Programmatic Advertising for Beginners

Programmatic advertising has become a major area of focus in the advertising industry; it also happens to be something we discuss frequently here at the enCOMPASS blog. That’s because, quite simply, programmatic advertising is an effective way for brands to spread their message in an increasingly fragmented media landscape.

Yet, for some businesses, programmatic advertising may remain something of a question mark. In this post, we’ll provide a very basic understanding of what programmatic is, why it’s so beneficial, and how your brand might get started with a programmatic ad strategy of its own.

Defining Programmatic Ad Buying

Let’s start by defining the term: What is programmatic advertising? Basically, it’s a way for brands to purchase advertising space in real time, guided by relevant data. The upshot is advertising that’s highly targeted—and thus, efficient.

This is a somewhat simplified definition, and in reality, the word programmatic denotes several different forms of media buying, with the common thread being the real-time aspect and the use of data to guide the ad buys.

Before we get into that, though, let’s look at some of the reasons why more and more advertisers prefer the programmatic approach.

Why Choose Programmatic?

Programmatic ad buying provides a number of benefits to brands. Here are just a few of them.

• Targeting. With a programmatic ad buy, you can zero in on your target audience with a laser focus, ensuring you’re always showing your ads to only and exactly the customers you’re trying to reach.
• ROI. Another reason to choose the programmatic approach is that you essentially set up an ad program that learns on the go—so the performance tends to be quite high.
• Insights. One of the other big draws for programmatic ad buying is that it makes it easy to scoop up some hyper-specific insights into your ad campaign, making it easier to increasingly personalize your advertising.

These are just a few of the reasons why programmatic ad buying is on the rise among today’s advertisers.

Understanding the Terminology

With that said, there are some thresholds to entry—specifically, the need to adapt a new set of terminology. To help you get the lay of the land, here’s a quick glossary of programmatic ad terms.

• Inventory. When we talk about the ad inventory, we’re talking about the amount of ad space that’s made available by publishers for a set span of time.
• Exchange. The ad exchange refers to the platform on which inventory is bought and sold.
• Ad server. The server is essentially the host for your ads, ensuring that it’s shown within an app, on a website, etc.
• Impressions. An impression is a unit of measurement; basically, one impression means the ad was shown to a single person. It doesn’t always mean the ad was clicked on, however.

Different Types of Programmatic Ads

In addition to these terms, it’s also important to understand some of the basic types of ad-buying that exist under the programmatic umbrella. There are three main categories to be aware of.

1. Real-time bidding, or RTB. This is an auction-based way to buy ads—and it tends to be pretty fast-paced. The ad-buying, which is automated, takes place in mere milliseconds.
2. Private Marketplace, or PMP. This model is very similar to RTB, with one key distinction—that is, only a select number of advertisers are invited to participate in the exchange. Consider it an “invitation only” ad program, were companies get to bid for space on extremely popular and influential channels.
3. Programmatic Direct. This final option isn’t auction-based at all, but rather denotes ads that are sold manually; specific ad inventories are bought, and once that transaction takes place, the rest of the process takes place programmatically. In programmatic direct ad-buying, there may or may not be negotiations that take place.

In addition to these three broad categories, it’s also helpful to understand one final distinction about programmatic ad buying; basically, you’ll need to decide which of these two types of ad you want to run:

• Native ads, which are made to blend in with the existing editorial content of the website/publication in question.
• Display ads, which are not made to blend in—in other words, they stand out more, and are more obviously paid promotions than native ads are.

Getting Started with Programmatic Ad Buying

The benefits of the programmatic process are numerous, but before claiming those benefits, there are some important decisions you’ll need to make—which category of ad-buying, what type of ad display, how programmatic ads fit into your existing marketing funnel, what kind of budget you have, and more.

These are important questions to explore with the guidance of an experienced programmatic ad buying team—and enCOMPASS fits the bill! We’d love to chat with you and to answer any further programmatic ad buying questions you may have. Contact us any time!