Programmatic Advertising: The New Behemoth in AdTown

Programmatic Advertising: The New Behemoth in AdTown

I have recently became certified in Google AdWords, with my focus directed towards display ads. It is quite impressive how the bidding process goes and how your display ad ranks. But just when I thought I had a good grip on digital advertising, something new started catching my attention: Programmatic Ads.

Curious and the ad-tech obsessed that I am, I started scratching the surface of what seems to be a giant in the display ads spend. eMarketer just estimated that programmatic display spend will grab just over $10 billion by the end of 2014 and will account for 63% of display spend by 2016. These are big numbers, folks, and we ought to take notes.

So, what is Programmatic Advertising? George John, CEO of Rocket Fuel, has the best answer that made sense to me:

[It is] the application of Artificial Intelligence and Big Data to bid on an Ad Inventory source, through an Ad Exchange, in real time, to show one specific ad to one anonymous consumer, in one context and on one device.”

Phew.. That was a mouthful.

Yahoo! is in talks” to buy a programmatic ad platform. IAB boasts and holds seminars about it. AdWeek and Digiday have series of articles and posts to explain what it is. Chango spent a ton of money and time writing whitepapers about it. So, why is it so important?

I found that the answer is: Targeting. Programmatic provides targeting like never before. So, let’s look at the evolution of targeting to try and understand how programmatic is different.

Traditional advertising provided a wide reach of impressions to an audience that may or may not be interested in the ad. If you watch the Golf Channel, you’re probably an affluent, college graduate, 25-54 years old, and interested in golf. A financial services commercial may be appropriate here.

Digital advertising came and changed the game a bit, with Search and Display Ads delivering impressions based on intent targeting and context. If you’ve searched for a BMW in the past 30 days, you might be looking to buy one, interested in BMW, or at least a BMW fan. Therefore an ad for BMW targeting you is correct there.

Intent targeting could use cookies stored on computers to infer interest and other habits, and then serve an ad that matches these characteristics as a target. Even with that, we are spending a lot of money and reaching a lot of people who are not going to be interested or relevant to the product we are selling. That is because we’re still serving ads on sites or apps where our target audience is potentially frequenting.

Now, we have programmatic ads. It leverages Big Data collected about internet users to narrow down the number of impressions and serve a precisely targeted ad. It provides the ability for real-time bidding (RTB) for each impressions. I may have lost you somewhere in here, but to bring the thought back home, I found this video from Media Crossing to be the most useful. Take a look:

So, with programmatic advertising, we can target individuals rather than an app or a site. It provides us with the ability to pay only what each ad impression is actually worth, not a for a handful of impressions that may or may not serve our purpose.

I have to admit, this is a behemoth of a topic. I am quite confused with a lot of its aspects. And if you’re like me, new to this topic, you could use some help understanding terms to begin with. That being said, the next post about programmatic ads will have a deeper explanation, and a bunch of definitions.

In the meantime, I wonder if anyone is familiar with some brands that are using programmatic ads and how they have been useful. Any brand or agency in Buffalo, NY is experimenting with it? Let me know.

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