Programmatic advertising is the future of paid digital
Here’s why programmatic advertising will become standard in the digital marketing mix
For some, few words can strike more fear – or in some cases, blank faces – than ‘programmatic advertising’. Even seasoned digital marketers can find this opaque, jargon-heavy corner of the marketing world intimidating.
It’s easy to see why. Programmatic advertising is, by nature, off-limits to everyday marketers. It is not something humans do, so much as observe. We can only watch as machines perform a complex melody of algorithms on our behalf in a matter of milliseconds. Just like stockbroking, programmatic can seem like a closed circle, too baffling and exclusive for us mere mortals who have yet to use it.
But programmatic has grown to a point where it cannot be ignored. Two years ago programmatic amounted to 79% of all digital ad spend in the UK. This year, that figure is predicted to rise to 90% of digital display ad spend, with nearly £6 billion invested into this medium. Like it or not, programmatic is a powerful advertising tool that’s now well established and must be embraced.
What is programmatic anyway?
It might seem daunting, but programmatic represents huge opportunities for brands looking to capture a specific audience. To better understand programmatic, it can be helpful to view it alongside its more traditional, analogue sibling: direct.
Programmatic advertising is usually handled by software. Clever tech attached to a website will track when the user has landed on the page (you’ll have heard this described as an impression). The software then holds a mini-auction for said impression, selling the user’s attention to the highest bidder. Once the auction is over, the highest bidder wins the right for their ad to appear for the customer. And voila – the customer clicks onto the ad, lands on your site and, hopefully, converts. All this is done by clever algorithms in the blink of an eye.
Implementing direct advertising is the complete opposite. Advertising space is sold by humans (either through an in-house sales team or agencies) at fixed prices. Unlike programmatic, it’s a negotiated at the end of the phone in minutes, not seconds. It’s also a manual process, often involving two or more parties (i.e. brokers) to complete. Direct ad sales can therefore be slower than programmatic, but still have their place, especially for out of home advertising such as buses and train ads. For digital though, programmatic is the future.
How programmatic took over
One reason why programmatic has taken centre stage is its efficiency. Without the middlemen in the negotiating stage and artificial intelligence driving improvement, marketers save a lot of time. They also skip out on any unnecessary admin, such as trading emails and signatures with publishers.
Instead, brands can use intuitive software to do the hard work for them, since most of the process is automated. This also means quickly scaling up campaigns for improved success. That said, to get the most from their campaigns, brands will need to stick to a consistent plan when it comes to choosing who to target and where to be tactical with their budget. A strategic approach in this instance is highly recommended – an agency, like Further, can use their expertise to bring programmatic into your wider paid marketing strategy early, ensuring the best mix of channels for your objectives.
Programmatic ads are also sophisticated and contextual. Rather than the catch-all effect often criticised in traditional advertising such as billboards, programmatic allows marketers to narrow down their audience on an increasingly granular level. Brands can even raise their bids for customers who appear more lucrative (for instance, online shoppers browsing luxury products) and retarget users who have abandoned the buying journey.
This ability to access the individual customer is what makes programmatic so effective. Technology today can serve individual customers with relevant content according to their browsing activity, in real time. Once you find the right customer and serve them with a tailored ad, the effect is extremely powerful. Personalisation can boost your conversion rate significantly, while also being cost effective – they only serve the most relevant customers, so a return is more likely. It’s no wonder that last year, a Forrester report found that 89% of digital marketers see personalisation as a top priority – especially in financial services.
That being said, marketers should, however, be careful with just how ‘personal’ they get. According to Yougov, more than half of British adults say that personalised ads ‘creep them out’. Finding the right tone in the customer experience between relevance and being ‘creepy’ is a delicate balance – one which may prove challenging for marketers delving into programmatic for the first time.
On the horizon
Programmatic is only set to get faster, smarter and simpler to implement. For your customers, it will mean a more relevant, seamless experience. Programmatic today can serve content to the right person, at the right time, in the right place. According to Brian Kelly, CEO of AppNexus, even the content itself will be adaptable. For instance “consumer opening an app in Boston in January will see an ad set against a snow-capped Faneuil Hall; another consumer may view the same ad six months later in Tokyo, set against a sunny Mount Fuji”.
Even more exciting could be the arrival of programmatic to other channels, namely TV. Top box technology could allow brands to target viewers based on user behaviour. Let’s say a user watches a lot of travel programmes – they could start to see more ads on TV offering to whisk them away to warmer climes. Programmatic could also make TV more affordable for brands, who would see better value through greater measurability and personalisation, especially today with Netflix and other streaming services dominating the industry. It won’t be long before digital marketing agencies offer this service as standard within their paid channel strategies.
Wearables are another example of tech that could bolster the programmatic advertising industry. Supermarkets could allow retail brands to alert shoppers’ smart watches to a promotion in a specific aisle, tracking shopper footfall to improve shopping experiences. But could our ads change based on which shops we visit? Could programmatic even arrive on voice platforms, serving us content when we ask Alexa a question? If our other predictions are anything to go by, AI will certainly continue to feature in the future of marketing.
Wherever programmatic takes us next, it’s likely to be powerful for your brand and surprisingly relevant to your consumers. If you’re looking to start your journey with programmatic advertising, get in touch.