Why Programmatic Advertising is Gaining Momentum

Programmatic advertising is hot in digital advertising. It is, put simply, the automation of media buying. Operating through the use of SaaS platforms—such as demand-side platforms (DSPs) and homegrown trade desks—it allows media buys to efficiently access inventory on desktop display, mobile web, mobile apps, social platforms, video, and more. By balancing computers and people, programmatic advertising allows marketers to advertise effectively and consistently across channels.

Along with the influential ability to make advertising more efficient, Blog 24 - Graphic 1programmatic is also known for its ability to find and ‘speak’ to individuals. Though it does requires that balance of human implementation and computer efficiency, programmatic replaces much of the human aspect of media buying.

Given programmatic advertising’s ability to target individuals in a cost and resource effective way, it’s only natural that investments in programmatic are increasing. In fact, a 2016 survey by eMarketer showed that programmatic advertising accounts for over half of digital display ad spending in the United States.

The Advent of Programmatic Advertising

Programmatic advertising first came onto the marketing scene with the onset of impression exchanges. Impression exchanges—which are essentially auction houses, like Google AdWords, for display banners—allowed publishers to monetize inventory that could not be sold direct or through an ad network partner.  In these early days, the inventory was remnant and very long tail. Over time, though, more and more publishers realized that they can make their premium inventory more easily available as well. Thus, programmatic advertising was born.

Funded by venture capitalists, programmatic advertising platforms began to take off with the additional help of early adopters. Large advertisers typically filled the role of these early adopters due to the efficiency that programmatic advertising brought to marketing budgets and efforts alike.

As it has grown, though, programmatic advertising is no longer used exclusively by large advertisers. Many parts of the solution have become more commoditized, allowing small and medium-sized businesses (SMBs) to get involved as well. This new level of accessibility allowed programmatic advertising to take off around the same time that efficiency and individual targeting became incredibly sought after.

Of course, programmatic advertising’s ability to use data for targeting is what has really set it apart from traditional media buying. This has also set it apart from buying direct from publishers or ad networks, which used to be more black box. In other words, programmatic advertising has created a whole new game in digital advertising.

Overall, the growth of programmatic advertising to the levels we see today is due to the new accessibility of the platforms and abundance of advertising inventory. It continues to have drawbacks, though, that every advertiser should know before starting their own adoption process.

Programmatic Advertising Is Ideal for Some—Not for Others

The benefits of programmatic advertising, giving advertisers more control and increased efficiency, are huge. With accessibility at an all-time high, why, then, is adoption not at 100%?

Following Best Practices is Necessary

Adoption requires knowledge of the tricks of trade when it comes to programmatic advertising. The key to successful adoption is to rely on one source of truth before taking the plunge and moving on to working with multiple programmatic partners at once.

This one source of truth can take the form of anything from a web analytics platform to an ad server, but is necessary to help new adopters understand and effectively use programmatic advertising. While taking programmatic advertising in-house can be an ideal way to streamline your marketing efforts and increase adoption, understand that there are usually minimum commitments to using self-serve options.

Why Programmatic Doesn’t Work for Everyone

Programmatic advertising is extremely effective in B2C space. It presents many challenges for B2B advertisers, though. This discrepancy is mainly due to the fact that programmatic advertising succeeds in fast paced environments that rely on real-time data. The longer sales cycles that are associated with B2B marketing will lead to the inability to properly target buyers and can leave many B2B advertisers wondering what exactly they did wrong.

Disadvantages of Programmatic AdvertisingBlog 24 - Graphic 3

Like anything with many advantages, programmatic advertising has its downsides as well. A December 2015 survey, also by eMarketer, found that the top issues US advertisers were facing when adopting programmatic advertising were multi-device measurement, fraud, and ad blocking.

While many publishers are finding ways to successfully work around ad blocking, measurement of mobile campaign success will continue to be a major threat to the ongoing success of programmatic advertising. With the growing importance of mobile advertising, this threat is one that will keep programmatic advertising from reaching full adoption until accurate measurement is possible.

According to Sean Nowlin, President of Paid Media at Fathom, “Programmatic advertising has the power to bring sophisticated buying capabilities to SMBs. If the industry can work through current issues like fraud and ad blocking, the technology can help all advertisers pinpoint their audiences and efficiently message them.”

The Future of Programmatic Advertising

In the next few years, publishers and buying platforms will likely get much better at measuring the success of mobile campaigns. In fact, they will need to do this to maintain the rate of success and adoption that are currently being seen.

Additionally, accessibility of first party data will drastically improve targeting capabilities of SMB advertisers. With native advertising as a growing capability of programmatic advertising and the convergence of paid search and display buying platforms, the future of programmatic is looking expansive, multi-functional, and promising.


Did you like this post? Let us know why (or why not) in the comments. In the meantime, check out our blog I Hate Advertising – One Marketer’s Take on the Role of Advertising to find out why you need to put your audience first in your ads, programmatic advertising or otherwise.

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One Comment

  • Matt says:

    This is a great article, Victoria. My company has been using Centro for some time now and they have been great with helping us with out programmatic advertising needs. They also have a great blog on their site, and it is a handy tool for staying up to date on programmatic advertising news. I would recommend checking out their website for anyone who is trying to either get into the field or learn a bit more information about this subject.

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