The Ever-Evolving World of Programmatic Advertising

With the ever-evolving world of digital marketing, businesses are witnessing more and more of a need for fresh marketing strategies to engage potential customers. Coordinating all of the new advertising activities requires a lot of resources, causing businesses to outsource this work to other companies or even software. In today’s blog post, I’ll be giving an overview of what programmatic advertising and AdTech is, the benefits for the publishers, as well as some challenges for marketers.

Programmatic Advertising & AdTech

When the Internet was young, nearly everything had to be completed with human assistance. Advertisers had to hand-select appropriate tags for their ads and share with a publisher who would then use those tags to promote the ad to the right audiences on their website. This process took a lot of time and resources that could better be used elsewhere, so a new system was created called programmatic advertising. This new process used advertising technology, or AdTech, to automate the purchase, sale, delivery, and measurement of advertising campaigns. Programmatic advertising looks different for each transaction and can utilize various types of AdTech. Here are three of the main types of AdTech used today: 

• AD SERVER: Ad servers act as a “hub” for all of the programmatic advertising activities. This is where the ads are uploaded and managed by the advertiser and can be later viewed once the ad has gone live. The server decides where to place the ads and then offers metrics such as impressions and conversions to help guide the advertiser’s next steps.  

• AD NETWORK: This concept has been around the 90s and although it has been modernized, the goal remains the same - to serve as an intermediary between publishers and advertisers. Rather than an advertiser having to contact multiple publishers, they can use the ad network to get their ads out to multiple publishers in one swift action. Added bonus - these ads often are offered at a discounted rate because they are typically composed of the publisher’s unsold direct deals. 

• DATA MANAGEMENT PLATFORM: This type of AdTech is used to track how well campaigns have been performing across various sources. It collects, stores, and organizes data from websites and apps to provide a comprehensive analytic report. Marketers can use these reports to improve their ad targeting and better plan future campaigns. 

No matter what kind of AdTech is required for a programmatic advertising purchase, one thing remains true - the new process cuts out the middlemen. This is specifically done with ad exchanges between demand-side platforms and supply-side platforms. 

Supply-Side Platforms & Demand-Side Platforms

There are two primary kinds of platforms that real-time bidding (RTB) for ad exchanges takes place on: supply-side platforms (SSP) or demand-side platforms (DSP).

Supply-side platforms are used by publishers to manage and sell their ad space. Some components of these platforms include infrastructure, integrations, trackers, and reporting databases. Publishers can use these tools to optimize their offerings and make themselves appealing to potential advertisers.

Demand-side platforms are used by advertisers and ad agencies to purchase ad space from multiple publishers in a single place. These can be thought of as the stockbroker of programmatic advertising - they purchase inventory from publishers on behalf of their clients, the advertisers. Inventory can be bought in both bulk and on an impressions-by-impression basis, making DSPs more flexible than the typical ad network. 

SSPs and DSPs work together to exchange ads and serve them to a consumer. The actual process is quite complex but Self Advertiser provides a good basic overview of how the process works in the image below. If you’d like to learn more about the ad exchange process, I’d recommend checking out this resource. 

Benefits of Programmatic Advertising

Not only does programmatic advertising help marketers by streamlining the digital advertising process, it also benefits the website publisher! First and foremost, it provides customers with a customized advertising experience that didn’t take a lot of time or resources to achieve. This makes them more satisfied with the overall experience and more likely to have a positive association with the website, thus resulting in more impressions and conversions. 

Additionally, programmatic advertising provides the website publisher with measurement tools that allows them to better track progress over time. They can optimize their website to increase revenue from the advertisers and click-through rates of the consumers. It makes them a more attractive platform to advertise on, which helps the company to grow. 

There are many more benefits to using programmatic advertising for both advertisers and publishers alike. However, like any other great tool, it does come with its challenges. 

Challenges of Programmatic Advertising

This study interviewed 100 digital marketers to get some first-hand information on the challenges of the industry and the results weren’t too surprising. The largest issue that programmatic marketers faced was the complexity of the system. 53% of respondents agreed that there were too many layers to the programmatic advertising ecosystem and 20% agreed that they had a lack of understanding. Luckily, this issue can be resolved at an individual level. The Trade Desk has developed a virtual certification for programmatic advertising that is completely free. Not only will this course help you better understand the ins and outs of programmatic advertising but it also looks quite impressive on a resume!

Another issue that marketers face in the world of programmatic advertising is the lack of quality control. The demand for programmatic advertising has rapidly grown over the past few years, causing companies to cut corners where quality is concerned. This can be an issue for publishers in that they can’t control the quality of ads that appear on their website. High quality ads are important and not having them could negatively affect the user’s interaction with the website. On the other hand, it can be an issue for advertisers where spam is considered. Bots could be used to artificially increase the amount of impressions, which in-turn would inflate the price of ads. It’s hard to monitor and enforce, which has led to issues on both sides of the coin. 

One last challenge that’s important to mention is the issue of privacy. Third-party cookies are becoming less and less common and will soon be phased out completely. Programmatic advertising heavily relies on this data to serve relevant ads to consumers so once this data is gone, campaigns may become less effective. Many companies are considering transferring programmatic advertising to in-house operations in order to both protect user’s data and gain more control over the system. Either way, it’s important to have a basic understanding of how programmatic advertising works so that you and your business can adapt to the ever-changing industry standards. 

Thank you for reading and happy advertising!