The New Age of Online Marketing
When Google introduced their artificial-intelligence-geared search algorithm, Rank Brain, to little fanfare in 2015, the world of internet marketing and Search Engine Optimization (SEO) changed forever. With no warning signs or training wheels, optimizing your presence on the internet was a whole new game.
It was a game that Google designed to be a complete surprise. Quietly adjusting their search engine’s capabilities gave Google the ability to maximize user experience. Users could find the best possible results, while avoiding subpar websites that employed deceptive SEO practices to boost their online traffic. Consumers would be directly connected to the cream of the crop instead of slogging through the rubbish heap.
Considering that Rank Brain is still making waves and surprising leaders in the SEO community, it may not be shocking that online advertisers and publishers are still being caught unaware by an entirely new and algorithm-driven system of online advertising that is quickly paving the information—“marketing”—super highway of the future.
Welcome to the future: Programmatic Advertising.
The big joke underlying this brave new world? It’s been responsible for 23% of online marketing sales since 2013, and according to some sources, it’s forecasted to exceed 80% by 2018. With the end of 2016 approaching quickly, it begs to reason businesses need to know about this new business standard before their advertising dollars disappear down the drain
Outlining Programmatic Advertising
If you’re still in the dark about Programmatic Advertising, you’re assuredly asking, well what is it? Conceptually, it is very simple. It’s a system of buying and selling advertisements and ad space in realtime that doesn’t rely on direct human negotiation. With Programmatic Advertising, account managers are no longer hitting the digital pavement and buying ad space on publishers’ websites. They are still involved in the process, but much fewer of them are needed, and an algorithm that can perform hundreds of matches per second is eclipsing their primary role. After all, why have a salesperson placing ads on hundreds of different websites, when a hyper fast platform can place ads with much greater speed and efficiency?
The Marketer’s Holy Grail
Increased speed and efficiency aren’t the only competitive advantages Programmatic Advertising provides. It also acts as a kind of advertising smart bomb, using precision guidance to target the exact audience advertisers are looking for, down to the individual level. In our big-data-driven world there exists the ability to know almost every detail of a consumer’s digital life and activity—how they communicate and socialize, what concerns or questions are on their mind, and most important for advertisers, what they buy and how they shop. Programmatic Advertising takes full advantage of this proliferation of data and offers the chance to retire the past, semi-blind placement of ads.
Publishers and Advertisers
Selling Ads and Ad Spaces
In digital advertising, as in all advertising, the two major players are advertisers and publishers. Those with ads to sell and those with the ad space to host them. Digital media—like traditional forms of media made for newspapers, radio, and television—was originally sold the same way as traditional media or how people sold vacuum cleaners, door to door. An advertiser—like Nike, Apple, or Coca Cola—would approach a publisher—like Google, the New York Times, or ESPN.com—and offer to purchase a set amount of ad space for a set period of time. This original arrangement was very time consuming and, depending on the size of the company, depended on a large sales team to place all the advertisements.
With Programmatic Advertising though, the sales dynamic is changing. It is no longer necessary for an advertiser to go directly to a publisher to negotiate the details of an ad buy. The system has shifted to a fully autonomous format that requires a much smaller dedicated sales team. The new system, the mechanical details of which will be discussed below, is revolutionizing the industry’s work force, making the selling of ads much more efficient and less prone to human error or poor judgment.
This efficiency is achieved through a system of Real Time Bidding in the marketplace, which utilizes digital sales systems to perform hundreds of bids in mere milliseconds based on a company’s advertising needs.
Programmatic Advertising isn’t only making ad sales more efficient. It’s also making the use of advertising dollars more efficient, by allowing for extremely precise customer targeting. Historically, when advertisers purchased blocks of ad space for set periods of time on a publisher’s platform, their ads would appear on those platforms, and the advertiser would hope potential customers in need of their product or service would tune in to the right platform at the right time. It has been referred to as spray and pray advertising because you cannot guarantee that your potential customers will be exposed to your advertisements.
While spray and pray digital advertising could certainly be tailored to certain markets—Nike targeting ESPN.com for instance, or Nintendo targeting gaming websites like IGN.com or gamestop.com—advertisers could not guarantee the advertisement they were filling an ad space with was reaching their potential customers. Football fans visiting ESPN.com to look up stats and read the latest news about their favorite team might have no interest in buying a pair of Nike’s football cleats. Or gamers visiting IGN.com to read game reviews might not even own a Nintendo console. In both cases, the companies are targeting their general market demographics, but they are not reaching the specialized demographics or direct individuals they need to to make a sale.
DSPs and SSPs
The Structure of Programmatic Advertising
The structures that allow for more efficient ad sales and greater consumer targeting in Programmatic Advertising are called DSPs and SSPs. DSP stands for Demand-Side Platform, SSP stands for Supply-Side Platform, and these two coequal platforms represent, digitally, all the ads and ad spaces for sale on the internet. They are the platforms that allow advertisers and publishers to organize, price, and list their ads and ad spaces in the marketplace. You can think of them the same way you think of the classifieds section in your newspaper, but much larger and servicing a marketplace much wider than your local setting.
In the Advertising world, advertisers have a demand for the ad spaces publishers supply, so advertisers focus on and work with DSPs to list and price their advertising demands, while publishers employ SSPs to list and price their supply of ad spaces. Both platforms are extremely effective at simplifying the sale and purchase of ad spaces and ads because they’ve replaced sales teams and can operate using Real Time Bidding.
