Programmatic advertising refers to the process of using automated technology to buy and sell digital advertising space. Programmatic advertising utilises technology, algorithms, and user data to serve targeted advertising that improves advertising efficiency and overall user experience.
Automating the process of media buying and selling through programmatic advertising has dramatically improved digital campaign return on investment (ROI) and enables media buyers and sellers to work together more efficiently. Your ad could be excellent, but without the right audience, timing, and platforms, your advertising will never reach its full potential. Whether you are an SME or a global brand – programmatic advertising can help you to reach your desired audience more effectively.
In 2022, programmatic advertising will continue to evolve and optimise the media buying and selling landscape in the UK and globally. In this article, we have put together an overview of what this means and how a programmatic approach can be used to increase your advertising efficiency and drive your marketing budget further.
What Did Things Look Like Pre-Programmatic Advertising?
Prior to programmatic advertising, the media buying and selling landscape looked very different. The traditional method of buying advertising included requests for proposals, tenders, quotes, and extended negotiations. In some cases, sellers and buyers still operate through this outdated process – but it has become increasingly rare.
If this all sounds quite messy – then you are correct, the traditional method for buying and selling advertising is inherently clunky.
In the early stages of online advertising, buying an online advertisement involved a relationship between media owners (sellers) and advertisers (buyers). Media owners had something that advertisers wanted – an engaged audience that they could promote their event or product to online. Conversely, advertisers provided media owners with the opportunity to monetise their online platform by selling advertising space.
As more inventory space became available (online advertising space), it created an oversupply of new platforms that advertisers could use to connect with their audience. With publishers growing exponentially faster than advertisers, ad space was left unsold and unmonetized.
The introduction of advertising networks saw advertising split into two distinct (and separate) platforms.
- Premium Ad Inventories
- Remnant Ad Inventories
Premium ads were sold directly between buyers and sellers with a pre-existing relationship, while remnant ads were sold through rudimentary ad networks. Premium ads were more targeted and therefore generated a higher ROI than remnant ads which often racked up impressions, with low conversion rates.
Programmatic Advertising vs. Display Advertising – Which is Best?
“Porque no los dos?”
Programmatic advertising and display advertising should not be viewed as advertising adversaries – they are complementary methods that can be used within the context of a single marketing campaign.
Programmatic and display ads refer to two different aspects of online, digital advertising. Programmatic refers to the way that ads are bought and sold, whereas display refers to the format of an ad and where it appears.
The key difference between programmatic and display advertising is that display advertising takes place on a closed network, whereas programmatic is a method of buying advertising space across multiple ad exchanges. Because display ads refer to a closed network or ecosystem, advertising is limited to websites that opt into that network. Conversely, programmatic ads cover multiple ad exchanges with more inventory which increases advertising. As a result, programmatic ads can reach more visitors than what is possible on display networks.
Why Is Programmatic Advertising on the Rise?
Programmatic advertising is on the rise because it is user-driven, targeted, scalable, and – most importantly, it increases advertising efficiency for media buyers and sellers.
The latest data from Statista indicates that global spending on programmatic advertising topped $150 billion over the last twelve months. In 2022, that number is projected to rise again by an estimated 14%. The United States continues to lead the world in programmatic advertising uptake and spend, but the United Kingdom and China continue to close the gap with more buyers and sellers opting for a programmatic approach to advertising.
Programmatic advertising is designed to simplify the process of buying and selling ads and eliminate the inconsistency of traditional advertising campaigns. By relying on an algorithm to match buyers and sellers, markets can take the guesswork out of creating ad audiences based on incomplete and inaccurate data.
Marketers looking to increase efficiency and optimise ad spend are using programmatic advertising to save time, money, and boost overall ad performance.
Key Advantages of Programmatic Advertising
Programmatic advertising represents the future of how online advertising will operate. The stark increase in buyers and sellers opting for programmatic advertising over the last few years reflects the changing nature of advertising and a shift in the way that advertising will evolve with improved personalisation and advertising efficiency.
Some of the top reasons why programmatic advertising is on the rise include:
Greater Transparency
Automation means greater ad visibility and transparency. Advertisers can see exactly where ads are being placed, how they are performing on different platforms, and how much they are paying. Advertisers can use this information to inform broader marketing efforts to understand the kinds of ads that resonate with different audiences.
More Control
More control means real-time reporting and optimisation that can increase ad performance on the fly. Rather than draining your marketing budget to gain insights, programmatic insights allow advertisers to control ads based on real-time performance and insights.
Buying Efficiency
Programmatic advertising enables marketers to browse and purchase advertising inventory at scale. Automation cuts down on repetitive tasks such as bidding and ad space requests and means that marketers can focus on creating campaigns that resonate with their target audience – instead of worrying about how they are going to reach that target audience.
Fraud Detection & Control
The cost of global ad fraud in 2021 is estimated to be $65-billion USD, according to the latest data from Statista. Programmatic advertising is working on the front-line to reduce ad fraud works with advanced technologies that fight bots, malware, and human fraud farms.
Improved Ad Targeting
Programmatic advertising provides more flexibility when it comes to ad targeting. Advanced technology enables advertisers to target users based on location, browser history, common interests, demographic, and – perhaps most importantly, retargeting. Advanced targeting improves overall ad quality which improves user experience and ad cost efficiency.
Return on Investment
When it comes to advertising – return on investment (ROI) is king. Programmatic advertising means better targeting, better advertising insights, and greater visibility which results in a higher ROI for advertisers. ROI is the single most important when it comes to explaining the widespread adoption of programmatic advertising over the last five years.
Is Programmatic Advertising Worth It?
In a word – yes.
Programmatic advertising is the most effective way to improve advertising efficiency and ensure your ads are consumed by the right audience. The monumental increase in buyers and sellers adopting a programmatic approach over the last five-years reflects market sentiment.
While programmatic advertising can be daunting and complicated to begin with, it is an incredibly powerful way to save time, money, and increase marketing and advertising efficiency for businesses of all sizes.
Wrapping Up
Understanding programmatic advertising is the first step towards improving advertising efficiency and making better advertising decisions for your business.
Trade House Media is the United Kingdom’s leading ad tech company with senior expertise across the technology, publisher, and agency side of the advertising process. Get in touch today to find out how programmatic advertising can improve increase efficiency and win you more business in 2022.
