Did you know that as many as 20% of new businesses fail within the first two years of their opening? If that doesn’t shock you, by five years, 45% of new businesses tend to fail. If you have a new business or are thinking about starting one, you might be wondering what you can do to avoid this unfortunate fate.
The solution may lay in programmatic advertising. By utilizing the right programmatic advertising strategy, you have a chance to get above the competition so your business can flourish instead of fail. If you don’t know anything about this kind of advertising, you’ll learn all about it in this programmatic advertising for beginners guide.
Before we dive into how you can add programmatic advertising to your next marketing campaign, let’s explore what programmatic advertising is in the first place.
What Is Programmatic Advertising?
More likely than not, you’ve already seen plenty of examples of programmatic advertising. This is because programmatic advertising is one of the most popular forms of display advertising. However, knowing what programmatic advertising looks like is a much different concept compared to knowing how it works.
The way programmatic ads work is quite simple on the surface. It involves buying and/or selling advertising space. However, instead of manually, you would accomplish all of this automatically.
How might you buy and sell advertising space automatically, you might ask? It has a lot to do with machine learning and AI optimization. However, don’t be too fooled by the word “automatic.”
This does not mean that you can sit back and relax while the magic of programmatic advertising does all the work for you. On the contrary, while there are some things programmatic advertising can do on its own, there are still several factors you will need to consider and complete manually. However, you won’t be too overwhelmed because programmatic can do most of the major tasks alone.
These tasks can include reporting on ads, ordering, and setting ads up. Since most advertising features are automated with programmatic advertising, you can save a lot of time (and money) when you use an automated system like this. Platforms for programmatic advertising are usually very well-equipped and know all about what kind of ads to use, when, and how.
You should keep in mind that programmatic advertising not only involves the buying and selling of digital ad campaigns but also involves the optimization of those campaigns. However, at this point, you might be thinking that this kind of advertising sounds a little too good to be true. Can anyone use programmatic advertising or just some lucky few?
Who Can Use Programmatic Advertising?
The world of programmatic ad design has been quickly growing in recent years. More and more businesses are discovering the benefits of investing in this type of advertising compared to other, more traditional types. Instead of negotiating with real people and having to go back and forth on a deal, an AI can do all of that for you.
Your stress levels will be much lower and you’ll have a lot of extra time on your hands. After all, digital ads are digital, so why shouldn’t the way you buy and sell them be digital as well? More than that, the fingers of programmatic advertising can reach far and wide.
This kind of advertising is not just for computers. Rather, it can cover mobile devices like tablets and phones and it can spread through social media and video platforms. There’s not one digital space that programmatic advertising can’t reach.
You can even use programmatic advertising outside of the home. For example, this kind of advertising would even work with digital billboards in malls or on the side of buildings in a busy city square.
If you’re trying to market a product or service, this is exactly what you want. This is especially true if you’re trying to grow fast and have plans for the future. By putting your business out where everyone can see it, you won’t have any trouble getting traffic and business.
You might think that programmatic advertising sounds so effective that it must be too expensive for most people to use. While it is true programmatic advertising was quite expensive in the past, it is now becoming more and more affordable for more businesses to use. This is great if your brand is still small because it will give you the chance to compete with big brands.
Is Programmatic Advertising the Right Choice for You?
Programmatic advertising might sound nice at the moment, but how can you be sure that it’s really the right choice for you? After all, there are plenty of other choices when it comes to advertising in a digital space. Do you really want to put your eggs into the basket of programmatic advertising?
First, let’s consider what one of the most traditional methods of digital advertising is: real-time bidding. Before the existence of programmatic advertising, you would have to bid on digital advertising space in real-time. This process would work much in the same way as an auction.
If you’re not fast enough or if you don’t have enough money, you won’t be able to get that great advertising space you had your eye on. More than that, trying to keep up with the fast-paced buying and selling of digital ad space can get very exhausting very fast. If you’re trying to run and build a business, it would be difficult to keep up with your digital ad campaigns at the same time.
However, thanks to programmatic advertising, real-time bidding or RTB has turned into an entirely different creature. Programmatic advertising takes the manual effort out of the process and automates it. This makes the process more efficient than manual effort ever could be.
