programmatic advertising

Where does programmatic advertising appear?

Programmatic advertising can be used on any website, app, or digital property. All it takes is implementing the necessary technology

Each of these formats can live in a variety of environments, such as in web browsers, in apps, or through connected TV.

Programmatic is the dominant ad buying approach for which of the following ad formats?

Programmatic advertising refers to: 

• Programmatic advertising refers to the use of technology for buying and selling ad space. This method can be used on any website, app, or digital property.

• The most common ad types delivered via programmatic are banner ads, native ads, social ads, and video ads.

Programmatic advertising is the use of automation to:

The evolution of ad tech ; “Ad tech” is short for…

“Ad tech” is short for advertising technology. At first glance, the ad tech landscape may seem complicated, but learning about the history can help you understand the role that companies play in the transaction between buyer and seller.

direct buying or reservation buying what is it

When internet advertising began in the 1990s, advertisers and their agencies negotiated ad buys in direct, one-to-one deals with publishers. This traditional negotiation process is called direct buying or reservation buying.

ad network company

Unlike traditional mediums such as print and television that have limited inventory, the internet offers unprecedented scale. Agencies were overwhelmed trying to reach consumers across thousands of sites. Small and mid-tier publishers had little access to top brands. To bridge this gap and help solve for scale, a new kind of company, called an ad network, arose.


Media sales continued to be negotiated in a manual reservation process. Still, by working with ad networks, agencies could execute a single contract to reach consumers across hundreds of websites. Ad networks used ad server data for packaging inventory across websites based on audience characteristics, providing audience-based buying at scale. Agencies adopted network buying as a common alternative to placing direct buys with publisher sales teams. 

But by the mid-2000s, hundreds of ad networks were vying for media buyer attention. The ad network approach to packaging media also made it difficult for the buyer to identify which publisher sites the ads would appear on or understand whether they were truly paying a competitive price

The interaction of ad tech

Agencies realized that ad exchanges presented an opportunity to streamline their list of publishers while using technology to put the right ad in front of the right user at the right price. They also realized that mastering this technology was beyond the realm of traditional media buying. They established trading desks, or services exclusively dedicated to addressing programmatic media budgets.  

Review: Categories in the ad tech landscape

Ad tech vs. martech

As well-established companies continue to purchase smaller companies to expand their capabilities, we can expect to see increased industry consolidation and perhaps a merging of the ad tech and mar-tech landscapes (a trend some refer to as “mad-tech”).

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Ad Tech

Ad tech (advertising technology) helps companies buy, sell, and track digital ads.

• Advertisers use it to target the right audience and measure ad performance.

• Publishers use it to make money by selling ad space.

• Tools include: ad exchanges, ad servers, DSPs (demand-side platforms), SSPs (supply-side platforms), and DMPs (data management platforms).

👉 In short: Ad tech = tools for paid ads.

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Martech

Martech (marketing technology) helps companies manage all their marketing, not just ads.

• It’s used to attract, track, and convert customers.

• Tools include: CRM software, email marketing, web analytics, content platforms, and social media tools.

👉 In short: Martech = tools for all marketing efforts (paid + unpaid).

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Together

• Ad tech = paid advertising.

• Martech = overall marketing.

• The two are starting to merge into what some call “mad-tech.”

DSP,

SSP ,

Ad network,

Ad server ,

Ad exchange

• The programmatic advertising space can be very complex. Each system or company category has evolved to meet a specific market need and serve a unique purpose.
  

• Ad tech is exclusively concerned with paid media placements. Martech spans all marketing tools and technologies. The trend of these two landscapes merging is referred to as “madtech.”
  

• Ad tech is exclusively concerned with paid media placements. Mar-tech spans all marketing tools and technologies. The trend of these two landscapes merging is referred to as “mad-tech.”

How programmatic changed advertising

According to a 2019 eMarketer report, more than 80% of banner, video, and native ad placements are bought programmatically — and it's easy to see why. Programmatic technology has introduced new efficiency and effectiveness to digital advertising.

Personalization and optimization

Programmatic is and Programmatic ad buying is 

• Programmatic is efficient and effective, saving money while driving return on investment by reaching specific consumers for maximum campaign impact.
  

• Programmatic ad buying is successful because it enhances campaign personalization and optimization capabilities.

Which term best describes how programmatic advertising helps marketers save time and money while achieving positive results?

The changing consumer journey and The marketing funnel

The consumer journey begins with a person who's unaware of an advertiser brand or product. After they become aware, they may want to learn more about it. Next, they consider whether to buy it before finally making the purchase. In the last stage, they may decide whether they want to purchase from that advertiser again.

