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Programmatic Ad Buying 101:
Exploring the Benefits and Challenges

Ida Morris, Social Media & Content Manager and Brenna Betsch, Digital Ad Ops Coordinator

 

What is Programmatic Ad Buying?

Programmatic ad buying is the automated process of buying or selling online media advertisements at scale.
Its popularity in the digital space continues to rise, as there are many benefits to the advertiser and the seller.

Benefits of Programmatic Ad Buying include:

• Increased ad efficiencies

• Reduced overall advertising costs

• Ability to optimize and target the right audience in real time

• Higher ROI

• Leveraging unique data sets, both first- and third-party

• Building effective cross-device campaigns

• Collecting greater data insights to understand customers

• Achieving scale

• Reducing campaign launch time

Using Programmatic Media Buying Tools

One common form of programmatic ad buying is real-time-bidding (RTB), which is the process of purchasing ads through computer-run auctions. Both real-time-bidding and other forms of programmatic buying, such as paid search and personalized retargeting, are used for maximizing reach and minimizing waste through the possibility of extensive targeting and optimizations. In fact, according to Quarticon.com, the #1 advantage of programmatic ad buying is this extensive targeting and ability to eliminate waste. “The most revolutionary aspect of programmatic buying is that it allows an advertiser to serve one specific ad to one single consumer in one single context. Marketers can precisely determine which consumer gets to see which ad and when.” Advertisers realize that they need to reserve ad dollars for those consumers who will actually be receptive to their message, and engage, which will in turn increase their ROI. That’s why programmatic ad buying solutions  are the future.

How Programmatic Ads Are Pushing the Boundaries for Cross-Device Advertising

Audience targeting is key with programmatic buying. It allows brands to create campaigns that successfully reach goals, with limited waste. And with improving attribution models, users can now be tracked across platforms, across multiple channels, in a more cost-efficient manner. Conversion-based campaigns priced on a Cost-Per-Lead (CPL) or Cost-Per-Acquisition (CPA) basis can have more accurate reports and data insights due to these exceptionally efficient programmatic media campaigns. One platform that continues to see growth on a day-to-day basis is mobile-targeted advertising. As advertisers try to find ways to reach and follow the on-the-go consumer, it has allowed mobile apps such as Pandora, Spotify, Snapchat, and even Waze to thrive in a RTB environment, and these are just a few examples. Expect programmatic mobile trends to continue to evolve with wearable technology trends, such as smart watches and even smart glasses, looking into the future.

Programmatic Advertising and Ad Fraud

There’s no avoiding the fact that the industry is grappling with the issue of ad fraud, and working hard to find solutions. It’s easy to see why: ad fraud caused the loss of approximately $6.5 billion in 2017. Every single day, digital advertisers and publishers are losing hundreds of thousands of dollars because of these scams—so the IAB has decided to take a stand against them.

What You Need to Know About Digital Advertising Fraud

Ad fraud is when buyers are essentially tricked into paying for ads that they don’t actually get. This digital advertising fraud happens when a scammer buys a cheap space from an unknown, irrelevant site, and then lists it as premium space on the exchange.1 The result is that publishers are under the impression that their ads are being displayed on well-known sites, like The Wall Street Journal or The New York Times, but in reality, the ad is showing up on a site you’ve never heard of. These scammers have created more than 34,000 different domain names, and more than a million different URLs that they are using to trick advertisers. Previously, there was no way to confirm who was actually selling the impressions across the exchanges. IAB created ads.txt in an effort to stop this practice.2

What is ADS.txt?

ADS stands for Authorized Digital Sellers, which is a simple, flexible and secure method for publishers and distributors to declare who is authorized to sell their inventory, improving transparency for programmatic buyers.  Publishers must post a list of their authorized sellers to their domain, and then programmatic buyers can crawl around the web for publisher’s ads.txt files to create a list of authorized sellers for each of the participating publishers. When this has been completed, the programmatic media buyers can use their filter to match their ads.txt list against the data that has been provided.3

Detecting & Stopping Click Fraud

Now, publishers have more control over their inventory, and it’s hoped that ads.txt will eliminate the selling of counterfeit inventory. Ideally larger, well-known ad sellers will begin to adopt this method—some companies who are already discussing adopting this initiative include MediaMath, Adobe Advertising Cloud, and DataXu.4

Programmatic Ad Buying 101 – What Not to Do

In 2017, programmatic display spending reached nearly $33 billion. That’s nearly four out of every five U.S. digital display dollars.5 The programmatic space opens up a lot of inventory and data.

 

While there’s so much right about programmatic advertising, it’s important to take a step back and understand what not to do. Here are six common mistakes we’ve seen from programmatic advertisers:

1. Not Defining a Clear Media Strategy

This first step is often a forgotten one. Just because programmatic media is incredibly popular, doesn’t mean you need to dive into it headfirst.  Start by clearly defining the purpose and objectives of your campaign. Next, understand how you want to accomplish these goals. What’s great about programmatic ad buying is that you have the ability to test different strategies to see what works best, collect learnings, and optimize toward the best-performing campaign.

 

2. Focusing on Media, Forgetting Targeting Audiences

The current state of digital advertising enables you to reach your precise audience through a myriad of advanced targeting capabilities. So, why not use them? It’s easy to assume you’ll reach your audience of men, ages 18-34 through SI.com. But that’s not efficient.

 

At the heart of today’s capabilities is programmatic media marketing. This allows you to efficiently reach users who are valuable to you and your brand. Moreover, this tactic allows you to gather your own audience insights through data collection.

 

3. Not Measuring What Matters

First off, old KPIs need to be thrown out the window. Secondly, the C-Suite of metrics has become buzzwords in the programmatic world: CPA, CPM, CPC, etc. While these are important when calculating ROI, it is also important to consider metrics that will help determine where your prospects are in the path to purchase. Once you understand your customers’ journey, you can optimize to deliver on exactly what they need, and when. Read more about measuring digital engagement metrics.

 

4. Putting all your eggs in one basket

It’s tempting to put all your programmatic dollars into one simple solution, but there’s much more to it than that. Programmatic ad buying covers a wide array of solutions and not all may be right for your brand or your campaign objectives. It’s important to find the solution(s) that best fit your distinctive goals before making any costly mistakes, so that you can get the full benefits of programmatic buying.

 

5. Being Monogamous to a Single Creative

The great thing about advertising online is that you don’t need to use only one creative. In fact, in most cases you shouldn’t be sticking to just one. The beauty of the system is that you’re able to test different creative at the same time, to see which performs best. Therefore, you’re able to see how prospects are engaging with your ad and identify the elements that work best to perfect your creative.

 

6. Confusing Real-Time Bidding for Programmatic Buying

Real-time bidding is a capability within programmatic ad buying, but it isn’t the only one. RTB advertising refers to the purchase of ads through real-time auctions, sold on a per-impression basis via programmatic auctions. For example, one of many capabilities within the programmatic world is the ability to buy guaranteed ad impressions in advance from certain publisher sites, often referred to as “programmatic direct.”

Ready to perfect your programmatic ad buying strategy?

Our digital media experts have your programmatic media solutions.

SOURCES:

1. https://martechtoday.com/everything-need-know-iab-ads-txt-initiative-205979

2. http://adage.com/article/news/wake-call-news-facebook-disney-pixar-uber/311383/

3. https://iabtechlab.com/ads-txt-about/

4. https://digiday.com/marketing/dsps-pressure-adopt-ads-txt/

5. https://www.emarketer.com/Article/eMarketer-Releases-New-Programmatic-Advertising-Estimates/1015682

6.  Source: eMarketer, 2015-2016, Marketing Land, 2016

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