What is Programmatic Advertising?

From a marketing standpoint, buzzwords don’t get much more buzz than “Programmatic Ad Buying”—a process which has already transformed the ecosystem of online ads, and now seems likely to do the same for mobile.

 

But, while it’s certainly tempting to jump on the programmatic band wagon, it’s important to filter out the hype and enthusiasm to discern what is actually currently possible on mobile—as opposed to what may be possible, some day.

What Exactly Are Programmatic Buying and Real-Time Bidding?

Programmatic ad buying simply refers to the automated purchasing of ads, circumventing the human-managed process of directly purchasing ad space via contracts or insertion orders. But this isn’t what’s gotten everyone talking. The real story centers around a subset of programmatic buying: Real-Time Bidding (RTB for short). RTB only accounts for $4 billion of the $7 billion annually spent on programmatic buying (Business Insider), but it has has come to dominate the conversation so completely that the terms “programmatic” and “RTB” are now used more or less interchangeably.

 

Programmatic Buying vs. Real-Time Bidding Projection Image Courtesy of Business Insider

 

What is real-time bidding? The main analogy everybody seems to be latching onto is “day-trading stocks”—incorporating algorithms and automation software so that we can keep up with a massively complex, constantly evolving system.

 

More specifically, real-time bidding is an automated process that happens within the fraction of a second between:

 

A. When a consumer clicks to open a site or app with available ad inventory, and...

B. When the site or app actually loads on the consumer’s mobile device.

 

During this fraction of a second, real-time contextual information about the available ad inventory is sent from the supply side (publishers) to the demand side (brands, agencies, etc)—who then automatically do or do not place bids for the ad space.

 

Programmatic ad buying in real time Ad space is auctioned off and purchased programmatically within the 200 milliseconds it takes a page to load.
 

On a conceptual level, this system has two major benefits for mobile advertisers:

 

Obviously, it streamlines and simplifies a complicated workflow. There are hundreds of millions of unique eyeballs viewing tens of millions of sites and apps, on hundreds of different devices, across multiple screens.

 

In addition, RTB improves an advertiser’s all-important audience targeting capabilities by including a number of additional contextual parameters into the buying process. The publisher is no longer just saying, “I have available ad space on my app, which attracts X demographic.” They are now also saying “I have available space on my app, and it’s about to be viewed by a specific consumer, who meets a specific criteria, at a specific time of day, in a specific geographic area.”

 

This improvement in audience targeting builds on one of the core strengths of mobile advertising—its ability to reach anyone, anywhere, at anytime.

 

Best of all, these real-time bidding parameters can be set to automatically adjust in real-time, so ad placements that underperform will be phased out to allow the campaign to focus only on buying space that is generating good results.

 

This video does a good job summing it all up:

 

If you'd like to discuss launching a targeted programmatic campaign, just click here and we'll be in touch to discuss the unique capabilities and benefits of running optimized media through FunMobility: 

 

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