Written by Hanapin Marketing
Programmatic Advertising is a sector of paid media that is growing rapidly and shows no signs of slowing down. According to eMarketer, in 2020, the US programmatic digital display ad spend is expected to grow 20.1%, to $68.97Bn. That’s 86.3% of total digital display spend.
The way in which brands and advertisers reach the masses is changing, and programmatic is the primary driving force behind it. Instead of utilizing one brand message to a broad, generic audience, brands can now tailor their messaging, at scale, to nurture customer relationships on a 1:1 basis.
Programmatic technology allows advertisers to take everything that they know about their customers and potential customers, and deliver a unique experience at each stage of the consumer journey.
This journey has changed. No longer are consumers confined to a single place or time to buy a product or use a service. Modern customers utilize multiple devices at their convenience before completing their customer journey.
Programmatic technology allows us, as advertisers, to serve specific messages–across varying platforms, to the right person, the right amount of times, on the device that makes the most sense–at any stage in the journey. With this technology, brands can build positive brand awareness, nurture prospects through the funnel, and ultimately bring them to the point of conversion.
What is Programmatic?
Programmatic is the process of efficiently managing digital advertising through the utilization of increasingly integrated data, technology and mediums.
There are multiple players that make up the programmatic ecosystem, all of which interconnect to facilitate the buying of ads across the web:
- DSPs, (Demand Side Platforms) are where your campaigns are created, managed and optimized. It is the programmatic equivalent to the Google Ads UI.
- DMPs (Data Management Platform) collect and analyze a vast amount of user behavior and cookie data. Marketers can segment and create new audiences to target based on their specific strategy and goals of their campaigns.
- SSPs (Supply Side Platform). When an ad space goes into a programmatic option, the role of the Supply Side Platform is to determine which ad is the right one to show to the user at that time. These auctions are concluded within milliseconds.
- Publishers: Publishers are the site or app where ads are ultimately shown. Typically, publishers use SSPs and exchanges to auction off their unsold inventory automatically.
This is a simplified breakdown of the ecosystem, in reality… it looks like this:
Programmatic is generally split into 3 different ways to execute buys:
1) Open RTB exchange: This is a collection of open ad exchanges, each of which provides relevant ad inventory to the advertiser via a Demand Side Platform (DSP) such as Google’s Display and Video 360 (previously known as DoubleClick Bid Manager), Mediamath, or The Trade Desk. Advertisers bid on this inventory on a CPM basis. They control the level of bid they want to use.
2) Private Marketplaces (PMPs or Private Exchanges): These are auctions containing unsold inventory that the publisher sets aside for select advertisers. To enter these auctions, advertisers must bid a minimum floor price, set by the publisher. Typically, the content is premium higher traffic areas of the site or app.
3) Guaranteed Direct: This is the programmatic version of the direct buy. Rather than dealing with the hassle of RFP’s and sales staff, advertisers can create deals directly with a publisher via a DSP, allowing them to report and monitor the campaigns themselves. The usual format of these deals is a set amount of impressions for a set price.
HOW IS PROGRAMMATIC DIFFERENT THAN THE GDN?
Most readers of this guide have probably had at least some exposure to Display and/or Video Campaigns in Google Ads, and have seen the features and capabilities expand over the years. What makes programmatic worth the extra work to implement compared to regular display ads? Below are 4 key differences between GDN and programmatic:
Reach:
This is the first thing that we tell people when we are asked this question. Reach through programmatic advertising cannot be matched anywhere in the online advertising industry. DSPs and programmatic vendors provide a single location for advertisers to coordinate and execute online media buys, across billions of potential ad placements provided by over 80 ad exchanges. Display campaigns executed via Google Ads will only show on the Google Display Network. The GDN is still accessible through programmatic vendors in the form of the AdExchange (Adx), also owned by Google.
Targeting:
GDN and DSPs share common targeting features including contextual/category targeting, day parting, frequency caps, remarketing etc. However, where programmatic takes the next step is the additional targeting features it can provide.
- 1st & 3rd Party DMP integration: Advertisers can take advantage of internal data (1st party – Remarketing, CRM data) or use 3rd party audiences created by DMPs that have collected user cookies and segmented them into certain behavioral categories. This data usually comes at an added cost.
- Granularity: Every advertiser is different, and has different strategies, goals, objectives, and device-specific experiences. So why shouldn’t they be able to use their advertising technology to reach the right person with the right experience at the right time?
A hypothetical example:
AT&T is running a promotion to encourage users on T-Mobile to turn in their old iPhone and switch their plan to receive a free iPhone X when they upgrade. DSPs provide the opportunity for AT&T to show a highly tailored message to only the users who are viewing ads on an iPhone 9 or earlier model and operating on T-Mobile.
