Programmatic Media Buying Explained for eCommerce Businesses

If you are buying into other websites’ media space, you are probably familiar with the “direct buy” long journey that involves long negotiations with publishers, tons of emails, and other manual actions. To cut this long story short, marketers struggled to make everything automated. But they did succeed — in 2009 when the real-time bidding technology was invented. This is where programmatic media buying has its roots.

eMarketer predicts that 87.5% of total digital ad spend will belong to programmatic by 2021. But who actually needs programmatic? Is it a good fit for eCommerce businesses and their budgets? How does Google offer to go programmatic? All this and more about the process, its benefits and takeaways of using programmatic media buying is explained in this article. 

What Is Programmatic Media Buying?

Let’s define programmatic media buying as the process of buying ads via a real-time bidding auction that occurs with minimum intervention of a buyer. The system pretty much resembles the pay-per-click system when advertisers place bids, and the highest bidder takes the desired slot. This is a great way to target the right audience and show your ads on the quality publishers. Time & budget questions are effectively solved with programmatic buying, as you only pay for effective ads, delivered to the right people at the right time. Automation is acquired with the help of programmatic media buying platforms that have online bid managers embedded on the website. This process is well-known to all marketers and called RTB (real-time bidding).

real time bidding

How Programmatic Media Buying Works

Basically, the process looks simple and occurs in 5 steps. But before we go into detail, lets see the glossary of attributes you are likely to meet when exploring programmatic media buying.

  • DSP (demand-side platform). These are used by marketers to set the purchasing parameters for ad campaigns. DSPs are designed to facilitate the process of buying ad inventory on the open market. 
  • DMPs. Data management platforms collect and evaluate the information obtained from cookies’ info to update marketers with a real picture of their audience for the sake of quality targeting. DMPs integrated with DSPs allow reaching out to target audiences.
  • SSPs (supply-side platforms) collect data about the web page viewers and submit a publisher’s ad inventory on an Ad Exchange. 
  • Ad Exchange is the available inventory publishers make available to advertisers who select programmatic media buying. Ad Exchanges run auctions based on one impression at a time via RTB. 

programmatic media buying scheme

As mentioned, the process of programmatic media buying usually consists of the following steps.

Step 1. Audience (on the right) visits a website or app and leaves data of themselves saved as cookies. At this very moment, the so-called ad expression is formed. 

Step 2. The information collected is sent to SSP for its owner to further form the bid floor (the minimum amount a publisher (stands closest to the audience) wants to accept for 1000 impressions).

Step 3. The SSP comes to a DSP with a bid request. Agency Trading Desk (on the left) on behalf of brands pre-set campaign parameters on DSP: add creatives, configure frequency capping, set targeting, daily budget spend, and preferable CPM (price for 1,000 advertisement impressions), etc. 

Step 4. The auction starts. DSP evaluates ad impression value consisting of targeting & budget to respond to the bid request and sends it to an ad exchange (in the middle). 

Step 5. Ad exchange processes the bids from DSPs. The highest bid wins. The auction is over. The winner’s ad is sent to the publisher and displayed to the targeted audience.

Benefits of Using Programmatic

Programmatic media buying has the undeniable advantages over direct buy.

  • Precise targeting. Programmatic is definitely about reaching the right people at the right time. It offers flexible demographic targeting, zoning in on a specific IP address, contextual keywords, etc.
  • Reach out to broader audiences. Programmatic with its focus on ad impressions and targeting parameters opens the window to the whole online population of 3.5 billion people.
  • Cost-effectiveness. Although CPM differs for each campaign, it is usually believed to cost somewhere between $0.50 and $2. But here we refer more to saving money you may spend on your workers’ precious time and the inaccuracy in targeting your audiences.
  • Saving time. In addition to the possibility to avoid manual interactions, programmatic has the real-time measurement capacities that allow to watch the effectiveness of a campaign before it ends and make adjustments if necessary.

Who Needs Programmatic Media Buying

The biggest programmatic market is the US, where back in 2018 US$40.6bn was expected to be spent programmatically – 58% of the total. China is in a distant second place, spending US$7.9bn on programmatic advertising this year, followed by the UK, with US$5.6bn of programmatic ad spend.

