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What is programmatic advertising? Definition, Types, Channels, and Advantages | Toolbox

Do you sometimes feel that you are being watched because advertising appears for exactly what you need? It’s almost like they’re reading your mind, but no. It is programmatic advertising.

Today, we will talk about programmatic advertising and how to make your ads reach the right person at the right time and in the right place.

What is programmatic advertising?

It is an automated purchase system for Internet advertising spaces. Its main characteristic is that you do not buy fixed spaces but rather the presence of specific people in the communication channels.

By this, we do not pay for our ad to appear in a specific space, but we pay for the ad to be shown only to our target, to our potential buyers, when they enter a website.

In this way, we only pay when a user of our target audience sees us.

This way, we make sure that our ad reaches exactly the right customer, and we will not spend the marketing budget on people who are not interested.

It’s much more efficient.

For example, let’s say we’re selling women’s marathon running shoes. We know that our target audience is women of a certain age, interested in running and who usually participate in races and marathons. 

Then it would be useless for a single man, older than a certain age and without interest in sports, to see our ad. 

What programmatic advertising does is that it doesn’t show that man our ad; it shows him one that fits him. 

On the other hand, when a woman who meets all these characteristics (and possibly has her next marathon in mind) enters a web page, we will show her our advertising. 

Just at the right time!

This shoots up our chances of success since they will surely want to buy from us. 

If you want to learn more to become an expert on this subject, keep reading because here we will tell you everything.

How does it work?

To understand it, we have to talk about cookies, algorithms, machine learning, and big data. 

Cookies are responsible for collecting user data. They are the real spies.

All data from all users collected by cookies ( Big Data ) serve to identify similar profiles, which we understand as segmentation. 

So, the more data the cookies collect, the higher the targeting accuracy. 

Finally, come to the algorithms, in this case, the algorithms specific to programmatic advertising.

These algorithms use machine learning to process Big Data and identify a user when they enter a website. The algorithm can determine the user profile and offer you personalized advertising with this information.

So, that’s where programmatic advertising comes in. It consists of buying space when our potential client enters a website. 

You may be wondering, in what spaces does this type of advertising appear?

It can appear on web pages, digital newspapers, and mobile applications. But that will be defined by the algorithm based on your needs and the goal you want to achieve. 

Now let’s talk about the process.

First of all, you, the digital marketing genius, have to be clear about the audience you want to reach. You have to use all the web analytics tools to segment your audience as best as possible and get to know your customers.

Once you know who you want your ad to reach, you’re ready to jump into the programmatic game.

The next step will be to get a Trading Desk, who will be in charge of buying the right ad space for you, the advertiser. 

On the other hand, the Sell-Side Platform (SSP) will be in charge of offering the different advertising spaces on the web.

And to mediate the purchase is the Demand Side Platform (DSP). This algorithm is responsible for identifying the user’s profile who enters the page and looking for programmatic ads directed to that specific user.

In other words, the Demand Side Platform is the one that receives all the information from the marketing campaigns (the ads, the characteristics of your ideal client, and the objectives that you set for yourself with that campaign). With that data, it is in charge of finding the perfect space for your programmatic ads. 

How do you buy spaces?

This is where things get exciting.

Everything would be very simple if you were the only advertiser, but that is not the case. There are many more trying to sell their products. So you have to compete for space.

Programmatic advertising uses a real-time bidding system ( RTB or Real-Time Bidding ) to win space. 

When a user enters a web page, the algorithm is responsible for identifying the user’s profile and locating all the possible programmatic ads aimed at that customer profile. 

This is where the bidding begins (RTB). 

The algorithm selects the advertiser most willing to pay for that space. But since all this happens in real-time and automatically, that is a value you already have established.

All this is an automatic process, which happens in a fraction of seconds and with little human interaction, which means that the possibility of error decreases. 

But, keep in mind that the different human actors in this process must always be supervising the operation to guarantee that there are no errors. 

Where to start?

The key for advertisers is to get a Trading Desk.

But if you are new to programmatic advertising, you may be wondering, what is that? 

Well, they are the cracks of programmatic advertising. At Rankinggoal, we are in contact with several, and if you need help, we can advise you.

They are multidisciplinary teams responsible for placing your programmatic ads in the most appropriate spaces. They do all this with data analysis. 

In addition, they are in charge of analyzing the results of the campaigns to improve them in real-time and make them more and more tailored to your target customer. 

In Trading Desk, you can be internal; you can have a team in charge of this in your company or look for an external agency. 

Do you want to know how much programmatic advertising costs?

Of course. It’s what we all want to know. 

This type of advertising uses the Cost Per Impression (CPI) or Cost Per Thousand (CPM) model, the cost per thousand impressions. 

These costs are variable, and also, since it is an auction model, the price will depend on how many people are interested in your same target.

The good and the bad of programmatic advertising 

What are the advantages of programmatic advertising?

Reach the right people

Without a doubt, this is the most beautiful thing about programmatic advertising. 

The clients that best fit your profile will see you!

All the effort you put into making an amazing creative ad will not be ignored by people who are not interested in your product. Only interested people will see it, so you will surely attract their attention. 

But in addition, if you have several targets, you can create campaigns that fit each profile. Because each client is unique and programmatic advertising allows you to speak to each profile most appropriately. 

More cost-efficient 

Because programmatic ads are shown only to the right people, you only pay when a real potential customer sees your ad. 

And this translates into a higher ROI (return of investment). 

Real-time optimization 

Programmatic advertising allows you to optimize your campaign based on your results. 

So you can improve your strategies in real-time!

Because the key is that you can always improve, and the best way to do it is by analyzing what your target customers think. And programmatic advertising gives you that possibility in real-time. 

And now the cons…

As always, we cannot say that everything is good. 

Programmatic advertising prices are higher. 

Although the campaigns are more cost-efficient, the costs per impression are higher. 

Showing your ad to everyone is not the same as showing it to only quality customers, those who interest you. And this is not only known by you but also by the person selling the space. 

This is why the prices for prints are higher because they are quality impressions, which have a greater possibility of becoming leads and buyers. 

can be invasive

Using a digital advertising strategy aimed at a specific audience risks becoming intense.

And he doesn’t want to be intense!

So that this does not happen, we have a solution. 

Frequency Capping or frequency limitation is your best ally. 

If you don’t want a user to see your ad repeatedly, you can choose the number of times your ad is shown to the same person. 

Generally, three or four times a user sees your ad is fine. 

If you are one of those who live on the edge, you can let them see it between seven and eight times. But we do not recommend more than that. 

Keep in mind that you have to take care of your potential customers. They may not be interested in buying in this campaign. But the next one, maybe. 

Better leave a good impression on your client, who will surely buy from you later. 

Programmatic advertising is here to stay

If you are interested in marketing, programmatic advertising is a must. It is a tool that you have to learn about. 

Whether it’s with programmatic advertising or the method you choose, always keep in mind where you will place your ad. We don’t want all the creativity and effort you put into waste because you’re in the wrong place. 

Now yes, you are ready to succeed with programmatic advertising!

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