This path is called the consumer purchase funnel or marketing funnel. The funnel shape is invoked because fewer and fewer consumers remain on the path to purchase, narrowing it, at each stage of the journey. This process has many different names, but the progression from lack of awareness to consumer loyalty tends to be more or less the same.

Marketers can use programmatic at all stages of the marketing funnel.

All stages of the marketing funnel

Awareness: The consumer first learns about a brand or product.

Consideration: The consumer begins to consider purchasing a specific product.

Purchase: The consumer makes a purchase.

Loyalty: The consumer is satisfied with their product and brand experience and becomes a repeat customer. Some consumers become brand advocates, spreading brand awareness through word of mouth.

The collapse of the funnel

Achieving advertiser business objectives

Achieving advertiser marketing objectives

Quality marketing objectives should be measurable (with clear key performance indicators of success) and time-bound (an exact time limit to achieve the objective). Advertisers might define business and marketing objectives in a number of ways. Let's take a look at some examples.

Advertisers might define business and marketing objectives in a number of ways.

Media objectives

Clearly defined media objectives can help you select campaign metrics for measuring the success of your programmatic campaign.

Understanding how business, marketing, and media objectives fit together can help you identify how programmatic technology can improve your overall marketing return on investment.

What are the three essential components of a good marketing objective?

Direct response marketing vs Brand marketing

Direct response marketing refers to specific messaging intended to drive immediate consumer action. Direct marketing focuses on driving product purchases and customer loyalty. 

Branding is a long-term effort to build and broadcast a brand's image and perception. Branding campaigns focus on consumer awareness and consideration. 

Aligning programmatic and non-programmatic media buys

Marketers should consider how to align their programmatic buying tactics with their non-programmatic media buys, just as they align offline and online marketing strategies.

The easiest way to do this is to use campaign insights from programmatic platforms to inform media strategies with non-programmatic partners. This is easier to manage when programmatic and non-programmatic spend is consolidated within the same buying tools.

• Marketing campaigns are often planned and purchased based on goals defined by a traditional marketing model known as the consumer purchase funnel. But the internet has changed the consumer purchase experience, and as a result, the funnel is collapsing. Marketers are being forced to think more holistically and strategically about how they plan ad campaigns.

• A clear understanding of an advertiser's business and marketing objectives can improve the way that marketers plan and execute digital ad campaigns.

• Branding and direct response campaigns are often treated as separate marketing initiatives; however, both can benefit from the use of programmatic platforms.

• Programmatic ad buying can occur in harmony with media buying through traditional processes and channels. Traditional campaign planning or buying activity can be enhanced through the use of campaign data available from programmatic platforms.

True of false? Programmatic is only appropriate for direct response marketing campaigns.

The life of an ad impression

Let’s take a look at how different technologies in the programmatic landscape work together to deliver an ad to an end user. 

i) When a user lands on a publisher page, the publisher web server displays the content on that page and calls upon the publisher ad server to show an ad.

ii) The publisher ad server responds with an ad tag. Depending on how the publisher has decided to monetize this particular content placement, that ad tag may have come from an advertiser ad server, or it may be an ad tag provided by that publisher's supply-side platform (SSP)

iii) If the tag calls upon an SSP, the SSP will determine if this opportunity to show an ad should go to an ad network partner or if it can be sold on an exchange.

iv) If the ad opportunity is sent to an ad exchange, its data will be analyzed to provide information to buyers that may be interested.

v) This data — passed in the query string of the ad request — can include anything from geographic location to user age, gender, or income to the content type and other metadata. This data helps match eligible opportunities to interested buyers and determines that ad opportunity's competitive value in the marketplace.

vi) Media buyers have predetermined which impressions they’re willing to pay for — and at what price — in their DSP. Each DSP will use information shared by the ad exchange to identify a winning buyer from their platform.

vii) The DSP will return an ad response, including bid data and the ad tag required to return the ad from the advertiser ad server.

viii) The ad exchange runs an auction among all DSPs and selects the highest bidder. 

ix) Whether the winning buyer will pay the price they bid — or just one penny more than the next highest bidder — depends on whether the exchange runs a first-price or second-price auction. In a first-price auction, the highest bidder pays their winning bid as the final price. In a second-price auction, the highest bidder pays only one cent more than the second-highest bidder. This process is often referred to as real-time bidding (RTB).

x) The winning buyer's ad server will display the final advertisement on the content page. This entire process takes place in less than 200 milliseconds, roughly the amount of time it takes to blink your eyes.

xi) RTB is not the only way that programmatic advertising can occur. Programmatic Guaranteed transactions can be facilitated without a real-time marketplace.

