Close

Contact Us

Provide your information and we’ll get in touch.

Why Programmatic is Eating the Ad World

August 4, 2016

Posted in Blog
Programmatic Ad Image with Robot

There are some things that humans do better than machines. Finding creative solutions to problems, making unusual mental connections and offering deep empathy come to mind. 

Then there are things like buying and selling media, where computers do a much better job than humans. 

That explains the rise of programmatic advertising over the past few years. In 2015 some two-thirds of display advertising is executed programmatically, according to eMarketer. That’s up from 49% in 2014. Ease of use, efficiency and the ability to connect rich data with ad inventory and targeting is fueling this growth. Programmatic doesn’t fit every advertising situation, but it’s a great tool for eliminating the drudgery involved with large buys.

Programmatic — What it is and what it isn’t

Programmatic is another word for automated. In this case, parts of the ad-buying process including sending RFPs, haggling over price and faxing insertion orders have been removed. Instead, software buys and sells ads. Those purchases take place in the form of real-time auctions, sometimes via programmatic direct. Some 92% of programatic advertising is executed via RTB. 

In addition to saving time, programmatic advertising also gives marketers seemingly unlimited targeting options. As a marketer, you can target by geography, daypart, interest, device, browser, mobile carrier, demographics, OS…the list goes on. Most demand-side platforms also give you a look — in nearly real time — into how your campaign is performing. As a result, marketers approach campaigns differently than in years past. Instead of viewing a campaign as a one-time effort, new ads are viewed as the start of a wave of experimentation. If ads are resonating with a particular demo or on a specific platform, an advertiser can double down on the buy, for instance. If the ads aren’t, then the advertiser can switch up the messaging or focus the buy on another segment. 

What programmatic isn’t good for

While there are big benefits to programmatic, it’s not the solution for every ad buy. The traditional model for buying ads is to work with a publisher or (on TV) a network to arrange a deal. If you work with a magazine publisher, for instance, you can arrange better rates by placing a large buy over several months. 

This model is still in place in 2016. Most TV inventory is still sold via the upfronts — a conclave of back-room deals in the spring. Online, publishers often work closely with advertisers to create native advertising campaigns, which contain elements of advertising and editorial. These efforts are similar to advertorials from years ago, but are often designed not only to lure readers of the publication but people searching terms related to the article. For instance, if a marketer wants to be known for cloud computing, they might sponsor a long-form piece on the subject that might get good visibility in searches for “cloud computing” and related terms.

A juggernaut 

Native advertising is currently experiencing strong growth. However, it is a relatively small part of the market compared to programmatic. It’s also worth noting that native ad units can also be bought and sold programmatically. Initially a model for online display advertising, programmatic is spreading. eMarketer estimates that by 2018 programmatic TV will take up 6% of that market. In 2015, Time Inc. also began selling print advertising programmatically. If that weren’t enough, programmatic creative — ad messages that are switched up based on artificial intelligence — are also gaining traction. 

That’s not to say that there isn’t still room for humans — true creative requires a human touch — but it definitely seems like the bots are taking over.