Perhaps you haven’t heard of programmatic ads, but chances are, you’ve seen one. Programmatic ads have been part of websites since the late 1990s, when banners popped up on select websites, then nearly all of them. As the advertising landscape has changed, so too have programmatic ads, now very focused on behavioral targeting so the right ad is seen by the right potential customer. In this blog, we’ll review what programmatic advertising is, how it works, and how you can apply it to your own business marketing campaigns.
By definition, programmatic advertising uses AI and machine learning to buy advertising in real-time. It bypasses the need for (silly) humans by having pre-set prices. Where traditional advertising included requests for proposals, quotes, and negotiation, programmatic advertising uses AI to buy and sell that online display space. It not only saves time, it also employs algorithms that are getting smarter by the second. With this data-driven approach, programmatic ads can streamline ad buying processes to ensure campaign efficiency.
According to Statista, the global programmatic advertising spend in 2022 was over $490 billion, and it’s projected to skyrocket to over $724 billion by 2026. This method of advertising shows little signs of stopping, since it is so efficient and scalable. Programmatic advertising is also heavily favored by marketers, with many putting more than 50% of their media budget into the advertising method. That’s big money, so it’s got to work, right?
Very soon after advertisers understood the potential of advertising online, ad networks were created to provide a platform for advertisers to pay to place ads on multiple websites. One of the earliest such platforms, DoubleClick, was purchased by Google in 2007 for $3.1 billion, and is still active today as part of the Google Marketing Platform.
In the early days, programmatic ads were purchased in a similar way to an ad that got placed in a magazine. For example, a banner might be placed on a website for a certain cost, no matter who visited the site or actually viewed the banner. The ad most seem to agree was the world’s first ever was a banner from AT&T on the online website HotWired.com (later to become Wired.com):
They were right, we totally clicked on the ad, and so many more that came after it. It changed everything, and I’m not even being dramatic.
While the OG programmatic ads were slapped onto websites without any real knowledge of who would view them, today’s programmatic ads are a different beast. In the mid-2000s, programmatic advertising adopted real-time bidding (RTB) technology. With RTB, advertisers were able to bid on available ad inventory in real-time on the websites that were available. More importantly, they were able to target specific audiences based on demographics, location, and browsing behavior. With bids for these locations set based on perceived value, advertisers could purchase individual impressions to reach specific audiences. The algorithm used will determine where your money is best spent as well as monitor the campaign to optimize ad spend.
How an ad is served is actually determined in mere milliseconds. As soon as a visitor arrives on a website, the website communicates with an ad exchange platform (supply-side platform, SSP) to offer that ad space. The SSP lets the demand-side platform (DSP) know the relevant information about the visitor that will be useful to an advertiser: location, device, and browsing habits, to name a few. Then, an advertiser can place a bid on the available ad space through the DSP. The algorithm sneaks in to decide what to bid on based on user data and targeting parameters to determine most valuable placement. The ad exchange (SSP) then selects the highest bidder and displays the ad to the user, all before you can complain about the page loading slowly! Pretty incredible, honestly.
The amount of online shopping people do just keeps increasing, with retail Ecommerce sales expected to grow by 28% in 2026. When you utilize programmatic ads, you’re finding your customer exactly where they’re spending time (online).
Programmatic ads are often better for ECommerce brands because they can reach a broader range of platforms, including the Google Display Network. Since programmatic advertising uses real-time bidding, it ensures that brands get the most value for their ad spend. There’s also the ability to adjust bids based on performance. With the ability to dynamically adjust and test ad creative, ads can be personalized and messaging can be tailored to the customer persona they’re targeting.
Another way programmatic advertising is especially effective is for retargeting website visitors who didn’t make a purchase on their first visit. A brand can serve these potential customers with retargeting campaigns that can increase the chance of conversion. Ultimately, with the ability to serve ads across multiple networks, it’s a great way for an Ecommerce brand to scale their visibility and reach across platforms.
Media buyers place bids on advertising space in real-time, just like in an auction, with the ad space sold to the highest bidder. As mentioned above, this process happens in milliseconds and is automated using programmatic bidding software.
A private marketplace sees ad impressions bought and sold on an impression-by-impression basis, but between exclusive parties. The auction model is set up in a nearly identical way to traditional RTB, but advertisers can only participate in auctions for ad impressions if they’re invited to do so by a publisher.
Sometimes, a publisher and advertiser can manually negotiate to determine a fixed price for ad inventory. In this case, the space is purchased directly and reserved exclusively for them by the publisher. In contrast to RTB and PMP, no auction takes place and the ad inventory is exclusively reserved.
Since these platforms do a lot of the behind the scenes work, you might not be familiar with them unless you go digging. But here are some details on some of the big players in the programmatic ad space!
Founded in 2006, PubMatic is one of the world’s leading scaled digital advertising platforms, with 537 billion daily ad impressions and 1.4 trillion advertiser bids per day. It’s considered to be a complete programmatic platform since it features comprehensive solutions for publishers and marketers. They boast about their powerful real-time analytics and fraud-free program refunds to protect against fraudulent activity.
A familiar face to most, Google’s advertising platform works on the supply side to monetize publishers’ content. With over 6 billion ad impressions daily, it’s a powerful way to reach your audience, no matter where they are. This platform features data tools for actionable insights, machine learning to optimize ads, and a range of ad formats available to utilize.
AdRoll promises to simplify day-to-day marketing and increase revenue, backed by over 15 years of experience delivering results. They also claim they’re the only marketing platform where ecommerce brands can run display ads, social media ads, and email from one place. AdRoll customers make $165 billion in sales every year!
Built for modern marketers, theTradeDesk calls itself a media buying platform built for the open internet. theTradeDesk offers access to dedicated experts that can help guide success in programmatic advertising. They also work with industry partners like the Ad Council, BVDW, and TrustARc to develop solutions that sustain exchanges of the open internet.
Criteo helps advertisers activate and monetize audiences anywhere shoppable moments happen by utilizing a large open commerce dataset. With an all-in-one solution, Criteo offers the ability to plan, buy, personalize, measure, and monetize all within the same platform. Criteo boasts the only unified platform that directly connects advertisers with retailers and publishers.
As a demand-side service, MediaMath features end-to-end campaign management and omnichannel ad campaigns trusted by over 3500 advertisers. They created the first demand-side platform in 2007 and today strive to pioneer new technology to make advertising better. They make it easier to run advertising across channels with ease, and features a modernized ecosystem with inventory meeting enhanced criteria to guarantee supply chain trust and transparency.
A demand-side platform that connects display to digital audio to CTV ads, Adobe Advertising Cloud can combine cross-screen and cross-channel integrations. It also uses AI optimization (Adobe Sensei) to get spend forecasts and real-time optimization, featuring actionable insights and recommendations to leverage campaign learnings.
SmartyAds is a demand-side, user-friendly, self-serve advertising platform ideal for running targeted campaigns that turn audiences into customers. They offer a full slate of services for both advertisers and publishers, and have partnered with over 25,000 top global desktop, mobile web, and in-app companies. Their features include a click booster to increase the likelihood of clicks on your ad campaign, and it supports various ad formats including display, native, video, and connected TV.
How to Get Started with Programmatic Advertising
Before you jump in and start working with one of the above platforms, make sure you complete these important steps:
Programmatic advertising has reshaped the landscape of online marketing for e-commerce. With its ability to use data to target ads in real-time, it offers an unmatched level of precision and efficiency. As technology continues to evolve, it's certain that programmatic will remain at the forefront of digital advertising innovations. If you're in Ecommerce and haven't yet explored programmatic advertising, now might be the time to dive in and harness its potential!
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