By Todd Crawford on October 6, 2015
The term programmatic media (also known as programmatic marketing or programmatic advertising) encompasses an array of technologies that automate the buying, placement, and optimization of media inventory, in turn replacing human-based methods. In this process, supply and demand partners utilize automated systems and rules to make digital media ad buys.*
Programmatic media’s success is in its efficiency – allowing marketers to easily buy media across hundreds of web properties with just a few clicks. Similar to how paid search was automated by companies like Kenshoo and Marin, display media buying is benefiting from Trading Desks, SSPs (sell side platforms), DSPs (demand side platforms) and Ad Exchanges. Just like buying and optimizing keyword bids, programmatic allows advertisers to bid at the impression level to ensure they are targeting only impressions that have the best chance of generating responses. With the addition of AI (artificial intelligence) and RTB (real-time bidding), the results are reported to perform 2-4 times better than traditional media buying ways that involve humans.
As with all relationships, it takes two to tango. Just as advertisers are leveraging programmatic to drive more efficient media buying and higher ROAS, publishers or content sites are using programmatic to increase their ad revenues by ensuring that they are getting the highest possible price for each and every impression. But are these two sides at odds with each other? How can advertisers leverage programmatic to become more efficient and increase their ROAS, while publishers utilize programmatic to increase their ad revenues on their web properties? If advertisers want to buy low and publishers want to sell high – something’s gotta give, right?
Well that’s where computers can do what humans cannot – processing millions of impressions a second in real-time and making decisions as to which ad is best suited for each impression. If I am only buying the highest potential impressions, I can pay more for these impressions because they are more likely to convert and improve my ROAS. In theory, buying 1 million programmatic impressions should have better results than buying 1 million human determined impressions. This means that publishers will average higher CPMs for their inventory and advertisers will see better returns on their ad spend. The proverbial “win win” appears to hold true for programmatic marketing, allowing it to serve two masters and keep them both happy.