Programmatic 101: Answers to Some Common Questions

One of the tasks that marketing teams have been struggling with for a while is to explain where the budgets are being spent and what the return on investment is expected. When it comes to digital advertising, this is not even the issue. Instead, specialists work hard to select the right instruments, monitor their effectiveness, and make the necessary changes.

Today, advanced marketers are using programmatic advertising to keep up and help their clients target the audiences in a more accurate manner. This approach is relatively new but it has been around for quite some time. In this post, we are about to address the most common questions you may have and share some of our insights.

What All the Buzz Is About

Programmatic allows digital marketers to focus on viewers instead of booking a digital space for a particular time. The tricky part here is that programmatic gathers information about a user when a webpage is loaded. So, gender, sex, location, etc., as well as information about a website, is assembled and then sent to an advert exchange. This is where the magic happens: a number of bidders that aim to reach a person with that profile compete and the winner shows its message to the target user.

Ecommerce businesses can truly benefit from the aforementioned options. We, digital marketers, are excited to be able to target every member of the target audience. Indeed, it makes more sense to identify users, rather than spend time choosing a website that they will probably visit. This is a solution to a problem when a lot of adverts are wasted by being shown to the wrong individuals.

So, programmatic is a special technology that brings us closer to truly personalized marketing. This approach is data-driven, so its credibility is high enough. However, the related problem here, as mentioned by our specialists, is that Google does not provide a separate data management platform. Therefore, data management is made using third-party solutions.

Structure of Programmatic

The thing well-known about programmatic is that it allows real-time bidding on open exchanges. Thus, advertisers can reach the highest exposure while maintaining the lowest possible cost. This works out for ecommerce but obviously does not help much if you work in a B2B niche, at least for now. Spoiler alert: the system develops, so more options are to come. Meanwhile, let us focus on how the technology is useful for online stores and classifieds since we have more expertise and experience in those niches.

So, programmatic is a complex technical concept and a system that consists of three platforms:

Purchasing transactions in the system happen instantly. Advertisers use cost per thousand impressions to bid for programmatic ads. To calculate bids in real time, the system uses different parameters, including historical data. This allows reducing costs by removing human factor and speeding up the process of making buying decisions.

Tendencies for 2017

Major market players along with research agencies have recently made some predictions about the development of programmatic. Our experts also have a few insights to share with you.

  1. Cross-device and cross-format solutions will be used more often.

EMarketer predicts that 3/4 of all programmatic display ad spending will be mobile. We also project that mobile ad spending will rise and outreach desktop. In addition, a programmatic video is likely to develop to the same extent as business video content.

  1. Pre-bidding will become a traditional technique.

Header bidding enables publishers to compete for the premium inventory that used to be available only for those who made bulk purchases. It will be also easier to get access to data about the target audiences.

  1. Budgets for programmatic will grow.

We see that this channel has been growing throughout 2017. This is due to the fact that automatic buying is more beneficial for advertisers as compared with direct transactions. There will be no surprise when programmatic advertising reaches 100% of total advertising purchases.

  1. Campaign KPI’s will become more thoughtful.

Though marketing metrics are important, they can hardly be helpful for business owners and ecommerce marketers. They are likely to focus on lead volume, conversions, and revenue rather than track paid traffic, social share, and click-throughs.

  1. People using ad blockers will see relevant ads.

Netizens install ad blockers to better their user experience, which affects advertisers who struggle to make their message heard. Fortunately, ad blockers have learned how to identify relevant ads to the user and, therefore, allow the content to be displayed. Big publishers also developed some solutions to bypass ad blockers.

Our Concerns

At the moment, we lack data to analyze whether users are ready to be addressed in such a personal manner. It seems that some people may argue that this is an intrusion into their privacy at least.

Another thing is that programmatic does not work well for increasing brand awareness. Therefore, if this is the case, it sounds reasonable to use traditional instruments of contextual advertising. In other words, add more human touch.

Last but not least, the algorithm is still learning. It is not perfect. Do you remember the problems YouTube had earlier this year? Pepsi, Walmart, J&J, and some other companies found out that their ads had appeared next to content promoting hate speech and extremist views. This was a result of using programmatic methods. So, it does not always perform as planned; still, an attention of specialists is required.

Wrapping Up

The technology itself is quite effective and promising. From our experience, ecommerce projects respond well to such an automation. Either way, it is recommended to never stop testing your advertising, including display ad formats, calls-to-action, and creative designs. If you are curious on what benefits programmatic can bring to your online business, contact us anytime.

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