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Programmatic Advertising

What You Need to Know

Today is an age of the non-linear path to purchase journey. Consumers want real-time connections containing information, offers, and deals during key personal micro-moments. With the rise of programmatic advertising we can create the optimal customer journey by targeting the right person at the right time for the best price.

Programmatic is a technology-based method of buying and selling relevant ad inventory in real-time based on a set of pre-determined conditions, such as price, audience, ad size, etc. The entire programmatic process occurs in less than 20 milliseconds, which creates endless opportunities to reach key audiences during pivotal micro-moments.

The Future of Programmatic

The Interactive Advertising Bureau (IAB) recently released its first-ever programmatic revenue report, revealing that U.S. marketers spent $10.1 billion through programmatic ad technologies this year in the digital display market. eMarketer predicts programmatic ads will make up over $14 billion of the approximately $58.6 billion total digital advertising spend in 2015, and that buyers will shift almost 60% of all ad budgets into digital by 2017.

While programmatic display ads command a lot of ad budget dollars, programmatic video ad buys are on the rise and expected to top $2 billion this year, a 212% increase over last year. It is projected that 40% of U.S. video ad spend next year will be via programmatic platforms.

By 2019, programmatic TV advertising is forcast to be just as prominent as consumers shop across various digital channels. Imagine you are researching a brand on your phone but you elect to wait to purchase. Then later you are watching TV and you are served a TV commercial about said brand.

The ability to optimize across both platforms may not exist, but it is coming. According to Videology, a programmatic video ad platform, audiences watching TV and digital video are (mostly) the same so they elect to use the same data to reach them in both channels. Videology reports that during Q2 2015, 70% of managed campaigns ran on more than one device, compared to only 22% in Q2 2014.

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Fixed pricing vs. Auction

There are two methods to purchasing programmatic ads: fixed-priced programmatic, which includes unreserved fixed rate, and auction based programmatic, which includes both private auctions and open auctions. Some speculate the growth in programmatic advertising is due the increase in private auctions. Having more control over when and where ads are served is proving to be a key benefit.

  • Ads bought via fixed-priced programmatic receive the highest priority and typically receive the best placements.
  • Any fixed-priced, reserved inventory that is not sold is made available at the unreserved fix rate.
  • Any unreserved fix rate inventory that is not sold is typically sold at private auctions where any leftover inventory is finally sold via an open auction.

Viewability, Fraud and Transparency

According to Marin Software, there are three terms you should be aware of when purchasing programmatic advertising.

  • Viewability
    Intended audiences never see one-half of the online ads that sell programmatically due to the ad not loading or displaying correctly. Per the Media Rating Council, an ad has to be 50 percent viewable for one second in order to count as viewable. However, the IAB believes 70 percent viewability is what advertisers should expect. According to Videology, 31% of their Q2 2015 campaigns were specifically optimized for viewability that is a 165% over increase from Q2 2014.
  • Fraud
    Impressions are not calculated based on humans seeing an ad; impressions are the total number of times the ad network served a browser. Anywhere from 30 to 60 percent of online ad impressions are allegedly fraudulent. People will hide ads behind other ads, spoof their domain to trick ad networks into serving higher-paying ads on their site, and purposefully send bots to a site to drive up impressions.
  • Transparency
    The more transparent a media partner can be with you in regards to where they are buying their programmatic advertising, the more effective tracking for your budget and program.

Programmatic Advertising Key Takeaway

With consumers wanting real-time connections during key personal micro-moments, programmatic advertising is proving to be the right solution to deliver the optimal digital customer journey. In addition, as media channels and partners continue to integrate, programmatic advertising promises to be a key part of media solutions for the future.

Sources: 2015, 2015, 2015, 2015, 2015, WTF is Programmatic, Marin Software 2015.