The word programmatic has been thrown around more than normal over the past seven months, especially if you are in the marketing world. When you run a search for “what is programmatic advertising,” you’re hit with dozens upon dozens of search results that may or may not give you an exact clear answer.
The simplest definition I’ve seen for programmatic advertising is the automated buying and selling of digital ads. Being familiar with any sort of digital advertising, you might be questioning how programmatic is that different from other channels such as Google Ads or Facebook Ads. If you’re not familiar with programmatic, you may assume that your business or agency is already engaging in this platform in any current marketing strategy. However, programmatic is very different from Google Ads, Facebook Ads etc. Below we’ll dive into why.
Placements & Formats Defined
At its core, programmatic is a general advertising term for multiple ad types and channels. This is just the same as YouTube, Display and Search under Google Ads or Instagram under Facebook Ads. Programmatic can be any or all of the following ad channels and types:
- CTV / OTT – Those pesky commercials that you see when watching the newest episode of a show, is a programmatic ad. The commercial that comes on Hulu or Sling is OTT, or Over the Top, and is viewable over the internet on a device such as Roku, Amazon Fire (which are the Connected TV device)
- Display – Fairly similarly to other display channels such as Google Display Network, but available third party data allows more niche audience segmentation.
- Geo-Frame / GEO-Fence – Allows advertisers to reach users via mobile devices by setting up a frame area (like a convention hall) and target them with ads later.
- Audio – Similar to Spotify, which you can also buy programmatically, this includes many additional audio platforms such as SoundCloud and other streaming radio platforms.
- App – Targeting is available for specific apps while adding in additional third party targeting – unlike apps in the Google Display Network.
- Native – More content focused ads that don’t disrupt the user experience while on a page. Fairly similar to other channels (Taboola) that use Native, but again, allow for more targeting.
Just like the more “traditional” digital ad platforms, there are different ways to target each of these ad formats, including:
- First party data
- Third party data
- Contextual targeting
- Keyword targeting
- Site placements (Apps, CTV and Audio, which we’ll get into more on the Placements blog coming later)
- IP Targeting
- ABM / SIC Targeting
- Geographical targeting
There are even more options than this, and while I could continue to go on, I don’t want to ruin the mystery. However, now we have a better idea of what programmatic can encompass and all the ways it can be beneficial to your marketing strategy.
Bidding By Audience
One of the most important aspects of programmatic is how it actually works – beyond just strategy. Not only is reaching the right user important, but with the right channel and ad format. Reaching the audience in real time is a key difference of programmatic advertising.
Programmatic advertising uses Real Time Bidding (RTB), which we will talk about at the highest level here. The auction is done in real time in less than a hundred milliseconds, with the winning advertisement being shown immediately. The key of Real Time Bidding is that it takes the site placement, audience targeting and ad creative all into consideration super fast.
Audiences are very important in programmatic advertising, so the fact RTB takes this into consideration so much is why your audience targeting is the most important factor of a programmatic campaign.
Programmatic In the Real World & Why Strategy Matters
Knowing the core of programmatic advertising now, you may see how there’s a handful of ways to go about determining a particular audience set. The main thing to look at is how your user is as a whole. You don’t just want to look at what they might be In-Market for, but what they are doing, viewing online, purchase behaviors, preferred content and who they are.
Let’s run through an example of strategy for a shoe company. Shoe Advertiser is looking to increase brand awareness to runners for their new model coming out in a few months. A more traditional strategy would be to create search campaigns, custom intent audiences for Google Display, create a YouTube bumper ad for In-Market audience and get something on Spotify. While these are always great to include in your strategy, this doesn’t necessarily mean the right user is being targeted due to limitations on each platform.
Looking at Spotify, for example, wasted spend could happen very, very quickly. Programmatic allows advertisers to include additional third party targeting options, such as behaviors for checking into 5K races, while the Native Spotify ad platform doesn’t have a ton of audience segments related to unique interests and behaviors.
Buying Spotify programmatically, the Shoe Advertiser can create a full fledged advertising plan with each campaign and channel having its own person and targeting. Knowing that the Shoe Advertiser wants to hit serious runners and not the casual runner, third party data can be used such as Marathon Runners and Triathletes over the Spotify buy. Targeting can get even more granular by splitting out age and platform (Spotify, Soundcloud etc). We wouldn’t target a running shoe Spotify audio ad to someone in their 70s, unless you’re my grandpa who still runs.
Niche Targeting = Lower Cost & Relevant Users
Going more in depth with shoe advertisers, an audio campaign is a great example of ways to use programmatic advertising over the direct placements on some channels.
Recently, I was hit with an ad for running shoes while I was actively out on a run and listening to pumped up jams. Within the Real Time model, the ad was shown to me with the audience targeting defined by the advertiser. :
- I am in the middle of, and thoroughly enjoy, the activity the advertiser wants of their target audience.
- I’ve been researching new running shoes – visiting websites, running searches (no pun intended) on all devices, watching YouTube reviews videos on my Roku, asking coworkers, heading to specific stores (pre-pandemic) and have previously checked in at 5K races.
- I have purchase behavior of signing up for 5K races.
- I’m on a channel that the advertiser is able to bid on (Soundcloud).
- I frequent Whole Foods and purchase supplements from a variety of retailers.
All of these qualities define me as the ideal consumer for the ad. In theory, this could also be a direct placement on Spotify – with options to target playlists and recently included interest targeting. However, there is greater error to slightly target the wrong person, thus leading to wasted ad spend – even at the CPM level!
My friend, who loathes running, has been known to listen to Power Hour Spin on Spotify when cleaning and not paying attention to anything beyond the dust under the stove (how does one clean this? Asking for the friend…)
In the specific case of a direct buy on Spotify, the mark could be missed because while the user was listening to a workout playlist, this target assumes that the user may work out based on the playlist title. However, the user could just enjoy listening to Power Hour Spin and have never exercised in their life. This would be a waste of impression and spend, and who wants that when you have the option to create a hyper-specific targeted audience?
Ready to Dive In?
Knowing a tad more about programmatic advertising now, at least at a high level, you might be ready to look at your current strategy, channels and audiences and see how programmatic can be infused. Many folks out there have been duped by programmatic advertising in the past, so it will be important to do your due diligence and understand the kind of partnership you should be looking for. This will be coming more specifically in my next post about programmatic.