Programmatic display advertising isn’t new. Back in 2013, the International Data Corporation (IDC) predicted that spending on real-time bidding (RTB) programmatic display advertising would increase at a compound annual growth rate of 59% by 2016.
Today, programmatic display advertising is the fastest growing segment of digital marketing.
According to eMarketer, programmatic display spending will cross $33 billion in 2017.

US Programmatic Digital Display AD Spending

Programmatic advertising is the future of digital advertising, and there couldn’t be a better time than now to get started with it.

What is programmatic display advertising?

So what exactly is programmatic display advertising?
According to MarketingLand, programmatic advertising helps automate the decision-making process of media buying by targeting specific audiences.

Digiday defines it as:
“The use of software to purchase digital advertising, as opposed to the traditional process that involves RFPs, human negotiations, and manual insertion orders. It’s using machines to buy ads, basically.”

In simple words, it is the purchasing of online ad space in real-time bidding scenarios and the showing of your ads to the most appropriate target audience.
Programmatic display advertising goes by several other names including real-time bidding (RTB), programmatic, programmatic advertising, and programmatic buying.

Here is what happens when you run a programmatic advertising campaign:

  • You buy an ad space via an Ad Exchange.
  • You enter your bid against your competitors’.
  • Your ad will be served if you’re the highest bidder.

So all you have to do is sign up with an Ad Exchange and the rest is easy.

Why your brand needs programmatic advertising

There are several good reasons as to why your brand should use programmatic buying. Statistics show that brands, both small and large, are actively involved in programmatic advertising across multiple channels.

Why your brand needs Programmatic Advertising

But you don’t have to use it just because everyone else is using it. Here are a few major reasons for, and the benefits of, creating your first campaign today:

a). Targeting: One of the primary benefits that your brand will enjoy is that you can laser-target your audience. Google conducted a survey and asked advertisers what was the most attractive feature of programmatic advertising.
Some 76% of advertisers reported that targeting options were what they loved about it.

Top draws to programmatic buying

The Economist showed the world in 2015 how to use programmatic advertising like a boss. It won the Masters of Marketing award for its series on strategy and campaign.

Economist created 60 creatives to target some 650k prospects who were reading similar stories on leading news sites.
With the help of dynamic advertising, creatives were built in real-time which matched the viewer’s preferences and the current story he was reading to one of the Economist’s similar story.

Here’s an example:

Dynamic Advertising, Economist's Example

The reader was reading a story on The Telegraph regarding the Mediterranean migrant death toll, and he was seeing an ad at the same time that said, “Why has the Mediterranean turned into the Dead Sea?” This ad led the user to the exact story on the Economist.

These types of highly targeted ads were created automatically for hundreds of users, based on analyzing the Economist website and app and then matching cookies and subscriber data to create an audience for seven sections.

A look-alike audience was then created as the target audience for this campaign.

The end result?

The Economist achieved 50% of its target in 9 days with an ROI of over 10:1. Over 3.6 million people took action as a result of this campaign.
This is what you can achieve with the help of programmatic advertising. Your campaign might not deliver these exact results, but you can definitely do much better than what you would do with traditional advertising.

Programmatic advertising is, undoubtedly, the best when it comes to targeting. AdWords is no match.

Programmatic Advertising with AdWords

b). High ROI: Programmatic advertising uses artificial intelligence (AI). This is why it is known as programmatic advertising. What does that mean?

It means the program learns and gets better with time as to where and when to run your ads for maximum conversion and ROI.
It is highly targeted, multi-channeled, and uses AI; therefore, any advertiser who uses programmatic buying gets a massive return on investment. This is the reason why 70% of B2B marketers plan to increase spending on programmatic advertising in 2017.

Use of programmatic advertising increases Conversion and Click Through rates

CarTrade used programmatic advertising to increase its conversion rate by 30% and its CTR by 120%. It also generated 5 times more leads.

In reality, it gets a whole lot easier to increase the ROI of your programmatic display advertising campaign if you’re using the right tools.
For instance, you can use AdWords, Analytics, and DoubleClick (Google’s programmatic advertising platform) to set up an attribution model to see how each programmatic advertising channel contributes to your customer’s journey.

c). Multichannel: One of the major issues with traditional advertising channels such as AdWords and Bing is that they have their own network of sites where your ads show.

