What Is Programmatic Display and How Is It Used?
- In regards to digital marketing, “programmatic” is the automated bidding and serving of online targeted ads in real time.
- Programmatic display advertising is still relatively inexpensive compared to other digital marketing channels.
- Depending on targeting, it only costs a couple of dollars per thousand ads served.
- Display ads tend to fuel paid and organic searches by creating brand recall among ad recipients.
- When you incorporate programmatic ad buying into your overall marketing plan, you should expect to see higher search volume and a lift in sales or leads.
In regards to digital marketing, “programmatic” is the automated bidding and serving of online targeted ads in real time. Programmatic ad buying en masse refers to a diverse range of platforms, tools, and processes in the digital marketing ecosystem. We can apply the term programmatic marketing to targeted display ads, video ads, social ads, and even paid search to some degree.
This post will specifically delve into the way that we use programmatic ad buying to deliver high impact targeted display ads to potential new customers. Although we will stick to targeted display, most of the same principles apply to other digital marketing channels.
First, a Little Background…
First, a little background on display marketing, its history, and evolution. Targeted display ads, or banner ads, are the box ads that appear on the majority of websites throughout the internet. The sites that they show up on are called publishers. The first banner ad appeared on Wired.com, then known as HotWired, on Oct. 27, 1994. Since then, publisher sites have sold advertising space to pay writers, developers, salespeople, and anyone else that supports their business. This ad revenue is an important part of what keeps their business going.
Now for Some Math…
Traditionally, display ads were sold by publishers and bought by marketers using direct communication between the two parties. Brands would reach out to publishers and agree to pay for advertisements by the thousands. The shorthand for this rate is CPM, cost per thousand, where m stands for the Latin word “mille,” meaning thousand.
For example, Brand A wants to serve 500,000 ad impressions on Publisher B’s site per month. Publisher B says their rate is $6 per every thousand ads served, or a $6 CPM. Brand A agrees and pays Publisher B $3,000/month.
Equation for total cost:
The Rise of Ad Networks
Publishers realized that no matter how hard their salespeople worked, there was always remaining inventory that went unsold. To them, this meant a lost opportunity for additional ad revenue. In the late 1990s, ad networks, which are networks of sites that sell ad space together, started to arise.
Publishers were now able to fill their remaining inventory by making it accessible to a larger population of marketers. This development also allowed marketers to buy ad space on a more significant number of websites without having to reach out to them directly. Thus, marketers gained more scale with less time.
Up until that point, all banner ads were bought based on the trust a marketer or advertiser had in a specific publisher site. As a marketer, you likely selected websites in your niche to serve ads about your products and services. If you sold sporting goods, you bought ad space on sites about sports.
Publishers were using a technology called an ad server to serve ads from direct marketers and from the networks they belonged to. Ad servers still exist and continue to become more advanced all of the time. One thing they could do even in the early days was to delineate where ads would be served. So news publishers with a sports section could sell ads for sporting goods only on sports pages. This automated way of getting closer to an end user with targeting is a precursor to programmatic marketing.
Demand Side Platforms
As more and more ad networks arose, there was a need to be able to serve in multiple ad networks at once without having to reach out to all of them individually. Another technology came about to access this inventory agnostically and be able to bid on ad positions in real-time. This technology is called a Demand Side Platform, or DSP, of which there are many.
DSP technology was developed to not only allow marketers access to more inventory but also to get closer to targeting specific users, based on interests and behaviors, rather than the users of individual websites.
Within a DSP, marketers can set brand safety standards, set the number of times an ad appears to a user in a given time frame, target keywords within website content, target categories of websites, target users based on their online behavior, and remarket to users who have been to their site, just to name a few options. This intersection of targeting sophistication and transparent reporting is true programmatic display advertising. It’s a convergence of real-time ad delivery based on a multitude of targeting parameters, which are all automated, leaving time for marketers to analyze data and streamline campaigns.
Is Targeted Display Advertising Less Expensive?
An enticing reality with targeted display advertising is that it is still relatively inexpensive compared to other digital marketing channels. Even in the automated programmatic ecosystem, ad bidding and buying are done based on an average CPM across entire advertising buys. Depending on targeting, it only costs a couple of dollars per thousand ads served.
While targeted display is still an upper-funnel tactic, meaning users are less likely to convert on seeing an ad, maximizing programmatic ad buying options and tools optimizes overall performance. Display ads tend to fuel paid and organic searches by creating brand recall within ad recipients. Some techniques, like remarketing, which is serves banners ads to users who have already been to your site, drive tremendous return on investment but don’t offer scale.
Programmatic Reaches Users at All Stages of Their Journey
Redefine Marketing Group uses multiple tactics within the programmatic universe to reach users at different stages of their journey. When you incorporate programmatic ad buying into your overall marketing plan, you should expect to see higher search volume and a lift in sales or leads.
Ad servers also generate reports to tell publishers how many ads deliver and how many clicks they receive. We bring this up because ad servers exist on the opposite side of the fence as well: ad servers for marketers. These ad servers act as an independent audit for what publishers report. A more significant use, specifically regarding this discussion, is their ability to communicate attribution.
The Question of Attribution
Within marketing, attribution is the identification of a set of user touchpoints that contribute to a conversion outcome. Marketing attribution affords a level of understanding regarding what order and combination of platforms, tactics, and ads influence individuals to engage in desirable actions.
While programmatic display advertising isn’t likely to be the last step before someone converts, we can use an ad server to prove that it was a necessary step in the process.
We illustrate the value of programmatic display buying referencing reports on search volume increase, overall lift in conversions, and attribution reports, which show display assisted conversions. At the very least, we urge everyone to do remarketing, but we recommend blending other programmatic ad buying into any marketing plan to raise brand awareness and recall.