This efficiency works on both ends: the ad publisher’s end and the advertiser’s end. So, instead of advertisers and ad publishers debating for long periods of time about a single ad space, programmatic advertising can take over and smooth out the process without any problems.
The process has never been easier. And, as it turns out, it has never been more popular either. The popularity of programmatic advertising for digital display advertising is only expected to increase in the future.
How Does Programmatic Advertising Work Exactly?
Just because programmatic advertising can accomplish a lot automatically doesn’t mean that you shouldn’t bother learning about how it works. Instead, for successful programmatic ads, you should know all about the process. That way, you will truly be able to understand how successful programmatic ads are and how you can make them even more successful in the future.
Let’s take a closer look at the different roles in the realm of digital advertising. You as an advertiser are obviously looking for ad space to buy. A publisher, on the other hand, is more concerned with the ad space he is trying to sell at a good price.
Programmatic advertising can help to connect the right publisher with the right advertiser. Let’s say, for example, that you want to start up an online campaign to market your brand’s stainless steel water bottles. To accomplish this with the most success, you would reach out to a programmatic advertising agency and such an agency would do all the heavy lifting for your campaign.
This agency would something known as a demand-side platform or DSP. The DSP is essential when it comes to the automation of buying advertisements that allow for more ad impressions. All of this, of course, would eventually help you to achieve the goal of your marketing campaign and you would barely have to lift a finger.
However, the benefits don’t stop there. The DSP is very efficient. When you buy ad space manually, you usually have to buy one space from one publisher at a time.
With DSP, on the other hand, you can buy ad space from several different publishers at one time. Talk about efficiency! But the different roles in the programmatic advertising space are more advanced than that alone.
The DSP and the DMP
You already know what the DSP is, but there are a couple of other terms you will need to memorize. Don’t be too overwhelmed because once you understand these new terms, you will have a much easier time understanding how programmatic advertising works. As mentioned before, the DSP allows you to buy ad space from multiple publishers at once, but the DSP also considers your audience.
Obviously, if you’re trying to market your brand’s steel water bottles, you won’t want to market to an audience that wants to buy new silverware. The DSP is able to identify your audience and then market to that audience. However, the DSP can’t do this alone.
Instead, it works together with another automated process known as a data management platform or a DMP. As the name suggests, it involves the management of data, but not just any data. The DMP is responsible for collecting and organizing the data of different audiences.
This data has to do with what certain people are searching for online. For example, some groups might be searching for moisturizing creams, other groups might be thinking about buying multivitamins, and other groups might want to invest in a sprinkler system. There are millions upon millions of people searching for different products and services on the internet at any given moment.
A DMP collects all of this digital data and is able to calculate what audience might find your brand’s ads of interest. Location, user behavior, and demographics all matter.
For example, if there is a certain audience interested in travel water bottles, that audience might find your steel water bottles of interest. So if you were to market your ads towards such an audience, you might very well be at the start of a very successful ad campaign.
Understanding the Supply-Side Platform
There is still another important role we have not yet explored in the world of programmatic advertising: the supply-side platform or SSP. When the DMP and the DSP work together to find an audience that might like your product, the ad isn’t published and marketed automatically. Instead, the publisher with the advertising space needs to be alerted.
That happens with the SSP. Ad publishers use SSPs to sell advertisements for the best possible value. So, if the DMP locates the perfect audience for your product, such information will be sent to an SSP and an ad publisher will be alerted.
Once this happens, the SSP starts up an auction for the ad space in question. The DSP also plays an important part in this process. The DSP uses all the data it has and is vital for determining the price of the bid for an ad’s first impression.
This auction is usually held on the supply-side platform, but it may happen in other digital spaces such as the ad exchange. The process usually happens in real-time and very quickly. Once the bidding is over and someone buys the ad impression, the ad is quickly whisked away to the publisher’s website where it can finally be displayed and attract a certain audience.
But keep in mind that the same ad is not always in the same place on the publisher’s website. Rather, every time a new user arrives at the website, a new ad will be in that advertising space. Even if you refresh the page as the same user, you are likely to find a new ad in the same place.
With each change of advertisement, another bid takes place. These auctions take less than a second to complete and are almost always occurring.