For instance, when you run a display campaign on AdWords, your ads will only be displayed on Google’s partner websites.
Fine enough.

But what about other websites that are not part of Google Display Network?

Similarly, if you run a video ad, even if your campaign is running with the world’s largest ad network, you’ll only be able to reach YouTube.
What if you wish to reach other streaming sites?

Programmatic advertising provides you access to a massive inventory of ad networks, publishers, and ad exchanges. You can run ads in several formats, including media-rich ads that are interactive and personalized.

The best part is you can advertise on mobile, desktop, tablets, apps, in-videos, and pretty much everywhere you want. If the options seem endless, it may make sense to reach out to a programmatic display advertising agency for some advice.

d). Better reporting: The fact that programmatic advertising uses AI and is highly targeted means it provides you with reports and insights on your campaigns, ads, target market, buying patterns, and several other variables that can eventually help you take your marketing to new heights.

Since it makes targeting a piece of cake and you can literally serve a unique ad to every single person, this allows you to analyze your customers at an individual level which is not possible with other forms of online advertising.

Merge reporting from your programmatic advertising campaigns with big data and you’ll be unstoppable.

Other reasons for, and benefits of, using programmatic display advertising right now are:

  • It is a totally automated buying platform.
  • It supports media buying from several different networks.
  • You have real-time bid adjustments.

Important terminologies

In order to fully understand the next sections and to use programmatic advertising, you have to understand major terms and abbreviations that you’ll hear (or read) a lot.

Unfortunately, programmatic advertising is filled with lots of abbreviations.

  • Real-Time Bidding (RTB): Buying and selling of ad space online via real-time auctions that happen in milliseconds.
  • Demand-Side Platform (DSP): Software that is used by advertisers to buy ads automatically. It is more of a technology than a software. The leading DSP platforms include Turn, MediaMath, Invite Media and DataXu.
  • Supply-Side Platform (SSP): A technology platform used by publishers to sell advertising space automatically. It is a publisher equivalent of DSP. Leading SSP platforms include Google, OpenX, Right Media, and PubMatic.
  • Data Management Platform (DMP): A data warehouse that’s essentially a software that holds information about consumers and customers. DMP collects information primarily through cookies which are used for advertiser targeting.
  • Ad Exchange: A digital marketplace where advertisers and publishers buy and sell ads. Leading ad exchange platforms for programmatic advertising include OpenX, The Rubicon Project, and Google.

With these definitions, abbreviations, and jargon in mind, let’s move ahead and see how these fit together in the programmatic advertising ecosystem.

Types of programmatic display advertising

There are two major types of programmatic media buying:

1. Programmatic RTB.
2. Programmatic direct.

1. Programmatic RTB

If you’ve ever used AdWords or any other advertising network, you can easily understand what programmatic RTB means. Just like how AdWords calculates bidding in real-time for all the advertisers, the same goes with the programmatic RTB.
In this case, real-time bidding is done programmatically, and the highest bidder’s ad is served.

Here is how it works:

Real Time Bidding

Whenever a web page with a programmatic ad space loads, the information about the web page and the user visiting it is sent to the ad exchange or SSP. The ad exchange awards the available ad space to the highest bidder.

This is done in milliseconds – the back end is completely on autopilot.

A potential advertiser uses a DSP for bidding on ad spaces. The purpose of a DSP is to automatically bid on the most relevant ad spaces based on the advertiser’s set criterion. It communicates with the ad exchange.

As an advertiser, you can use your DSP to bid on several ad exchanges at a given time.

Since it is real-time bidding, you cannot purchase an ad in advance for a set period of time — just like you cannot buy an ad on Google Display Network (GDN) in advance.

2. Programmatic direct

What if you want to buy an ad space for a week or for 10k impressions on a highly relevant website? You cannot do it with GDN and programmatic RTB.
You can do it with programmatic direct.

Programmatic direct is also known as automated guaranteed or programmatic guaranteed.

It refers to buying ad space programmatically without bidding. This makes your ad guaranteed every time the page is loaded and successfully passes your set criterion for targeting.

