What is programmatic advertising?
Programmatic advertising or programmatic buying is a buying model or technology that allows marketers to display ads in online advertising spaces using automation tools.
To create this kind of ads, analytical technologies and data processing (big data and machine learning) are used to make an effective audience segmentation, as well as to show advertising campaigns in the most appropriate digital media (suitable advertising spaces).
1. Types of programmatic advertising
Currently, there are four main business models used to buy programmatic advertising space: RTB (Real time bidding), programmatic direct, private auction and preferential agreements.
- RTB (Real time bidding). RTB allows advertisers to impact only users who meet certain pre-defined conditions. With the RTB model it is possible to bid for advertising space in real time and limit ads to users with more options to interact with them.
This is achieved by using cookies that collect user information for a more accurate segmentation of the target audience.
- Private auction (Private marketplace). In this case, it is a private bidding or more limited contest, where buyers need to have a previous invitation in order to participate in the bidding for the advertising space.
The main difference between the two lies in the greater or lesser ability of the advertiser to know exactly where their ads will be published.
- Programmatic direct. In this case, advertising is contracted directly through a platform or software, but with the premise that it is only contracted for a specific medium or support.
Here the advertiser chooses where they want their ad to be displayed and the type of audience to which it will be shown, which offers much more control over the campaigns. It is ideal to avoid the ad being shown in media that is not appropriate.
- Preferred deals. This is a modified version of direct programmatic in which the advertising spaces already have a starting price before they are auctioned.
2. Advantages of programmatic advertising
Programmatic advertising, compared to more traditional online advertising models, offers the following advantages, among others:
- Improved targeting. Through the use of big data, a large amount of user information is obtained, which makes user segmentation much more effective and accurate.
- It offers more reach. The wide variety of media in which programmatic advertising is offered, as well as access to advertising networks around the world, makes it possible to reach potential customers around the world.
- Simplification. The programmatic advertising process brings together the different elements needed in a campaign in one place (advertisers, ad servers, platforms and media). This not only improves ROI, but also saves effort and reduces the time needed to launch a campaign.
- Better results. Because of the effective segmentation of the users that are impacted, conversion rates are much higher. Generating a higher quality traffic and more qualified for the advertiser’s needs.
- It is possible to avoid human mistakes. Programmatic advertising systems can automatically manage, thanks to machine learning, a huge amount of data with which to make decisions in real time, increasing the effectiveness of campaigns and reducing the possibility of human error.
- Metrics and optimization. It is possible to collect a lot of data using programmatic campaigns, which allows marketers to measure the performance of the campaign in real time and make adjustments to them, the optimization is constant.