Programmatic Auction Types You Should Know About
What many people don’t know about programmatic advertising auctions is that there is not just one kind of auction. Instead, there are several different types of auctions. Each type of auction might offer a different advantage to the ad publisher or advertiser.
There are many types of auctions to consider, but we will only consider the most popular and successful ones. We’ve actually already explored one major type of auction: real-time bidding. This type of bidding only takes a few milliseconds or so to wrap up.
If you want something fast and efficient, RTB might be the right type of auction for you. RTB also involves the specific placement and showing of ads. Other types of auctions might not offer this advantage.
A private marketplace is a unique type of auction format in the world of programmatic advertising. A private marketplace is also called a non-guaranteed PMP and it tends to work mostly in the favor of the publisher. This is because a private marketplace allows a publisher to be more selective when it comes to advertisers who want to buy ad impressions.
The reason for this is that only certain advertisers can be invited to a private marketplace for an auction. This weeds out large numbers of advertisers all bidding for the same ad space. In a private marketplace, a publisher also has the opportunity to limit what kind of ad impressions they might sell.
The foundation of an auction in a private marketplace is more or less the same as real-time bidding. The only difference is how selective a private marketplace auction can be.
Usually, the auction is very small and a minimum price is set for a given impression. Then, the bidding can finally begin. Advertisers can bid on multiple impressions if they want.
Programmatic Guaranteed Auction or Direct Sale Auction
Another popular type of auction is known as the programmatic guaranteed auction, also known as a direct sale. Interestingly enough, there is no actual bidding in this type of auction which makes it especially unique compared to the other types of major auctions. You might be wondering how the buying and selling of an ad might happen without any bids.
It all has to do with the name of the auction: programmatic guaranteed or direct sale. This kind of auction involves the advertiser interacting directly with the publisher to buy an impression. The advertiser can do this alone or the advertiser may go through an advertising agency instead.
Whatever the case, you may be wondering what the point is of an auction without any bidding. Actually, this type of auction has an important purpose: to prevent the buying and use of ad spaces that may be fraudulent or otherwise without a good reputation. You have no doubt come across shady websites in your lifetime.
Even shady websites have spaces for advertisements, but that doesn’t mean that those spaces are going to be helpful to your brand if you buy them. Instead, you might actually risk the reputation of your brand if you advertise on a shady website. After all, if a certain website tends to display fraudulent ads, you wouldn’t want your brand to be among them even if you might get a good deal for the advertising space.
Fortunately, you shouldn’t run into this problem when you go through a direct sale auction. Much like with a private marketplace, this kind of auction gives the publisher a lot of control over ad inventory, including the regulation of the ad price. This is also beneficial to the advertiser since you will be provided with the best inventory.
The First-Price Auction
The last type of programmatic advertising auction we will explore is one that you are probably already familiar with: the first-price auction. Compared to the other types of auctions we have already discussed, the first-price auction is actually a very simple type of auction. More than that, it is also one of the most popular types of auctions and even the Google Ad exchange has started to use this type.
A first-price auction involves matching the price of an ad impression with the price of the highest bid. Previously, a lot of ad exchanges have used the second price auction format instead of the first-price auction. A second-price auction involves matching the price of an ad impression with the second-highest bidder rather than the first.
Even so, the highest bidder would still win the auction in a second price auction. A first-price auction is simpler in that the highest bidder not only determines the impression price but also wins the auction. Some larger companies might not like this type of auction for a variety of reasons.
However, as a business owner or even an enterprise owner, you should not encounter any problems if you decide to use a first-price auction. The only downside to this auction is that you will not have the chance to be exposed to more selective impressions and ad space as with the previously discussed auctions.
Instead of bidding among a small pool of ad inventory, you will be bidding in a much larger pool which means more competition. This may make it harder to get the right advertisements that you want, especially if you don’t have the money to be the highest bidder.
Understanding the Cost of Programmatic Advertising
Now that you know all about the types of major auctions for programmatic ads, you might be wondering how much you will be spending on these auctions. The answer depends on a variety of factors. And remember that you never need to spend your money on anything you don’t want to.
If you don’t like a certain ad space, save your money for one that feels right. Following your instincts is always good advice when it comes to successful programmatic advertising. To understand how much you might spend on programmatic advertising, you will need to understand the term CPM.