Programmatic display advertising-direct

According to eMarketer, programmatic direct spending crossed $8 billion in 2016 where it represents over 40% of all programmatic display advertising.
Programmatic direct is the best option for your brand if you’re interested in better targeting because you can choose when your ad will be served, for instance, to visitors coming from a particular zip code.

How programmatic display advertising works

By now, you know how it actually works because you know a lot about it.
Here’s an overview of what happens at the back end and how it all works.

Programmatic display advertising - real time auction

  1. Publishers create ad space on their websites via SSP and connect their SSP with an ad exchange.
  2. Advertisers set their target audience, cost, budget, and other necessary details with their DSP and connect it with an ad exchange.
  3. A user visits a website. All the information about the user is sent to the ad exchange.
  4. If the user’s information matches an advertiser’s defined audience, he will enter the auction for RTB. If it’s programmatic direct, the ad will be served.
  5. The advertiser with the highest bid will win the ad space for programmatic RTB, and his ad will be served.
  6. The publisher will get paid for the ad.

This might not seem to be an issue if you’ve ever used a PPC network. The only difference is that in this case, everything is done programmatically using artificial intelligence which improves every single step of the entire process.

It might seem similar to traditional online advertising, but it isn’t. It takes out all the manual work.

Display Advertising Programmatic vs Traditional

How to get started with your first programmatic advertising campaign

Theoretically, you know pretty much everything about programmatic display advertising. It is time to get practical.

So what are you supposed to do if you want to run your first programmatic ad campaign?

It is a 5-step process to help your brand get best results from your programmatic advertising campaign.

Our Digital Marketing Agency has implemented this methodology successfully in several marketing campaigns.

1. Set objectives

Just like any other marketing campaign, you’ve got to begin with setting clear objectives.

The first question that you should ask yourself and your team is:

Do we really need a programmatic advertising campaign?

Just because your competitor has set up a programmatic RTB campaign doesn’t mean you should invest money on the same. You cannot.

You should not.

You should opt for programmatic advertising if:

  • Your traditional advertising campaigns don’t give you access to your entire target market.
  • You can reach your market across all the channels and devices.
  • You’ve spent enough on PPC and other forms of advertising and have massive data about your target audience.
  • You need to use it as a competitive edge.

I hope you get the idea.

You have to have a clear understanding of why your business needs programmatic advertising. I’m sure you do.

The next step is to set objectives and decide what exactly you want to achieve with a programmatic advertising campaign. What’s your primary goal?

  • Brand awareness?
  • Increase in sales?
  • Lead generation?
  • ROI?
  • Engagement?
  • Traffic?

Your advertising team should have no confusion in terms of the objectives of the campaign.

When Nestle ran its programmatic campaign, its primary goal was to maximize the sale of its coffee machines, and the secondary goal was to reach a new audience. Over 91% of ads were served to new visitors.

If you set clear objectives, you can easily measure results, and at the same time, your team will find staying focused gets easier.

2. Choose DSP

Just like when you have to run a PPC campaign, you have to register with an ad network. Similarly, you have to choose a DSP. Some of the leading DSPs include Turn, MediaMath, Invite Media, and DataXu.

A DSP, as discussed, gives you access to advertisers and ad placements. It allows you to set bids.

A DSP is essential and the first part of your programmatic advertising campaign. It is complex and expensive software, so you should get in touch with an agency that has access to a DSP and experts in programmatic advertising.

You have to choose a DSP and an agency to kick-start your first campaign. According to Ian Harris, your choice of DSP and agency should be based on two factors:

1. The quality and quantity of inventory available with the DSP and your agency.
2. The cost for the campaign.

Normally, DSPs will help you get started immediately bypassing the need for an agency. If you’re new to programmatic advertising, it is recommended to go with an agency.

Here are a few important questions that you must ask regarding the DSP and the agency you’re about to work with:

  1. How do you source your inventory?
  2. What are the targeting options available to you?
  3. What are the channels and verticals you support, and what verticals perform best?
  4. What’s the average CPM?
  5. How do you deal with fraud and brand safety?
  6. Do you’ve a fraud protection policy?
  7. How you track and measure ad viewability?
  8. Do you offer customized support?
  9. Do you support rich media?
  10. Do you have re-targeting features?

