Online Advertising Technology and Innovation Web Marketing

Programmatic Marketing for Dummies

Written by Florian AUFFRET

You might have heard about Programmatic Marketing buzz these last years but never really understood what it really means. Don’t worry you are not the only one. Even marketers are not all aware of this trending topic. According to the IAB Europe, WARC and Appnexus’s study called «Why and How programmatic is emerging as key to real-time marketing success», 50% of media buyers confess they hardly understand programmatic.

Indeed it is a complex domain requiring a specialized technological knowledge and masters a disconcerting new vocabulary.

Nevertheless, you should begin to take an interest in this phenomenon because you have not heard the last of this. Indeed spending in this sector reached 21 millions of dollars in the world, an increase of 50% in 2014 compared to the year prior. Experts forecast another 56% rise in 2017 in France.

 

1. Definition

Its sophistication makes this topic opaque and difficult to explain. Many marketers and researchers tried to give a short and simple definition, but none caught my attention as much as Ameet Ranadive’s one:
“At a high level, Programmatic Marketing is the practice of implementing an automated set of business rules to efficiently target your most valuable customers and prospects with personalized ads.”

  • The automation allows marketers to decrease delays induced by a human chain link in the process in order to be more reactive.
  • An efficient targeting will “eliminate wasted impressions and clicks. Thus, you only show ads to users who have intent, and who are likely to take the desired action” (Ameet Ranadive, 2013).
  • Eventually, customization increases the potential that the customer does the desired action by showing him the perfect customized ad, based on data you know about him and his last searches on the Internet for example.

2. Glossary

To understand how the programmatic marketing is working, you first have to be aware and understand the multitude of actors, notions, and tools that take place in the process.
Below, these are the main words to know:

  • Publishers: have some advertisings spaces to sell on its website
  • Media buyers / Advertisers: buy advertisings spaces to promote its brand or its offer
  • Ad Inventory: It means a publisher’s package of advertisings spaces available for sale. It lists spaces’ locations, forms, and sizes.
  • Ad Exchange: automated marketplaces where buyers and publishers purchase and sell online advertising spaces.
  • Demand-Side Platform (DSP): Platform that allows buyers to manage different Ad Exchanges from a single interface and that bid automatically and in real-time to get advertisings spaces or impressions.
  • Supply-Side Platform (SSP): Platform that operates in the same way than DSP but used by publishers. SSPs gather thousands of Ad Inventories.
  • An impression: when an ad is displayed on a screen.

These definitions do not go in many details. They are, of course, more complex but it will allow you to understand the basis of the following process and get an overall picture of it.

3. How does it work ?

Let’s imagine you are a company that wants to use programmatic techniques to improve and optimize results and budget of your digital campaigns.
You (or your agency if you subcontract this part) will use a DSP to specify the settings and the budget of your campaign.
Then, the DSP will automatically bid for offers of advertising spaces or impressions, in real-time.
To do that, it will connect to an Ad Exchange, which is also, on the other side, connected to various SSP.
Among those SSP and attached inventory ads, DSP will choose spaces that fit most the buyer’s demands.
Once the space is chosen, the ad will instantly be displayed on the user’s screen.
Of course, all these steps happened in few milliseconds.

Programmatic journey

Three types of programmatic exist:

The Real Time Bidding (RTB)

It is quite similar to Google Adwords, except that you do not target keywords requests but advertising spaces, “thus Adwords was the first programmatic solution, without proclaiming itself as such at that time” (Julien-Henri Maurice, 2015).
RTB auctions take place on an Ad Exchange platform most of the time.

If you are a publisher :

  • You allow any buyer to participate in auctions in real-time (even though you may specify a list of undesirables buyers).
  • This is an interesting option if you have a big volume of advertisings spaces on your website, especially for spaces offering low audiences.
  • This is the less profitable form of programmatic publicity.
  • You don’t know who are the buyers.
  • You can only establish a floor price.

If you are a buyer:

  • You allow any publisher to buy.
  • This is the less expensive option.
  • You do not know who you are buying to, the too many transactions inhibit their tracking.

This lack of tracking with the RTB brought some fake publishers to sell ad spaces that did not exist. These frauds contributed to deteriorating RTB’s image and led to the development of the Direct programming.

Direct Programming

The direct programming has been rapidly adopted by agencies that wanted high-quality advertisings spaces to their clients.
As its name suggests, transaction is performed directly. Buyers/Agencies and publishers are in direct contact.

The main difference with RTB and Direct programming is the degree of transparency and traceability. Both parties know with who they deal.

Private auction sales

The publisher narrows the participation to the auction only to a selected buyers group, on the basis of diverse criteria.

The advantage for the publisher is the high degree of transparency and the possibility to choose which ad will be displayed on its website.
For the buyer, interests are less intuitive. Indeed floor prices are usually higher than with the RTB.

The programmatic is already starting to change the way we think and work and its future seems even more exciting. Olivier Monferran, CRM & Digital Manager at Opel France, sees the programmatic as the first step towards the one-to-one marketing Grail.
So stay connected, future is coming.

About the author

Florian AUFFRET

Student in Digital Business Strategy at Grenoble Business School and currently working at FretLink in Digital Marketing