What is programmatic advertising?

Programmatic Marketing Graphic
Image courtesy of spotxchange.com

Have you heard about programmatic marketing? Don’t worry if you haven’t, you are not alone. Programmatic marketing is a form of marketing where automated systems bid for digital advertising space, and then post advertisements based on the user visiting the page. The bidding system is fully automatic, using Real-time bidding (RTB) to allocate ad space to different websites and mobile platforms.

When we said “you are not alone,” we meant it. Just over 20% of CMOs understand programmatic marketing and use it. Almost 70% of CMOs claim that they need to find out more information about this form of marketing before making a decision. Roughly 18% of those (12% of CMOs total) have never even heard of it. Odd right? Something that adds so much value to brands isn’t being utilized. A blog on the Wall Street Journal website shows this quantitative information visually.

How is Programmatic Marketing valuable?
To put it simply, algorithms.  We understand that algorithms are not necessarily simple, but with the Google machine being popular, audiences understand that algorithms can sort through mass amounts of data in seconds. Instead of a marketer researching multiple websites when scouting advertising locations, then going through the process of finding the media kit, discussing prices with the host, then preparing the advertisement, programmatic marketing does that for you. Not only does the system manage all of that for you, it can even sort ads by individual visitor characteristics.

What if you could pinpoint your marketing based off of each user’s individual browsing history, and choose whether or not to market specifically to them? Programmatic marketing algorithms are able to make the decision in milliseconds. In fact, as a user that fits your target demographic is loading into the website, the RTB works instantly, and if the ad wins, it gets placed into one or multiple sections of the page.

Which Industries are Using RTB?
The entertainment and media category makes up 20% of  RTB ads in 2013. Technology and retail were also not far behind. The entertainment and media industries are able to segment their viewers into separate demographics, which may be the reason why many companies in that industry have been using the RTB technology. The industries with the least RTB were News and Social Dating, with 2% of the total RTB each.

Will this form of advertising succeed in the future?
According to Smaato’s Q4 2013 summary, Real-time bidding has grown by over 450% in one year. With the speed that these transactions can take place, marketers cannot keep up with the automated system, nor can they be as accurate. Programmatic marketing will likely continue to rise as long as it remains the most efficient way to market online and on mobile devices. If you are considering marketing, or do market, in the digital realm, you would be wise to look into programmatic marketing and RTB systems.

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