. The hoped-for outcome is the user clicking on the targeted ad and converting.

Benefits of Programmatic Advertising

  • Media buying is simple, cost-effective, and highly-targeted.
  • The human element of matching inventory to an advertiser’s stated target audience is removed from the equation. Instead, highly efficient automation handles the matching by leveraging real-time customer data and analytics.
  • Advertisers pay only for discrete impressions, rather than a package of impressions, based on their bid thresholds.
  • People can be better targeted because bids for advertising inventory are based on the user/visitor, not on the environment or websites. This increases the ability to target the right user at the right time in the right environment.

A Word of Caution

Advertisers love the convenience of buying media programmatically, but that doesn’t mean the programmatic space is free of challenges. You should be aware of the following:

  • Advertisers have less control over where their ads are placed, because programmatic advertising targets a specific user, not a specific website. Even when brands think they know where they’re running ads, they may not totally ever know. There have been several high-profile cases where brands have suffered after their ads were shown on sites considered inappropriate or offensive to certain groups.
  • Ads that are counted as seen by your target audience could have been registered by bots, reducing the actual occurrences of your ad reaching your audience.
  • Some agencies that buy ad inventory for their clients also own the programmatic platforms for ad bidding and delivery, causing a possible lack of transparency.

To avoid these potential pitfalls, make sure you work with a reputable media partner for programmatic advertising. Ask your media partner about their expertise in your sector, their ability to connect you to your target audience, and the makeup of their network of websites where your ads will appear.

For more information about programmatic marketing to reach engineers and technical professionals,

Marketing, General Programmatic Advertising