Technology is constantly making strides towards automation and digital advertising is no exception. Answering the call is a streamlined system of buying placement advert space called, “programmatic buying”. While the system is relatively new, its definition and capabilities have been lost to a mess of jargon and buzzwords. Leading to the question – what does programmatic buying mean?
What is Programmatic Buying?
The meaning of programmatic buying has stretched so wide that it hardly has any meaning at all. If you were to approach a digital marketer and ask the about their experiences with programmatic buying, chances are they’ll recommend a service or describe “media buying” – the procurement of media inventory. You’ll often find yourself with more questions than answers.
When people talk about programmatic buying/marketing/advertising they’re referring to the automation of bidding and optimization for placement space on a website. Unlike other Pay-Per-Click (PPC) practices, programmatic buying is independent from manual trading with optimization done in real-time. This is where the subtle differences start to shine against “media buying” – where a media buyer manually buys space.
There are a few ways to start programmatic buying like buying into a service or running in-house machines, but they all rely on an algorithm to manage bidding.
How Does Programmatic Buying Work?
The result of programmatic buying is an advertisement in the designed advert space of a webpage. In between the loading time of a webpage, information about the visitor is organized and sent to an ad exchange for advertisement candidates in an auction. The advert space is auctioned to the highest bidder. All of this happens within the webpages loading time, which by today’s standards is done in milliseconds.
Where Programmatic Buying Gets Interesting
The advantage of programmatic buying is in its targeting. Some services and software use personas that utilize a great depth of user-information, such as:
- Demographics: age, gender, marital status, birth date
- Geographies: municipalities, locations, city, state, country
- Behaviors: time spent on sites, conversion rate, pages visited
- Times of Activity: hour of day, day of the week
- Professional and Social Factors: income, marital status, family size
Combining the automation and targeting abilities of programmatic buying software offers two main things: increased spend efficiency and greater ad relevancy.
Increased Spend Efficiency
Like with most PPC platforms, programmatic buying comes with pricing packages that benefit the advertiser. The two most common are Cost-Per-Impression (CPM) where they charge per-1,000 impressions and Cost-Per-Click (CPC). These pricing packages are becoming more common as a sign of confidence in their persona data.
Greater Ad Relevancy
Data is king in paid advertising and programmatic buying lives and dies on the accuracy of its personas. In the past, websites relied on cookie data or an identifier to track behaviors on their site. Most programmatic buying software take cookies a step further by pairing a variety of data aggregators to create personas.
When the cookie shows a persona match, data is sent to the ad exchange to find the appropriate advertisement. No longer are placed advertisements limited to where advertisements are seen. With programmatic buying software, advertisers will know exactly who sees the advertisement.
The market for programmatic buying has grown significantly in recent years and is projected to continue growing into 2018. However, this isn’t without some caveats. Most networks are air-tight about their placement methods and average bids. It is ultimately up to the organization to find a programmatic buying system that works best with their service or product.
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