What is programmatic advertising? Here are the basics
You know the advertisements we see scattered around the websites we browse every day? Here, for Programmatic Advertising , or "computerized advertising", we mean a very innovative digital advertising technology, increasingly exploited by marketing companies , which was created precisely for the management of the advertising channel via the web . This allows companies that choose to use it to show their advertising content to a truly interested target. A fundamental role, in Programmatic Advertising, is given by the collection of data that allow algorithms to analyze the behavior of online consumers, in order to provide a target. A fundamental aspect is that these advertisements are offered exclusively to potentially interested users and cataloged through these algorithms. In 2020 alone, the programmatic market in Italy was already worth 588 million euros, but the growth will still be significant, since this methodology born on the web is gradually expanding to traditional channels, such as radio and TV.
How programmatic advertising works
At the base of Programmatic Advertising there are three types of platforms: the Data Management Platform (DMP), the Demand-Side Platform (DSP) and the Supply-Side Platform (SSP). These three work in real time and in synergy with each other, without ever stopping. In particular, the DMP is responsible for collecting and ordering data related to consumer behavior. DSP is the platform that companies use to programmatically buy advertising space. Here advertisers can access ad inventories. Finally, the SSP serves to position the offer of those who offer the audience (e.g. websites). Buyers bid on available inventory, which will then be sold at the highest bid.
Example of advertising formats, on a web page, that can be sold through Programmatic Advertising
Once an advertising space has been defined and allocated for sale in Programmatic Advertising, the algorithms begin to carry out their analysis and data collection. They try to understand its behavior, time per visit, social engagement, position and level of engagement. To these characteristics is added the cataloging of the public through segments that try to outline the type of consumer, in order to get to know him better and propose the most suitable ad. The strong point of an advertisement, in fact, is not only how brilliant or well done it is, but the achievement of the ideal user. Its success will depend mainly on this.
Take a women's clothing store as an example. This decides to reach its target of users through a programmatic advertising platform, thus outlining the characteristics of the typical user. The algorithms, as explained above, will already have a huge cataloged pool of users and will allow them to gain visibility towards users with certain characteristics such as age range, gender, interests, purchasing habits, the device used, the time. of reading. In real time, therefore, the platform uses the data to identify the right target to 'hit'. Therefore, personalized ads may be offered depending on the user to be reached. As if this were not enough, it will be possible to make dozens of evaluations based on the history of previous campaigns and, from time to time, adjust the shot or discover new targets that previously it was not believed could be interested in our product.
The effectiveness of programmatic advertising
The strong point of an ad, therefore, is not how bright or well done it is, but the right positioning. Above all, its success will depend on this. Programmatic Advertising offers a more complete and innovative advertising system than traditional methods and allows you to exploit your budget in the most efficient way , limiting waste. In fact, according to a study carried out by the German website Statista, between 2017 and 2021 the (estimated) global spending in Programmatic Advertising was that shown on the diagram above.
That spending is expected to accelerate to nearly $ 100 billion in 2022. It should be added that only algorithms and technologies such as those behind programmatic advertising are capable of analyzing such a vast amount of data. The advertiser can also reach the user via multiple fronts: laptops, desktops, tablets, smartphones and now also radios, TVs and digital billboards.
Furthermore, the difficulties in adopting this methodology are reduced to a minimum thanks to the operating companies that are now numerous and integrated in the programmatic supply chain to provide this efficiency to customers in the sector in the blink of an eye.
But if it is so efficient then who loses?
Nobody loses anything, in fact even those who provide content and show advertising (online newspapers, websites, etc.) benefit from it, the efficiency of the system is expressed by both ends of the chain. If it is true that those who manage advertising budgets obtain greater efficiency in their budget, it is also true that those who display advertising spaces obtain the same efficiency in maximizing each space in a personalized way with respect to each user who sees it. In short, it is a win-win scheme, a victory for everyone.
The article What is Programmatic Advertising? Here are the basics it was written on: Tech CuE | Close-up Engineering .