Transaction types

In the traditional media-buying process, agencies working on behalf of brands negotiated directly with publisher sales teams for favorable rates on ad spots they hoped would help meet their advertiser’s goals. Media buying began with extensive research to build a consideration set of potential media outlets. Next, request for proposal (RFP) documents were sent to dozens of publishers and sifted through. This was followed by pitch meetings, rates negotiations, and a finalizing of the media plan. Finally, the buyer signed an insertion order (IO) for each publisher’s ad placement (where their brand’s ad was guaranteed to appear). Today, this traditional process still occurs, but only for a portion of the total media budget. The majority of digital media placements are bought using programmatic technology.

Here are some key differences between the traditional insertion order process and automated buying:

IO buying vs Automated buying

Open auction

Private auction

Preferred deal

Programmatic Guaranteed

IO buying vs Automated buying

Each type of buying has its strengths and weaknesses. IO buying is cumbersome and inefficient, but buyers have absolute clarity on where their campaigns will appear and can use their negotiating skills to get a better rate. Automated buying is fast, flexible, and efficient, but the process lacks transparency and predictability. Programmatic platforms have combined the strengths of traditional reservation buying with automated buying capabilities to provide several different transaction methods. Let's take a closer look at each of them.

Open auction

In an open auction, hundreds of buyers competes via auction for unreserved ad space from thousands of websites and apps.

Open auctions provide buyers access to millions and millions of potential impressions, allowing an ad campaign to reach new audiences and target consumers at scale.

Private auction

In a private auction, specific buyers participates in an invitation-only auction for unreserved ad space from a single seller.

Private auctions allow buyers to tap into specific media sources, but they’re still participating in a competitive auction.

Preferred deal

In a preferred deal, one buyer purchases unreserved ad space from a single seller at a fixed price.

Preferred deals allow buyers access to a publisher’s inventory at a set rate without a guaranteed volume commitment.

Programmatic Guaranteed

In Programmatic Guaranteed, one buyer purchases reserved ad space from a single seller at a fixed price.

Programmatic Guaranteed buying is a way of automating the traditional, insertion-order process by reserving inventory at a pre-negotiated rate in a programmatic platform.

Let's review the different transaction types available through a DSP.

Buyers can apply settings in their DSP to take advantage of each buying approach.

• Many technologies in the programmatic landscape work together to deliver ads to end users.
  

• The traditional buying process still occurs, but only for a portion of the total media budget. The majority of today’s digital media placements are bought using programmatic technology.
  

• There are several transaction methods for programmatic buying, including open auction, private auction, preferred deal, and Programmatic Guaranteed.

Campaign targeting

Programmatic platforms work with data suppliers and data platforms to incorporate extraordinary targeting capabilities. Here are some examples of these capabilities.

Targeting specific inventory or publisher content  

Sure! Here’s a simpler and clearer version of that explanation:

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Campaign Targeting (Simplified)

Programmatic advertising platforms let marketers aim their ads very precisely using data from many sources.

Here’s what that means:

• Targeting specific inventory or publishers:
  Advertisers can choose where their ads appear. For example, they can tell the DSP (Demand-Side Platform) to only buy ad space from certain websites, apps, or ad exchanges — or to avoid specific ones.

• Contextual targeting:
  Instead of targeting people, advertisers can target the type of content on a page. For instance, they can place ads on pages about sports, entertainment, or technology, or choose content that includes certain keywords or is written in a specific language.

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👉 In short: Programmatic targeting lets advertisers control where their ads show and what kind of content they appear next to — making their campaigns more relevant and effective.

Reaching specific audiences is very important to programmatic media buyers. This can be done based on the following criteria.

Geography: Regional targeting by country, state, city, or zip code; buyers can also reach consumers based on their proximity to businesses, addresses, and latitude/longitude coordinates.

Demographics: Reaching consumers based on gender, age, household income, and other factors

Behavior: Reaching consumers who may be interested in a brand or product, given their historical data about the content they view, share, or interact with online or in app.

Retargeting : Delivering ads to consumers who have recently visited the advertiser website or demonstrated interest in a product or brand

Similarity: Reaching "lookalike" audiences that are similar to a brand's existing customers; this requires using the advertiser's consumer data and data modeling to identify new consumer criteria or audience segments.