Obviously, programmatic is not a fit for beginners and brands on small marketing budgets. And this is not just the money talk, — they simply don’t need it. With the variety of marketing channels modern digital world offers to marketers, investing money in programmatic media buying seems a waste indeed. Although, if your target audience is exactly where you are trying to reach them with your display & other ads, you can still do that with Google Ad Manager.

Programmatic Media Buying Platforms

Programmatic advertising platforms are designed to help brands manage their ad campaigns effectively. Some of them serve as DSPs, while the others combine DSP, SSP, DMP and Ad Manager in one place. Among the most popular are SmartyAds, TubeMogul (a part of Adobe Advertising Cloud), MediaMath, Amazon, TubeMogul, Facebook Ads Manager, and more.

However, one well-known corporation managed to unite advertising platforms to provide the programmatic experience that brands and marketers will love.

Programmatic Media Buying with Google

google ads

Google Ads

Google Ads is an online advertising platform developed by Google, where advertisers pay to display brief advertisements, service offerings, product listings, video content, and generate mobile application installs within the Google ad network to web users. Google Ads is referred to as the supplier of advertising services.

Adsense

This is a program that allows website publishers in the Google Network serve text, images, video, or interactive media advertisements targeted to the website content and audience. These advertisements are administered, sorted, and maintained by Google. Adsense is embedded on the websites within Google Ads Network. In other words, Adsense is what “decides” whether your ad will or will not be shown at a certain website.

Neither Google Ads nor Adsense has a relation to programmatic. Although, they are vital parts of the vast Google ecosystem. At the same time, they play an important role in understanding Google capacities for programmatic media buying.

Display & Video 360

When we refer to programmatic with Google, we actually mean Display & Video 360 (which used to be DoubleClick Bid Manager till 2018). 

Google defines Display & Video 360 as a single, integrated tool that helps creative, data, and media teams work together to execute end-to-end campaigns. In fact, DV 360 unites popular advertising marketplaces like PubMatic, Rubicon, AppNexus, Index Exchange and others for publishers to no longer go through several circles of the media buying process. DV 360 is itself a DSP. It provides access to external suppliers and specific websites. 

dv 360

Using Programmatic with DV 360 is a winning choice for eCommerce companies that target specific websites, which obviously has the necessary audience. You can either take part in real-time bidding or pay a fixed price for your ad to be placed on a specific website. Although such an option costs more, you can allocate budgets in a more effective way. Let’s assume you are selling mobile phones. Everyone needs your products. Then you can place your bid and win –  your ad is placed on a set of dedicated websites. But what if your product is exclusive and aimed at a really specific audience, say premium-class cars. Then why spread yourself at 1.000.000 views on dozens of different websites, where you’re not likely to reach those who can afford your product? Focus on one really green pasture, like Forbes in this case, to catch those who need your product and are ready to purchase from you.

Google Ad Manager 

Being a separate part of Display & Video 360, Google Ad Manager is the ad server used by publishers to sell ads programmatically or directly to advertisers. It also allows publishers to bid for a place on YouTube. Publishers using Google Ad Manager are keeping over 80 percent of the revenue, when an ad is shown programmatically through Ad Manager.

However, Ad Manager limits publishers to placing ads in Google services including YouTube. This could be a fit for companies with lower budgets, that are genuinely interested in more viewers with broader characteristics seeing their ads.

Programmatic Summary

Programmatic media buying is the process of buying ads via a real-time bidding auction. The process of automated media buying occurs in 5 steps, involving DSP, DMP, SSP and Ad Exchangers. The principle is based on paying for ad expressions saved as cookies when online users visit certain websites. Programmatic has some major benefits over the direct buy process. Automation of the process not only saves time but helps target the ads to the right audiences, and reach more people exactly when and where they need it. Its cost-effectiveness is about showing ads to specific groups of potential consumers. These can be a specific website or group of websites within one network. Google has great programmatic opportunities implemented in Display & Video 360 and a wider selection of media space limited by YouTube and the Google ad network. The pros of programmatic media buying and its potential for eCommerce websites make it a winning choice in digital marketing space.

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