Programmatic Simplified: What You Need to Know

First Things First

With all the talk of programmatic buying going on right now, there are a few questions you need to ask yourself. First, what the heck is programmatic buying? Should it be important to you?

Is it brand new tech that’s going to revolutionize the industry? Well, the short answer to that one is . . . no. Not in concept anyway. But before we get into all of my personal gripes and pet peeves, let’s define programmatic buying/advertising and all the relevant terms.

The Programmatic Fundamentals

“Programmatic media buying, marketing and advertising is the algorithmic purchase and sale of advertising space in real time. During this process, software is used to automate the buying, placement, and optimization of media inventory via a bidding system. Automating the process means that it can be done in real time and doesn’t rely on the human touch, manual insertions and manual trading.”

Source: Stateofdigital.com

And of course in keeping with tradition, marketers have a new list of acronyms that will be used as casually as ASAP.

Programmatic Acronyms to Know

  • SSP: Supply Side Platform
  • DSP: Demand Side Platform
  • PMP: Private Market Place
  • PMPG: Private Marketplace Guaranteed
  • AG: Automated Guaranteed
  • AP: Automated Performance
  • RTB: Real Time Bidding
  • ATD: Agency Trading Desk
  • DMP: Data Management Platform

Understand? Are you ready to dive in? Before we get into the “nitty gritty,” let’s talk about the “why.” I feel marketers should always have a good grasp of the goal they are trying to accomplish before diving into new and exciting technologies.

The Goal Of Programmatic Buying

I have a habit of beginning at the end. So, with that in mind, what is the point of programmatic buying? What does it seek to achieve?

The answer is efficiency.

It’s about placing your ad in front of the right audience at the right time. We all know this mindset. It’s not far off from paid search advertising. You are bidding on prospects that match a certain criteria in real time. But now you can apply a lot more criteria and use a lot more platforms. But the endgame remains the same. Reach the right person at the right time.

How Programmatic Buying Works

Programmatic buying (like all things should) begins with data, specifically a DMP (data management platform). It allows you to define your audience parameters, budget, and max bid. The DMP integrates with a DSP (demand side platform) that manages bids and optimizes ad placements. An SSP (supply side platform) is fed inventory from either a private marketplace such as a publisher’s website or open advertising platforms such Google’s Display Network. The DSP and SSP meet in the middle in the ad exchange. The DSP places a bid, the winning bid is chosen, and the ad is placed. This all happens in milliseconds.

My Personal Gripes With Programmatic Buying

At Randall-Reilly we’ve been applying these principles for a long time. It occurred to us long ago that just buying ad space wasn’t the most efficient use of a budget. We just didn’t call it programmatic. And really, what we do is to encourage our clients to go beyond programmatic. It’s better to identify the actual outcome you want – phone calls, form conversions, video views, and optimize your campaign around things that actually affect your bottom line.

Large scale, public marketplace programmatic buying is limited to optimizing and bidding around impressions; and impressions for the sake of impressions really isn’t the name of the game in B2B markets. There are some efficiencies that programmatic brings, such as automated optimization, but if those efficiencies don’t result in increased revenue down the line, who cares?

Programmatic buying does increase efficiency in some ways, and it is exciting, but the name of the game going forward will still be great data and great creative. Marketers can come up with new exciting-sounding names, but it will still always come down to targeting the right audience (good data) and delivering the right message (great creative).

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