CPM stands for cost per mille but it means cost per thousand. This term refers to how much you might spend per 1,000 ad impressions. Usually, if the quality of the ad inventory you are buying from is very high, you should expect to pay more per thousand ad impressions.
After all, it makes sense to pay more for high-quality results. You could easily save money by putting your money into some low-quality ad inventory. However, as mentioned before, you’re not likely to get very far when you buy cheap or shady ad space for your brand.
On the other hand, if you manage to get your brand displayed in a high-quality ad space, the people that see the ads will know that your brand must be trustworthy. More than that, those ads will likely get far more views, especially if they are displayed on large and successful websites. Specification may also affect the CPM.
The more specific you want the ads to be for your audience, the more you should expect to spend. Certain industries may be more expensive than others as well. In terms of CPM, you usually won’t spend less than $0.50 or more than $2.
Set Your Programmatic Ad Campaign Goals
Knowing how to bid on ad space and understanding the cost of impressions is only the beginning. As you start to add programmatic advertising to your campaign, you should always keep your goals in mind. Otherwise, you will never be as organized and concise as you need to be to succeed.
More than that, having goals can be very motivating. By setting a goal for yourself on your marketing campaign journey, you will be able to measure your progress before and after the campaign. By the time you reach your goal, you will be able to look ahead and see what else your brand needs to conquer to flourish.
The time you use to set your goals is also the best time to start preparing to meet those goals. A popular and very good goal is to increase your brand awareness. After all, what kind of business doesn’t want to increase brand awareness?
By doing this, more people will see what your brand has to offer. More than that, your brand will also be more reputable and more known by a large group of people. Once you accomplish this goal, you may set another goal such as targeting audiences that are outside your usual audience.
This, of course, will increase your brand awareness even more. You can also start with smaller goals such as increasing your website’s traffic. Whether your goal is big or small, it’s important to follow through.
After all, if you set a goal and never complete it, how can you expect your business to succeed? Whatever your goal is, increased traffic is almost always a must. Fortunately, any kind of ad placed in any digital space will usually do that for you.
Choose the Right Type of Programmatic Ad Campaign for You
Much as there is no one type of programmatic ad auction, there is no one type of programmatic ad campaign either. Most programmatic ad platforms allow you to choose from a variety of certain types. These types might include banner ads, video ads, native ads, and so on.
Each of these different ads has its own unique benefits. They also have their own unique appearances and costs. All of these factors can influence the effectiveness of an ad, so make sure you consider what your audience might prefer before you invest in any single type of ad.
You should also keep in mind that cheaper is usually not better in the world of programmatic ad campaigns. This is because the cheaper an ad is, the less effective it usually is. Take banner ads as an example.
A banner ad is a large ad that stretches across most, if not all, of the computer screen. These ads are usually the cheapest of the bunch. You might think that since a banner ad is so large and obviously clickable that you should get plenty of clicks.
However, this is usually not the case. As it happens, banner ads are not only the cheapest type of ads but also the least clicked on. This might be because many people find banner ads to be very annoying.
They are much like a digital billboard that blocks the viewer from anything else on the website. Then, the viewer will have to figure out how to close the ad. Because banner ads are so in-your-face in terms of presentation, they tend to turn viewers off to whatever you might be advertising.
There are some cases in which you can use banner ads to your advantage. However, it’s often best to use other ads.
Programmatic Video Ads
In an age where YouTube is one of the most popular websites on the internet, it’s unsurprising that programmatic video ads could be quite effective. If you’re not using programmatic video ads, how much do you really care about making your brand successful? The only downside of video ads is that they tend to be a little bit more expensive than banner ads.
Keep in mind that the CPM for banner ads is only about $2.80. Also, keep in mind that the engagement rate for video ads is 5 times better than the engagement for banner ads. So, factoring in that information, most people would agree that it’s completely worth it to spend a little bit more money on video ads in exchange for many more clicks.
Why might video ads be so much more engaging than banner ads, you ask? It might have to do with the fact that video ads are much more interesting than banner ads in general. Banner ads usually have some sort of static text or image to display.
Anything that is static is usually not very engaging, to begin with. On the other hand, video ads are, of course, in motion. Video ads are also, obviously, shown while someone is watching a video.