The answers will help you determine if a DSP is a good fit for you or not. Before you contact a DSP or an agency, make sure you’ have done your homework and you know what exactly you need, what your objectives are, what channels you need to go for, what your budget is, etc.

Once you’re done with the DSP selection, move ahead and initiate your campaign.

3. Optimize and expand

Once your campaign kicks off, you have to closely monitor the results.

It is strongly recommended to run an RTB campaign because RTB has low cost, providing you with enough data to optimize your campaign.
Statistics show that programmatic RTB is 70% cheaper than programmatic direct.

There are two things that you can test and analyze with your RTB campaign:

1. Optimization.
2. Expansion.

In order to achieve the best results from your programmatic ad campaign, you have to optimize your creatives, ads, and other variables at all the levels.
Here are a few variables that you should never go without:

  • Split testing.
  • Audience segmentation.
  • Bid adjustment.
  • Ad frequency.
  • Creatives.
  • Placements.
  • Time of the day.
  • Devices.
  • Ad format.
  • Channel.

The list can go on and on, but I’m sure you get the idea.

Test every variable while running RTB programmatic ads.

The next phase is to expand the ad size. According to Google, non-traditional ad units have better viewability rates.

Google ad size and viewability rate

This means you have to expand your ads and bid on ad spaces with lower demand. This will do two things:

  • Decrease your cost due to low demand.
  • Allow you to test different ad sizes and placements which might lead to an increase in viewability rate.

4. Choose direction publishers

Based on optimization and testing different ad sizes, you’ll be in a better position to choose your programmatic direct partners.
Choose websites that perform really well in terms of clicks, ROI, conversions, sales, engagement, and other metrics you consider important for your campaign.

Choosing your programmatic direct partners

Programmatic RTB should be used for

  • CPM and CPC.
  • CTR.
  • Leads.
  • Testing purposes.

While programmatic direct is best for

  • Engagement.
  • Brand awareness.
  • Website visits.

When purchasing direct programmatic ads, make sure that the publisher is someone you’d like your brand to be associated with because the publisher will turn into your partner. You don’t have to look for CPC and leads, but you have to see the publisher’s philosophy and core values before partnering with it.

Consider programmatic direct as a partnership instead of simply an exchange of ad.

5. Track and measure

Track and measure the progress of your entire campaign based on your objectives and goals. Some 84% of marketers say that better measurement and analysis can help increase digital spending by 25% or more.

Track and measure the progress of your entire adwords campaign

Don’t take measurement lightly. It is the crux of your campaign.
Measure the performance of direct publishers and see how well they did in terms of KPIs and primary metrics.
Based on the campaign analysis, tweak your creatives, bid, and other variables, and run it again.
Direct publishers who don’t do well should be replaced.

Here are a few techniques to measure your campaign’s success:

  1. Measure viewable impressions of ads. Technically, an impression is counted as viewable when 50% of the ad unit is viewed on a screen for at least a second. Simply measuring impressions won’t help much with your campaign’s success.
  2. Use an attribution model. This has to be set up prior to creating your campaign. A cross-channel attribution model is what you need to understand all the touchpoints.
  3. Measure brand lift. An easy approach is to see an increase in your brand related search queries in Analytics.

Conclusion

Programmatic display advertising is still new, and there is little competition. Now is the most appropriate time to create your first campaign and take a leap.

In the foreseeable future, online marketers and entrepreneurs will switch to programmatic ads.

Brands that embrace it before everyone else gets there will definitely have a higher chance of success.
The time is right, and this guide has given you the wake-up call to take advantage of this display advertising approach which is aimed at helping you reach a more targeted audience and boost your bottom line.

Alex Membrillo Cardinal CEO

Alex Membrillo

Founder and CEO

Alex Membrillo is the CEO of Cardinal, a digital marketing agency focused on growing multi-location companies. His work as CEO of Cardinal also recently earned him the honor of being selected as a 2015 and 2016 Top 20 Entrepreneur of metro Atlanta by TiE Atlanta, Atlanta Business Chronicle’s 2016 Small Business Person of the Year (Rising Star), and the 2015 Digital Marketer of the Year by Technology Association of Georgia (TAG).