Reporting:
While both Google Ads and DSPs provide similar base reporting, another important aspect that differentiates programmatic from the GDN is the depth and granularity of reporting. This deep level of available reporting filters provides advertisers with unparalleled amounts of data to inform their marketing decisions.
Beyond making key device targeting decisions, like the example provided earlier, advertisers can also use granular reporting to see if ads were shown above or below the fold and how well those positions performed. Advertisers can then use that data to make key optimizations.
TIPS FOR PAID MEDIA MANAGERS TESTING PROGRAMMATIC:
For those of you who have already started testing self-serve programmatic (or are planning to), and are struggling to see the performance, here are some features and tips that are easily overlooked when making the move from Google Display to programmatic.
Exchange Performance Reports
Pull campaign reports, grouped by exchange, and see which exchanges your ads are serving on. Highlight your worst-performing exchanges and remove them from your targeting. It is worth noting that this technique can have an impact on your scale. If your largest source of inventory is the worst performing, it may be worth reevaluating your targeting.
Analytics
Google Analytics is probably the most important tool that you can use when managing programmatic campaigns. Campaign metrics such as impressions, clicks, and CTR will only provide a snapshot of your overall campaign performance. It merely shows that someone saw an ad, clicked on it, and visited your site. But what did they do when they got there? Did they bounce? Did they look around? Did they buy? Use Google Analytics to see the full impact of your campaign. High bounce rates and low time on site may indicate several problems, such as:
- Landing page relevance
- Poor user experience
- Subpar targeting
…or even worse:
- Bot traffic
Armed with data and insights, you can adjust your funnel, user experience, and targeting to fine-tune your campaign performance. Your analytics tell the story of your customer journey; make sure it is not a horror story.
Bidding
Many DSPs in the marketplace have their own proprietary algorithms that they can apply to your campaigns to reach specific CTR or CPA goals. However, algorithms and robots don’t always work to your advantage. If you set your goals wrong, you could see low scalability. If you set them too high, you could run into performance issues.
Human analysis and interaction are constantly needed in programmatic, especially when it comes to bidding. While algorithms can be useful as more campaign data is collected and your strategy evolves, DSPs do not create them.
It is important to consider testing manual and automated bidding as you ramp up your campaign. Not only does this control how you manage your budget, but it also gives insight into what is the right bidding approach for your strategy.
ISSUES IN THE INDUSTRY:
Ad Fraud
One primary concern among many marketing teams when taking the step into programmatic is ad fraud. Ad fraud is the practice of using simulation software that mimics user behavior online which triggers ads to serve on shell “publishers” to generate ad revenue for those creating the bots. It is expected that at one point, up to 30% of all ad impressions and traffic were a result of “Bots.” As the industry has evolved, so too has the technology. Safeguards can now be implemented either directly with a DSP or through a 3rd Party Vendor to filter out the majority of bot traffic and ensure that your ads are being shown to real people.
Brand Safety
Like all concerned advertisers, we want to make sure that the ads we run are showing where they are supposed to be. Third-party vendors such as Peer 39, Integral Ad Science, and Double Verify already integrate directly with many DSPs to ensure that the inventory you bid on is verified to be brand-safe and real.
Costs
With all the beneficial features that exist in programmatic, it does come at a premium. Many DSPs come with a high minimum spend or access fee. Google Ads, as we all know, is plug and play. DSPs also take a percentage of spend compared to Google Ads, where all spend is allocated towards the media costs.
WHAT LIES AHEAD FOR PROGRAMMATIC?
The future is bright for programmatic. As the entire advertising industry evolves, we are starting to see programmatic technology being adopted in new forms as well as the more traditional sectors.
Native
As the popularity of ad blockers continues to rise, the Ad tech industry is looking for different ways to make ads more conducive to user experience and less intrusive to the customer. In similar fashion to the way Facebook and Twitter incorporate ads into their primary user interface, companies such as Triplelift and Outbrain are leading the way in creating opportunities for advertisers to reach customers with content that seamlessly blends into the environment around it.
Programmatic TV and Audio
This is probably the most exciting prospect for advertisers. TV and audio are still the easiest way to reach a mass audience and build a recognizable brand. Like direct deals with websites and publishers, the potential to forego the usual RFP and Sales process by introducing automation, coupled with the ability to layer audience data on top of these broad audiences, is causing disruption in the industry and is showing no signs of stopping.
SUMMARY
There are many differences between the GDN that PPC Managers know and love, and the programmatic ecosystem. Google Ads will always be king when it comes to search–there is no question about that. However, the competitive landscape and customer demands have forced advertisers to move beyond Google Ads. Better targeting offers the opportunity for a better customer experience, which in turn drives revenue and ultimately brand loyalty. Programmatic is redefining the industry as we know it, and advertisers need to adapt.