Considering that programmatic ads are highly targeted, video ads tend to relate to whatever a person might be watching or what they were searching for previously. For example, if someone was searching for anti-aging cream on the internet and they start watching a video that is either related or not related, this person might receive a targeted ad for your brand’s anti-aging cream. Since this person is already thinking about buying such a cream, there is a pretty good chance that she might click on your video ad.
Programmatic Native Ads
If you are unfamiliar with native ads, they are quite simple and very effective. No doubt you have been subjected to the highly annoying pop-up ads on various websites. Just as you close one pop-up another seems to appear to take its place, only increasing your annoyance and making you far less interested in whatever is being advertised.
If you dislike this kind of advertising, you shouldn’t expect other people to enjoy it once you put your business’s ads into the world. Fortunately, there is a clever solution to this: native ads. Native ads are designed in a particular way that allows them to blend in with a website’s design and layout.
They also don’t pop up when you are least expecting them. Instead, they are much more reserved and professional. No matter what the publisher looks like, whether it’s monochrome or very bubbly and colorful, your native ad will be able to blend in seamlessly.
The biggest benefit of native ads is that they don’t look like ads at all. This removes any annoyance someone might feel when seeing an ad. Since a native ad does not intrude upon what someone might already be looking at, the viewer’s natural curiosity might lead him or her to click on the native ad.
Because a native ad does not push itself on a visitor, the visitor will not immediately be repelled by the ad and instead might even be compelled to click. Since a native ad is a high-quality ad, you can also expect more high-quality traffic to discover your brand. Native ads might appear as promoted listings, content recommendations, and other natural forms.
Set a Budget for Your Programmatic Ad Campaign
It can be easy to be swept away by all the unique facets of programmatic advertising. However, in order to keep your budget in mind, you will have to refrain from buying every type of ad and campaign that lands in front of you. Instead, you will need to be very selective and plan ahead when it comes to choosing what ads might be best for your brand and your wallet.
For example, we have already seen how banner ads are very affordable compared to other options in the world of programmatic advertising. If you have a small budget and want to save money, why not use banner ads? On the other hand, if you have a very large budget, why shouldn’t you buy the most expensive types of ads you can?
The trick to getting the most out of your budget is thinking beyond the money. Of course, you should not go overboard with your budget, but you need to think of what kind of quality you might be getting from what you pay for. For instance, even though you might save money with banner ads, the low quality of the ads is usually not worth the money that you save.
In contrast, spending large amounts of money on ads is not usually going to pay off in the long run. Rather, the best course of action is almost always to find a balance somewhere in the middle. You will want to invest in programmatic ads that don’t cost too much or too little.
You will want to find ads that are high-quality without breaking the bank. That way, you can get the best of both worlds: successful and reputable results while staying within your budget. Be sure to do your research before you make a decision.
Optimize Your Programmatic Ads and See Results
As mentioned at the beginning of this article, because programmatic ads are automated for the most part doesn’t mean that you can sit back and let the machine learning do all the work for you. Sure, you can let artificial intelligence do all the heavy lifting, but without a human touch, your ads will only take you so far. If you want to see big results from your programmatic ads, you will need to do a little optimization on your end.
One of the most important things you can do is analyze the performance of your programmatic ads. Real-time reports are great to have on hand. Real-time doesn’t always mean instant, but real-time reports can give you the most up-to-date information on your ads.
Real-time reports will be able to educate you on ad impressions, clicks, conversions, and more. If you have several different types of ads running at once on different sites, you will be able to see which ads are performing better than others. For example, you mind find that your video ads are far outperforming your native ads.
If that’s the case, then the next time you spend money on programmatic ads, you should consider buying more video ads. This way, you can optimize your ads and maximize your traffic and brand awareness. The more you analyze your ads, the more areas you will find to improve.
And the more you improve, the smoother and better your campaign will flow. The result, of course, is a much more successful business.
Everything You Need to Know About Programmatic Advertising Campaigns
If you were unsure about how to ad programmatic advertising to your marketing campaigns before, you should now know all about it. From choosing the right ad auction to the right type of ads, there are many ways you can make your business a success with programmatic advertising.
To learn more about creating advertising campaigns, don’t hesitate to contact us here.