What is Programmatic Advertising?

Summary

Programmatic advertising using real-time bidding technology has been a cornerstone of digital marketing since its debut in 2009. Today it comprises over 90% of US digital display spend and is the most common method of transacting.

For most of this time, programmatic advertising has been the realm of large advertisers and agencies using powerful software platforms to buy digital advertising space, but many smaller advertisers have been exposed to programmatic advertising through Google Ads.

In this guide, we explore key concepts of programmatic advertising including various processes that are involved, how data is at the heart of programmatic advertising, and different targeting methods. I also aim to SHOW you what programmatic advertising looks like – take a look on this page to see examples of real programmatic ads. By the time you are finished reading this page you’ll understand how the ads you are seeing are tailored for you.

Programmatic advertising is a method by which an advertiser uses auction-based bidding software to buy digital advertising space across media channels such as Display, Online Video, Audio, Mobile, Native, Out Of Home, and Connected TV (CTV). This method has revolutionized the advertising industry by automating the buying process and utilizing algorithms to target specific audiences effectively. Ten years ago programmatic was mostly desktop display ads (the banners you see on this page) but that channel has been eclipsed by Mobile and the fast growth of video and CTV.

What are the benefits of programmatic advertising?

The main benefits of programmatic advertising are transparency and control. Transparency into where your advertising dollars are going and control over how and where your money is spent in real-time.

Not every dollar of programmatic spend goes to working media. Fees are taken out for use of the platform, data, and other optimizations along the way. Unlike direct buys, programmatic buys disclose all fees and hidden costs upfront so you know how much of your budget is going to ads that are being seen. Programmatic platforms provide detailed analytics and reporting, offering insights into ad performance and spending.

Control over your advertising buy is essential. There are three elements of programmatic advertising that you can control.

The first is inventory or placements. Inventory refers to the domains and publishers that you are buying ad space from. An example of this could be wsj.com. The Wall Street Journal is filled with available ad placements that you can target via a PMP or direct deal in your programmatic platform. You can choose to advertise with this publisher or block them from your ad buy. There is a whole science to optimizing your inventory selection in programmatic and it’s one of the services that HOP offers.
The second element you can control in programmatic buys is the audience that gets to see your ad. There are many ways to optimize your data or audience strategy, but the main concept here is precision targeting at scale. Programmatic advertising allows you to utilize data to target specific audiences based on demographics, behavior, and interests, ensuring your ads reach the right people. A majority of optimization work on programmatic campaigns is around how to segment your audience(s). HOP can help you with your data strategy as well.
Finally the last element you can control in programmatic is the creative format and messaging. Having strong creative will have the most impact on your programmatic advertising effectiveness! There are many different formats available and ways to personalize your ads. Just take a look at this page to see some example formats used for display ads. Creative format selection is crucial to the success of your programmatic campaigns and is something that HOP specializes in.

Programmatic Channels

Below are the most common digital channels utilized by programmatic media.

Video

Digital video (sometimes called Online Video or OLV) is any type of video content powered by the internet. Video ads are great for building brand awareness. They can be shown with video content in the video player itself (in-stream video) or on a web page that may not have video content (out-stream video).

Mobile

Mobile advertising refers to ads served on handheld devices like smartphones and tablets, engaging users across their browsing experiences, both on the web and in-app. Mobile advertising can be used for app retargeting to re-engage users who have already shown interest by downloading your app, or geotargeting which uses location-based services to deliver relevant and timely messages.

Native

Native advertising blends seamlessly into the media environment, providing unobtrusive user experiences. Integrate your ads into the look and feel of the media environment for a more engaging experience. Sometimes native ads are referred to as in-line, in-feed, or in-article ads.

Audio

Audio encompasses digital music streaming, podcasts, and talk shows through platforms like Spotify, Pandora, and iHeartRadio. It is used to reach consumers in a non-skippable environment with contextually relevant ads.

Connected TV (CTV)

Connected TV (CTV) or Over-the-Top (OTT) refers to internet-connected devices streaming content on home TVs, similar to traditional TV commercials.

Digital Out Of Home (DOOH)

Digital Out of Home (DOOH) or programmatic Digital Out of Home (pDOOH) are digital screens that are on street furniture, highway signs, elevator screens, on top of taxi cabs, etc. Really any public screen that is connected to an ad network is considered DOOH. This channel is one of the fastest growing channels favored by advertisers to reach consumers on the go. Geo-targeting by screen location is the most common form of targeting, but there are more advanced ways to target out of home ads to users based on their mobile device.