But the real advantages of DSPs and SSPs for Programmatic Advertising is the data-driven targeting they allow advertiser’s to use. While DSPs act as warehouses for advertising stock, SSPs, while also acting as warehouses for available ad space, collect an immense amount of data about how customers use publishers’ websites. They collect this data through internet cookies, and the data helps SSPs understand who is using a publisher’s website as well as how much time they spend on a particular website and how many pages they visit each time they use the website. This data makes it possible for publishers to know what kinds of companies would be best served by advertising on their website.
Advertisers have a similar way of amassing this kind of data, but it is done independently of DSPs. Instead, advertisers can employ DMPs (Data Management Platforms) that read consumer internet cookies in much the same way as SSPs. Analyzing DMP information allows advertisers to make well-informed decisions about their target audience. The incredible amount of user data collected, between SSPs and DMPs, allows advertisers to forego spray and pray advertising completely in their digital marketing plans, because they will not only know their consumers better, but they’ll know how their consumers interact with websites and a business’s ads.
Structurally and informationally, exchanges are much simpler than their other Programmatic Advertising counterparts, DSPs and SSPs, but they are the pivotal juncture allowing for DSPs and SSPs to share (i.e. exchange) their vast amount of information. Essentially, exchanges are the pathways that connect advertisers, publishers, DSPs, DMPs, SSPs, and consumers together.
How it Works: Step by Step
A user visits a website. As the publisher’s website uploads, it consults it’s SSP to know what ad space is available and the minimum cost to fill it. The SSP then connects to an exchange, sending the availability and cost information as well as all the user information it has accumulated. The exchanges then connect to a number of DSPs. The DSPs rate the information received from the exchanges, comparing the user data from the SSP to an advertiser’s DMP consumer information. The DSPs then place bids for the ad space. The exchange recognizes the winning bid and sends that to the SSP along with the advertisement to fill the ad space. The SSP sends the ad to the publisher’s website and the consumer sees the ad.
It is by no means a simple process, but compared to traditional mass media buys reliant on a degree of spray and pray advertising, Programmatic Advertising offers a level of efficiency and data-driven precision that can not be found anywhere else. And it all happens in milliseconds.
Three Myths about Programmatic Advertising
Once you understand the basics of Programmatic Advertising, it’s important to also know some of the myths surrounding it. According to Emily Sears, the Head of Digital at Google Media Lab, there are three myths about Programmatic Advertising every advertiser should understand. Believing fully in any of these myths threatens businesses and their marketing plans in various ways. They may make businesses hesitant to adopt Programmatic Advertising as it would not build the kind of brand awareness they hope to achieve. They may make businesses believe that creative, high quality advertisements and media plans are unnecessary. They may leave businesses with the flawed assumption that the technology is the end all be all that doesn’t require a sensible and comprehensive marketing strategy. These myths when taken at face value can potentially cause serious damage to a business’s programmatic marketing strategy.
Myth One — Programmatic is only for Direct Response
This myth stems from the belief that Programmatic Advertising’s data driven approach is concerned primarily with it’s data-driven precursor Direct Response advertising as opposed to the classical models of mass marketing and branding campaigns. Programmatic Advertising definitely aims to elicit a response from the right consumers, in the right markets, at the right times, and to ensure engagement over a period of time to achieve the goal of making a sale—the same as Direct Response. But the fatal flaw for companies is believing this is the only benefit of Programmatic Advertising. It is not. It also has the ability to build a business’s brand while adopting a targeted “mass” marketing approach. Generally, only major companies like Apple, Coca Cola, and Nike can achieve the kind of significant market presence that makes them known to the majority of consumers around the world, but Programmatic Advertising can offer local business’s the same level of market saturation in their regional markets by efficiently buying ad space on the computers of local residents. Businesses have to target the consumers in immediate need for their products and services, but they can also lay a ground work for future sales by establishing a brand image and market presence through Programmatic Advertising.
Myth Two — Programmatic = the death of creativity
While this concern sounds like it should only worry creative directors and those who earn a paycheck designing, planning, and executing creative marketing campaigns, nothing could be further from the truth. The ability to accurately target customers in a particular market doesn’t mean putting an ad in front of them will guarantee a sale. Businesses still need to be creating highly effective advertising to ensure the customer will click on their ad, review their website, and ultimately decide to purchase their product or service. They cannot just place a lackluster advertisement in front of a consumer and expect a sale. They need to develop and deploy high quality advertising that will speak for their company and intrigue consumers.
Myth Three — Technology is all you need
This is almost never the case, but if businesses are willing to fall for this misconception, their use of Programmatic Advertising will almost certainly fail to net them the full advantages the system offers advertisers. It is about more than reducing their need for ad sellers by automating the process through Real Time Bidding. It is about targeting the customers who are willing to buy their product or service, and even though the algorithmic use of consumer data can increase their chances of targeting the right customers and making a sale, the only way to maximize sales to the greatest extent is to develop a marketing plan that is improved by Programmatic Advertising, not one that relies on it alone. Businesses must know who the customers are in their targeted market demographic. They must know how to find them and how to reach them. And they must be willing to change their strategy if their results are lacking. The only effective way to maintain the analytical fluidity that allows them to remain relevant in the market is with a marketing team. Those people who know the media landscape and can design campaigns that will stand out, and those who know how to measure the right consumer data relevant to a business’s product or service.
Getting in on the Digital Ground Floor
There is no doubt that Programmatic Advertising looks intimidating, and understanding the finer points of how it works and knowing what pitfalls to avoid will not necessarily prepare businesses to jump in head first, but Programmatic Advertising will not be slowed down. We at Get the Clicks are investing time and resources into developing our Programmatic Advertising services for this reason. Programmatic Advertising will soon dominate advertisement sales in the digital world, and it’s already starting to make inroads into television ad sales. Businesses need to take the time NOW to understand how they can maximize their marketing budgets and plans by using programmatic Advertising.