Audience: Utilizing third-party data sets available from a DSP's data partners or uploading their own first-party targeting data to create custom audience segments

Device: Targeting campaigns to appear on specific devices (mobile phones, connected TVs, etc.) or browsers; targeting can even be based on connection speed, wireless carrier, or internet service provider

Optimization and machine learning

Optimizing an ad campaign entails making media and creative changes to improve ad performance while keeping costs low. In a programmatic buying platform, this can mean adjusting your targeting settings, changing which publishers or marketplaces you buy from, or increasing or decreasing your bid price.

Many buyers use a combination of manual optimization techniques and automated optimization settings in their DSP.

• Programmatic platforms work with data suppliers and data platforms to incorporate extraordinary targeting capabilities.
  

• Reaching specific audiences is very important to programmatic media buyers. This can be done based on geography, demographics, device, and other criteria.
  

• Optimizing an ad campaign entails making media and creative changes to improve ad performance while keeping costs low. With manual optimization, buyers attempt to improve campaign performance by making changes to campaign settings in their DSP by hand. With automated optimization, buyers are taking advantage of DSP machine learning capabilities.

What does the term "machine learning" describe?

Transforming media channels

As media companies embrace programmatic, new technology is rapidly emerging to automate media buying for every media channel.

The automation of transactions across formats and channels — even those where advertising can't be purchased or placed in real time — makes advertising more efficient and effective. It also streamlines the media buying process by consolidating all digital ad placements for a brand in one technology platform: the DSP.

below are examples 

Advanced TV

Programmatic audio

Digital out-of-home

Programmatic direct mail

AR / VR formats

True or false? Programmatic audio inventory supports only digital audio ad formats.

True or false? OTT/CTV inventory on smart TVs and other devices can be purchased in real time via DSPs.

Social, native, and content marketing

Social

Advertising on social media platforms such as Facebook, Pinterest, and Snapchat accounts for more than half of all programmatic ad spend in the U.S.

These platforms rely on proprietary technology to automate data-driven ad buys, using their audience data to connect advertisers and consumers at scale. They don't rely on the same interconnected series of third-party systems necessary for programmatic purchasing on the "open web." However, they exemplify the precision and speed of programmatic advertising.

In social environments and eCommerce platforms such as Amazon and Etsy, paid advertising takes on the feel and format of organic content. Ads may appear in a newsfeed or list of recommended products —unprompted or in response to search results — but they always blend in with the content around them.

Native

Native advertising refers to ad placements that match the content's look and feel. This includes sponsored content, promoted content, content recommendation widgets, rewarded video ads, and other ad formats on the web or in apps.

Programmatic platforms can deliver native ads thanks to standardized technical specifications implemented in SSPs, exchanges, and DSPs. These technical standards enable ads to adjust dynamically to match the publisher page where they appear. Metadata elements such as headline text, image, and video files are uploaded into the buying platform and then configured in real time to match the site or app’s look and feel. 

Content marketing

Marketers are now investing more in content marketing — creating digital content such as blogs, videos, and social posts that focus on entertaining or educating customers rather than explicitly pitching a product. This content can be promoted, boosted, shared, and disseminated via advertising platforms, and consumers prefer advertising that provides content value.

Programmatic marketing

Programmatic technology has transformed marketing. It’s now possible to plan and purchase media campaigns with a great degree of targeting accuracy, enabling personalized marketing not just online but in print, television, and out-of-home advertising, too. Instead of addressing audiences on a channel-by-channel basis, brands can now craft a holistic digital experience for their customers.

• Programmatic has influenced the way that ad space across nearly every media type is purchased, even media where transactions can’t happen digitally or in real time.
  

• New technology is rapidly emerging to automate media buying for every media channel, including advanced TV, programmatic audio, digital out-of-home, programmatic direct mail, and AR/VR formats.

What type of programmatic channel involves distributing dynamic advertising via digital place-based networks?

Awareness

• Measurement philosophy: How many new people were exposed to and paid attention to awareness-focused advertising?

• Specific measurements: Views, clicks, new visitors to website, viewable ads, brand lift studies, in-target ad impressions, engagement

Consideration

• Measurement philosophy: How many people exposed to consideration-focused advertising might be interested in eventually purchasing from a brand?

• Specific measurements: Clicks, new visits to specific website pages, brand lift studies, likes, engagement

Purchase

• Measurement philosophy: How many people exposed to conversion-focused advertising actually converted?

• Specific measurements: Conversion volume, cost-per-conversion, return on ad spend

Loyalty

• Measurement philosophy: How many people exposed to loyalty-focused advertising purchased again or shared their experience with their network?

