Blog | Paid Media

What is Programmatic Buying?

June 1, 2017
Reading Time: 3 minutes

Programmatic buying continues to grow in popularity for the way it does the “heavy-lifting” of ad buying. The automation it offers digital marketers comes with a lot of benefits. It also has a few drawbacks that need to be monitored to ensure ad effectiveness, aka return on ad spend (ROAS). Let’s take a deeper look at this powerful digital marketing tool…

What is Programmatic Buying?

Generally speaking, programmatic buying leverages technology to automate and optimize the ad buying process in real-time. Think of the various factors involved with ad buying: bidding, ad networks, consumer matching. It allows a marketer to enter variables and then let automation do all the work.

To get into the nitty-gritty, it leverages big data and technology. To date it has become quite complex. Originally it was exclusive to search and display ads where it served targeted and relevant consumer experiences through ad networks, trading desks, ad exchanges, demand-side platforms (DSPs), supply-side platforms (SSPs), and real-time bidding (RTB). Now programmatic buying includes mediums like television and video across multiple channels on desktop and mobile.

Is Programmatic the Future of Advertising?

The speed of automation makes it likely programmatic buying will eventually own a dominant market share of online display buying. The addition of RTB to social networks with vast amounts of demographic data (think Facebook!) will create new opportunities and ways to target consumers and even further personalize messaging. As more and more platforms make themselves available, the revenue potential will continue to grow at an amazing rate!

In 2014, it accounted for only $9.9 billion of ad spend. It had more than doubled by 2016 where it reached $22.10 billion in ad spend. Right now, it accounts for 67% of total display buying in the U.S. Forecasters predict its share will reach 82% of the total U.S. digital video ad spend by 2018!

Brands that want to start with programmatic buying need to think mobile first. This year it’s estimated every 7 of 10 programmatic display ad dollars will go to ads on mobile devices. Mobile, desktop, wearable or home system like Google Home, every brand can benefit from it.

Benefits of Programmatic Buying

While we don’t believe in a “set it and forget it approach” at BFO, the benefits of programmatic buying are extensive. They include:

Superior Demographic Targeting – You set the variables and it finds them and delivers. It puts an end to “Pray and Spray” display advertising targeting concerns.

Creates More Cost Effective Spend – Algorithmic placements of ads and a 100% transparent pricing model guarantees puts your ads in front of your audience for the money you want to spend. Plus, it offers the benefit of real-time bidding.

Data Driven Business Decisions – Advertisers can evaluate their success mid-campaign and makes changes like narrowing the target based on data. Better yet, it eliminates the problem of the traditional model where advertisers had to buy a contract with a publisher for a certain amount of ad space.

Increased Viewability – Advertisers have more control over what gets viewed. For example, a marketer could choose to buy only the top 10% of ad viewed for the longest time.

Efficiency – It removes guesswork and potential detail errors like tagging issues that can negatively impact a campaign.

Potential Drawbacks to Programmatic

For its benefits, programmatic has a few drawbacks that should be actively monitored. One is mobile. Cookies still don’t work on mobile and this prevents programmatic systems from tracking cookies creating issues for cross device marketing (such as capitalizing on mobile micromoments by serving ads on desktops to users who first searched on mobile).

Fraud also remains a problem. Unethical publishers can do something called “URL masking.” This fraudulent practice is  where a publisher lists its website in the ad exchange as a more reputable site leading the advertiser to have no idea where their ads are actually running.

Inventory quality also remains an issue. This area of ad buying requires more transparency in the quality of actual ad inventory.

Is Programmatic Buying Right for Your Brand?

The automation it offers marketers can save time, money and a lot of frustration. Yet, it remains a young and still growing area of digital marketing. This means it requires constant monitoring to ensure the success of a campaign. Marketers should also trust their insight for the best results. 

Is programmatic buying right for your brand? Start a conversation with one of our representatives to find out!