Anyone on the internet knows exactly where to scroll to find out how to “get rid of belly fat today” or get “one weird trick” to solve an inane problem — the bottom of their browser on almost any popular website. Far away from where the readers’ eyes and cursor typically spend any time, this is where programmatic advertising got its start. But for companies that think this digital ad buying method still is a bottom-of-the-barrel approach to get clicks, it’s time to think again.
Big data and automation have been fueling a revolution in programmatic advertising. These technologies are creating a landscape that allows businesses to hyper-target potential customers through what is quickly becoming one of the most sophisticated methods to ever arise in the digital ad world.
As ever, this process is enabled by a few types of practitioners. Supply-side platforms enable publishers to bring their ad inventory to the market. Then, on the tactical side, there are data management platforms (DMPs) and demand-side platforms (DSPs).
DMPs allow companies to access granular information on an audience to help optimize an ad strategy. Are they in the market for new clothes? Are they going to start needing diapers in the next few months? DMPs deliver this information through big data analysis and segmentation.
DMP-based audiences are then pushed to DSPs to place bids on that audience in real-time through a given ad environment. DSPs can even get specific information, like if that potential customer is on a mobile device or is watching a streaming video, and hit them with the right creative in the right format at the right time.
As programmatic advertising evolves, that inventory is also expanding away from offbeat URLs to high-end media companies seeking more ad revenue — publishers are shifting valuable inventory from direct sales to DSPs.
“We are seeing really premium publishers offer higher and higher quality inventory,” says Leland Morris, director of sales for data science and managed programmatic service provider YouConnex. “Not just in placement but in the inventory type and creative. That’s expanding and evolving every day.”
YouConnex determines if a placement is high quality by forming relationships with their inventory channels, gaining a sense of their transparency and determining which key performance indicators (KPIs) to measure against.
Brian Stempeck, chief client officer at The Trade Desk, an eight-year-old DSP with an integrated DMP, also sees programmatic ad buying moving upmarket.
“Premium publishers are realizing programmatic is a good thing for them,” he says. “If we know someone is in the market for a new car and we can identify the user, we are going to bid aggressively to get a better CMP [cost per thousand impressions] or price for the media than they would have through direct sales.”
DSPs rely on algorithms that are making decisions around 6 million times a second, says Stempeck, on parameters like if that person has been on a car site in the last three weeks, what their projected income is, if it’s a Friday so they are more likely to go on a test drive and so on.
Then a carmaker can supply ads that can run on mobile, video, audio and other formats, and a DSP can hit the prospective buyer the right number of times in the right medium to pique their interest.
As algorithms and automation continue to provide more sophisticated targeting options, YouConnex CEO Sean Halter stresses the importance of blending that with a hands-on approach as the industry grows.
“You can rely on automation to do a lot of things, but if you completely take that human element out and set it and forget it, you are missing an opportunity to have a strategy and layer tactical thoughts in that campaign.”
Morris echos the importance of having a person in the loop during the targeting process.
“Data is the backbone of what we do. … Are we filtering down to the right people, and what’s the quality of engagement? All that is under the label of big data. Our job is to dig into what it really means.”
The industry is working to bridge online and offline as well. The Trade Desk recognizes how valuable it is to be able to connect the dots between online clicks and sales that occur in-person.
“What we are seeing clients push toward is, if I’m Home Depot, and most of my sales occur in store, how do i measure whether if someone saw an ad and then went to a Home Depot?” says Stempeck.
Programmatic advertising is an exciting and evolving field. As first-, second- and third-party data become more robust and high-value digital ad inventory flows into the platforms, the industry is confident it will take on a new life for marketers and consumers. In fact, according to ZenithOptimedia, programmatic is slated to grow by 31 percent in 2017 — faster than social media (25 percent) and online video (20 percent). Dun & Bradstreet predicts that 70 percent of marketers will increase programmatic spend in 2017. Those are numbers that should make all CMOs, digital marketers and advertisers stand up and re-look at programmatic advertising.