• Specific measurements: Repeat conversion volume, repeat cost-per-conversion, repeat return on ad spend, likes, shares, engagement

Measurement technology basics

To understand how digital advertising measurement works, it’s important to first understand the technology the industry uses for measurement.

• Within each part of the marketer’s funnel (awareness, consideration, purchase, loyalty), there are different measurement methodologies that are used in order to measure success.
  

• Digital measurement is enabled through a few, key technologies, namely pixels, cookies, and device IDs.
  

Which stage of the consumer purchase funnel entails a unique form of measurement?

Contribution vs. attribution

Brand vs. direct response

Marketers tend to simplify the funnel by bucketing each part as either "brand measurement" or "direct response measurement." Let's examine each category in more detail.

Brand measurement

Brand measurement

In the upper funnel, where a marketer is trying to create awareness, build consideration, and improve perception, measurement can be a bit abstract. There's no universal checkpoint that marketers can point to and definitively say “we’ve now achieved awareness” or “we’ve now achieved consideration.” Without specific signals for measuring success at this stage, many different brand measurement methodologies have developed.

Brand measurement types 

i) Brand lift studies

Running A/B tests and then surveying each group to determine lift in various brand metrics.

ii) Audience reach && frequency

Quantifying what percentage of a desired audience is reached by marketing, and how many times.

iii) Engagement

Measuring engagement metrics for advertising, like clicks, hovers, rollovers, expansions, etc. Quantifying what percentage of a desired audience is reached by marketing, and how many times.

iv) Viewability

Determining which ads that ran were in the viewable portion of a user’s screen.

v) Unique site traffic

Measuring net new users to a website that saw or clicked on advertising.

vi) Physical traffic

Measuring user visitation to geographic locations that saw or clicked on advertising.

vii) Social listening

Analyzing how a brand is being discussed or shared on social media platforms.

viii) Organic search lift

Measuring an increase in searches for a brand or its products and services on various search engines.

ix) Multi-touch attribution

Quantifying at a user-level the specific value of all marketing touchpoints along a user’s path to purchase.

x) Marketing mix modeling

Quantifying the contribution of each marketing medium, channel, or tactic through regression analysis.

Direct response measurement

In the lower funnel, where marketers are trying to drive conversions, there's a very specific signal of success: the actual conversion itself. While marketers agree that this is the universally accepted end-goal, how conversions are measured and valued can vary greatly.  

Single-touch vs. multi-touch

Within single-touch, a marketer might only value one of the following:

Multi-touch attribution is assigning fractional credit to multiple media touchpoints on the path to conversion.

With multi-touch attribution, there are several ways to assign credit to various media touchpoints:

• Linear: Each media touchpoint is given equal credit.

• Time decay: The value for each media touchpoint is calculated as a function of the amount of time prior to the conversion.

• Position-based: The value for each media touchpoint is assigned based on where it occurs in the sequence of touchpoints.

• Data-driven: The value for each media touchpoint is calculated dynamically, based on each unique user journey and a number of variables.  

Both single- and multi-touch models measure attribution, as they seek to assign specific value to media touchpoints.

Incrementality testing

regression Anaalysis

Media mix modeling

Another way to measure contribution is called media mix modeling (MMM). In this approach, marketers look back at aggregate data from their marketing activities and try to associate it with business metrics using regression analysis.

This form of measurement has been around for decades, and is typically used by marketers to get a broad, strategic view of how marketing impacts their business, in order to inform future marketing decisions.

Measuring contribution through incrementality testing or MMM helps create context for marketers to effectively measure attribution through a single-touch or multi-touch approach.

• There are two general approaches for measuring advertising: measuring contribution (many factors combine to contribute to an outcome) and measuring attribution (an outcome is caused by specific, quantifiable factors).
  

• Marketers tend to simplify the funnel by bucketing each part as either "brand measurement" or "direct response measurement." In the upper funnel, measurement is typically abstract. In the lower funnel, the actual conversion is the signal of success.
  

• Both single-touch (assigning 100% credit to a single media touchpoint) and multi-touch (assigning fractional credit to multiple media touchpoints) models measure attribution.
  

• Measuring contribution through incrementality testing or media mix modeling helps create context for marketers to effectively measure attribution through a single-touch or multi-touch approach.

Which of the following measurement approaches measures contribution?

Explanation:
Incrementality testing measures contribution — it shows how much a marketing activity actually adds to results (like sales or conversions) compared to what would have happened without it.

The other methods (linear, single-touch, multi-touch) are attribution models, which assign credit for conversions — not true contribution.