The three simple elements of Programmatic Buying and Real Time Bidding
On a daily basis I’m asked by advertisers in Hampton Roads and beyond to explain what these huge buzz words really mean. The ad industry is still clamoring for a sexier and simpler word than “Programmatic,” but my money says it will never happen. (I remember Cable’s battle cry from the ’90s: “Someone find a better name than Pay-Per-View!”) Once a clunky name sticks, it sticks.
The important thing to know is that this system of targeting, buying and tracking advertising is transforming the industry.
The Journal of Financial Advertising reports that more than 50% of financial brands utilize it within their media mix. Some reports have more than 70% of major advertisers shifting significant portions of their digital budgets to programmatic and online TV (video) buys.
So how can you break it down? Well first, if you’re a seasoned media technician working in this stuff every day and you never have a reason to explain what you do, STOP READING NOW. What follows will seem way over-simplified. But what follows is proven “light switch” wording that has helped folks, from the CMO to the front line, understand how this all works.
First, several definitions (there are other important ones, but let’s just start here):
Programmatic means that, instead of picking up a phone and calling a media rep at a network or publisher’s office, I’m using a computer platform to scan, plan and buy available ad inventory that’s listed on other computer platforms. As much as 98% of Internet inventory is available in this world.
Real Time Bidding means each impression is identified, bid for and placed by the same computers each time the viewer loads a page where the ad is served.
A Demand Side Platform is the technology that lets a human media buyer pull it all together—look out across all of the available inventory, target consumers, schedule buys and measure performance.
The following three elements have worked the best for me in explaining the basis of how it comes together:
1) Target People, Not Websites
Almost everything you touch today leaves some type of data-based thumbprint behind. That “Big Data” you keep hearing about is a compilation of billions of activities, affiliations, purchases, friendships, likes—you name it. It’s collected, sorted and made available by data companies for programmatic planners to build profiles of targets that advertisers want to reach. Your “data thumbprint” is embedded in your browser, viewer or app. The Demand Side Platform sees the thumbprint or profile of the person and only serves your ad when it sees your target.
2) Bid for Each Impression in Real Time
When the media buyer set up the plan, he determined how much he was willing to pay to serve your message to each person who matches one of your customer profiles. If the market is low, you pay less. If competition is high, you will have to pay more. It can vary by time of day, location of the ad, industry, DMA, zillions of variables. And the value you bid can change as well. Bid higher for customers that have bought from you before, or who live closer to your restaurant. The bids are entered into and managed automatically by the system, so it all happens in nanoseconds.
3) Continuously Optimize and Improve Every Campaign
The system tracks and reports every activity: ads served where and when; who clicked to where and when; how much impressions and conversions cost. Every day, technicians are sitting at desks looking at what worked well and shifting the budget to do more of it. They test and find what doesn’t work well and throw it out. Day after day they work to improve bid pricing, lower conversion costs and provide up-to-the-minute reporting.
Programmatic buys are placed across websites, video platforms and mobile apps using all sorts of static, animated and full-motion video messages. The system lives mostly in the online world today, but programmatic technologies are moving quickly into more traditional media—television and radio in particular. The ability to target a TV ad to an audience of one isn’t far away.
One thing is for sure: The more sophisticated advertising gets, the more we need to find ways to explain what’s happening. Hopefully this version helps. If so, pass it on. If you’ve got comments or additional thinking, please add it. Love to hear from you!