Programmatic buying and what it means for advertisers

Programmatic buying is often described as ‘the future of display advertising’, but with the inevitable expansion of the digital media landscape, specifically display ads, it is both corny and fair to say that the future is now.

Display advertising is changing in many ways and programmatic buying is paving the way so that media buyers (and sellers) can invest in acquiring relevant consumer data that surpasses basic analytics. However, in spite of all the positive expectations that came with the recent surge in programmatic buying, there are many concerns for the discerning buyer and seller. Said concerns create opportunities for growth in efficiencies and new markets which pushes ROI in advertising, as also alleviates the concern about limited transparency between vendors involved in programmatic transactions.

The potential of programmatic seems to raise more questions than provide answers about digital display advertising. In order to address concerns about programmatic, it’s best to consider what this is and how it affects display advertising, media buyers, publishers, agencies and the like.

What is programmatic?

Programmatic transactions involve selling and buying digital advertising inventory, and is achieved through real-time bidding (RTB) or direct sales.

RTB is not a new form of transacting in digital advertising but it is a method of buying and selling that has its own efficiencies and allow media buyers to now bid for ad inventory as they would with AdWords. The reason for this is that the premise of bidding for ad inventory, is exactly the same as it is when bidding on keywords for ad inventory through Google AdWords, except that this time it is not a bid for remnant inventory but higher value inventory.

There are various types of programmatic transactions, that is, automated guaranteed, unreserved fixed rate, invitation-only auction and open auction. These transaction types are often confused with programmatic jargon that is used interchangeably in the marketplace, such as “RTB”, “programmatic premium”, “programmatic direct”, and “automation” to name a few.

Transparency in programmatic buying

According to IAB, transparency is the key to successful programmatic transactions. This is a process that is hindered by varying levels of transparency, specifically from a publisher’s sales perspective. As publishers are constantly auctioning off ad inventory, the bid for full transparency could be unsettling for buyers with a very particular campaign.

Publishers can offer transparency at the following levels:

• Top level domain (publisher.com)
• Section targeting (sports.publisher.com)
• Full URL (publisher.com/sports/AFCON/S/article1234.html)
• Masked URL (publishermarketplace.com)
• Blind (No information is shared – the buyer doesn’t know where they’re buying inventory)

Transparency is closely linked to the types of programmatic transactions mentioned above and may be cause for concern on the buyers end. For example, on the one hand, “automated guaranteed” transactions mirrors traditional direct ad inventory purchases and guarantees pricing, as well as even campaign priority among other direct sales. It is this transaction type that can guarantee full transparency.

On the other hand, “unreserved fixed rate”, “invitation-only” and “open auction” transaction types may bar transparency to a certain degree. One transaction type may reserve inventory, while the others have fixed prices (negotiated with the seller) and some mimic real-time auctions.

What does this mean for the advertiser?

From a publisher’s stance, selling ad inventory is made possible through their programmatic capability which plays a major role in how transaction pan out. It is up to the publisher to embrace this ‘trend’ and build on existing programmatic capabilities as well as organizational structures. A great deal of buying and selling inventory lies in the hands of both buyer and seller. In order to grasp the magnitude of this valuable opportunity, it is crucial that the sales people involved don’t “fear” programmatic and understand the logistics and the potential advantages for display advertising it brings.

In the end…

While some may prefer traditional methods of buying ad inventory, the need for continued education on programmatic buying is important. The competitive nature of display advertising is becoming more demanding with the likes of TrueView display ads often making its way across the proverbial lips of online vendors. This type of display ad is set to revolutionise ad inventory sales through selective display and carefully coordinated, collated consumer data. In this instance TrueView display ads may soon be a frontrunner for auction.

Other than quibbling over how programmatic influences buying tendencies of advertisers, the one thing it can guarantee is that it consolidates consumer data which will ensure that the campaigns reach the target audience. Sellers who increase their programmatic capabilities stand to increase their number of buyers by providing them with rich data collected through programmatic transactions. Once they have the technical knowledge, they can reap the benefits.