Artificial intelligence is changing the way hundreds of industries do business and the advertising space is no different. There’s a new kid on the block that goes by the name of programmatic advertising. Using artificial intelligence and real time bidding, programmatic is helping both publishers and advertisers do business faster than ever before. Programmatic display advertising in the US is skyrocketing, jumping 41.2% in 2021 to $106 billion and is expected to hit just over $142 billion in 2023.
Although spending is on the rise, the lack of understanding from digital marketers is often a huge hindrance, and probably the reason you’re reading this article. So, in this article we’re going to outline what programmatic advertising is, how it changes the game, and most importantly, if it’s right for you. Jump in your matrix chairs, let’s dive in.
How Does Programmatic Advertising Work?
Ad buying used to be a pretty simple process. There are advertisers who want to buy the space for the ads, and publishers who own the space. If you know advertising, then you know that placement has always been the most important factor. It doesn’t matter how creative or brilliant your campaign is, if nobody is seeing it, it won’t succeed. Relationships between advertisers and the owners of the ad spaces have always been important, and has often cut the smaller publishers and advertisers out of the equation.
Programmatic changes that. Algorithmic software handles the sale and placement of advertisements using online ad exchange platforms. Publishers list their spaces, advertisers list their ads, and software matches the sides to the best potential customers by examining their online data history and profile.
By using this data, ads can be more effectively targeted. This leads to a better ROI for both advertisers and publishers because the computers are deciding who sees the ads based on a plethora of online data. The crazier part? This all happens within a fraction of a second. Seriously. A process that could’ve taken months with a traditional approach, now happens in an instant.
Is Programmatic Advertising Right For You?
So we’ve explained how it works and how it changes the game. Now let’s talk about if it’s worth it for you? The answer, much like most things in life, isn’t straightforward. It relies on a few factors.
The most important factor is obviously cost. How big is your budget? If you have the money to go head to head with the top dogs, then yes, go for it. But, this doesn’t mean that smaller budgets can’t work. Programmatic can handle the haggling for you and show your ad if the software determines that your ad is the right fit for the viewer using the digital asset.
An asset could be a website, app, smart TV, etc. CPM (Cost-Per-Mile or cost per a thousand impressions) for programmatic advertising can range anywhere from a few cents to upwards of $6–$7. This is where your budget is a factor. Most companies don’t have the budget to rationalize $7/1000 impressions, so you need to consult with a marketing team on how your limited budget is best spent.
The second factor is: do you have the time to understand all of this artificial intelligence jazz or do you have somebody who can? We have to warn you: just because you turn programmatic ads on, doesn’t mean it’s going to succeed. It requires testing, patience, and an understanding of how the software works. We utilize StackAdapt, for our programmatic needs but there are an array of other software out there.
Make no mistake about it, programmatic is an important aspect of the future of advertising. Determining if your budget and goals make it worthwhile to jump on the train now is the key decision you need to make. If you need somebody to help punch your ticket, give us a call.