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Programmatic Buying – 7 frequently asked questions

The automated programmatic advertising market based on user data is changing the face of digital marketing. It develops rapidly, increasing its value on the market from year to year. Worldwide, in 2019, as much as 65% of digital advertising expenditure was allocated to programmatic advertising. So if you are serious about your online activities, but you do not yet understand what the phenomenon of Programmatic Buying is, this article is for you.

What exactly is this Programmatic?

Programmatic advertising is a fully automated buying and selling of online advertising. Transactions in this model are much more effective. Target groups are automatically selected in such a way that they are the recipients most likely interested in the category of products and services that we offer them. So we reach a potential customer at the right time with the right message. The rest depends only on our creativity and a well-thought-out strategy. As a result, we save time that we would have to spend on testing many groups of recipients (usually a process lasting several months) and a budget that is spent on high-quality traffic.

The above, combined with the right strategy and advertising creation, can significantly shorten the shopping path. The whole process takes place within one technology platform, in which we can access many channels, ranging from mobile devices, through audio platforms, websites and television.

How does automated advertising work?

It all starts from the website. After the page loads, the signal is automatically sent to the ad market. All this happens in a split second. On the ad market, the auction is immediately carried out among all advertisers who have registered an interest in displaying ads on this page.

How does the system know who to show the ad to?

At this time, cookies appear informing advertisers what a customer is interested in and what their browsing history looks like. For example, if he spent a lot of time looking for new brand shoes, footwear companies from the premium sector will present them with an offer according to his preferences.

Let’s say you run a business that sells wedding dresses. You can create the following ad profile on the software platform:
– Woman, aged 25-35,
– Location: near your salons, wedding dresses,
– Interests: wedding dresses and accessories,
– He spends a lot of time looking for wedding dresses during the day,
– The ideal time of day from 5pm to 10pm (peak browsing time),
– Targeting desktop users (for example, by testing a search campaign before, you already know that this channel has the greatest potential in your case).

The platform also allows you to set a maximum bid, which is the highest amount you’re willing to pay for an ad placement.

This is just a general example. In fact, there are many more targeting possibilities in the programming model. Plus for you, if you’ve already managed to define your dream client quite accurately.

Programmatic Buying and RTB is it the same?

Let’s explain it once and for all. Programmatic is a technology, RTB (Real-Time-Bidding) is just one of the methods to implement this technology. RTB can be seen as a subset of programmatic (programmatic RTB), a piece of a much larger puzzle.

If an advertiser decides to invest more, they will receive a guarantee of displaying their ads on target sites instead of having to participate in auctions. This is a frequently chosen option that does not require RTB. Premium brands in particular opt for it.

This buying method is often referred to as “programmatic direct” and allows very precise targeting of the audience. Traffic quality is much higher, so it usually goes hand in hand with higher ROI.

This is a more expensive solution, but it has incomparably more advantages for the advertiser. It solves its two biggest problems: loss of time and partly spent budget for advertising creations directed at a wider audience, of which only a certain part is in the real area of interest in the product.

So machine learning replaces human work?

Definitely not. This technology replaces time-consuming activities such as offers or negotiations. Thanks to this, man has more time to focus on activities that have a direct impact on the success of the operation. Whoever follows the Pareto principle in life knows how much benefit it can bring for him. Optimizing and planning the right strategy suited to the objectives are key aspects of the campaign’s success, which for now can only be guaranteed by a very experienced specialist. Programmatic buying saves not only money, but also time.

Purchase methods. It’s too complicated! How are they different?

This is true. In conversations with clients, we noticed that many of them have a big problem distinguishing models for purchasing inventory in the programmatic system. So we hurry up with help.

In the programmatic system, we distinguish several different purchase methods. They are in turn:

A. Real-time bidding (RTB)
In this model, we purchase advertising in digital media in the real-time bidding process. The place of sale and purchase are advertising platforms called ad exchanges.

In practice, it looks like this:

When display becomes available, an RFP is sent to DSP (Demand Side Platform). The query is analyzed and sent back to the ad market, where it participates in the auction.

SSP (Supply Side Platform) filters the responses to the offer and sells the advertising space to the winner, i.e. whoever offers the highest price. In the last step, the ad appears on the landing page. All this happens in a split second and takes less time than loading the site. This model is available to every advertiser.

B. Private Marketplace
This model is intended for premium publishers. They offer their inventory to a selected group of advertisers that has previously been approved. It has full transparency of purchase. The advertiser always knows on which sites his ad will appear. Purchase, as in RTB, is done through real-time bidding, with the difference that the publisher must first approve the buyer. These are called closed auctions.

C. Programmatic Direct
Programmatic direct, in turn, is a model in which you buy inventory directly from the publisher. Before the campaign begins, the terms and prices are negotiated between the buyer and seller. After determining them, the buyer can start the campaign.

Transactions do not take place here in the auction system, and the price is set in advance.

This is undoubtedly a very desirable model in a programmatic system because it provides:

– high campaign effectiveness,
– qualitatively the best move,
high ad position,
– brand safety and increased trust in the brand (ads are displayed in places selected by the advertiser).

The above points + a responsibly planned strategy can provide the brand with an uninterrupted stream of revenue.

D. Preferred Deals
The preferred offer model is similar to the direct model, with the difference that despite the pre-determined price, inventory is not reserved only for the buyer. This means that the publisher offers them first, but if he does not accept them, they are put up for RTB auctions or go to a private marketplace.

Is Programmatic Buying the future of digital marketing?

Everything points to it. Advertising expenditure in this model is growing rapidly. It is currently expected that in 2020 they may reach as much as $98 billion. Brands want to invest in a programmatic model and it’s easy to understand why.

For an entrepreneur, time is money. So why waste it on bureaucracy, when you can secure the best destinations in milliseconds. Companies are increasingly aware of this and therefore decide to programmatic buying.

Over the next few years, this approach will become increasingly common. Who decides to launch a campaign in a programmatic model usually does not go back to old habits. A bit like in the automotive industry, because if you change to Porsche, would you like to go back to your old car decaying car?

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