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  • August 5, 2019

Programmatic advertising: A simple explanation

Programmatic advertising has exploded over the last decade, and this growth is only expected to increase. While we spend a lot of time on this blog exploring trends, data, and insights, sometimes it’s worthwhile getting back to basics. In this post, we’re defining programmatic advertising for any newcomers to the industry, or junior marketers who need to get up to speed.

So without further ado…

What is programmatic advertising?

Programmatic advertising is a method of buying digital media that leverages data and technology to automate the purchase of ad space to reach potential customers. It improves the targeting, and segmenting of audiences to ensure advertisements aren’t getting lost on sites their potential customers aren’t visiting. Programmatic advertising gives companies the ability to purchase thousands of ads at once across multiple platforms. This includes video, mobile, social, and television.

“Programmatic [advertising] is extremely efficient and unparalleled in its ability to pair rich audience data with ad inventory and targeting.” — eMarketer

How does this process work?

There are many advanced ways in which programmatic advertising can play out, but in its simplest form, ad space is purchased and sold in a digital auction, enhancing an advertiser’s ability to conduct business with publishers. Companies are given the opportunity to bid for ad space alongside brands they may not otherwise have had access to.

After the ad space is purchased, the advertisement is placed on sites that the target audience is known to visit. This allows smaller advertisers to reach audiences that have been acquired by larger ones. As a result, it’s more likely that the audience will actually see the advertisement and begin to associate products with the offerings.

Why marketers use programmatic advertising

Programmatic advertising is growing in popularity with marketers as the data and technology gets more advanced. In the US, advertisers will spend nearly $60 billion on programmatic display—a number that is expected to grow to almost $81 billion in 2021, accounting for almost 88% of display ad spending.

There are 5 main reasons why marketers are leaning more on automation to scale their advertising campaigns.

  1. It saves time and money. It’s obvious, but automating ad placements saves marketers a lot of time and is more cost efficient than buying inventory manually.

  2. It gives marketers more control of their budgets and campaigns by allowing them to target ads at a granular level across audiences, behavioral characteristics, device type, or contextual environments.

  3. It increases scale. Programmatic advertising allows marketers to access a wider ad inventory across the totality of the worldwide web.

  4. There’s better reporting available. Programmatic campaigns deliver an array of performance data that marketers can use to learn more about their audiences, the advertising that resonated, and the sites that delivered the best results. This helps them improve future strategies so they can get more effective over time.

  5. It provides a path to calculate return on investment (ROI). Programmatic advertising leverages a combination of data and technology to execute campaigns which allows marketers to track the progress of ads and how audiences are engaging with them. This helps track ROI for campaigns and enables marketers to be smarter and more efficient with their media budgets.

Programmatic advertising continues to evolve with new, exciting opportunities to tap into data and increase efficiency in an increasingly fragmented market. We hope this quick explanation gets you up to speed.

Looking for more articles that help demystify the world of digital advertising? Try our jargon-busting article that lists the most essential 23 digital advertising acronyms and terms you need to know.

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