6 amazing benefits of programmatic advertising

Apr 05, 2024

The newest buzzword in the advertising world is programmatic advertising. Programmatic advertising means using an automated algorithm to buy the ad space. It’s instrumental for advertisers to show the right ad to the right audience in the right place.

It’s your money down the drain if the ROI of an ad campaign is below par. With this new advertising technique, you can strategize your ad spending. Statista says that the budget of the programmatic advertising of companies for 2020 alone is over $129 billion.

So, it’s already been tried and tested by top performers, and the benefits of programmatic advertising are now becoming widely known.

What is programmatic advertising?

Think of a magazine or billboard ad that constantly shows the same advertisement for the desired period despite whoever visits. Only when it’s shown to the right people it receives views and clicks.

Programmatic advertising bridges this targeting gap with the help of artificial intelligence. It also cuts down manual negotiations with agents for ad space reservations.

Here, you use software to buy the digital advertising space instead of involving negotiations, tenders, and proposals. The entire ad buying process becomes automated and streamlined for both buyers (advertisers) and sellers (publishers, site owners).

One shouldn’t think that programmatic advertising is only for large-scale companies. They work for SMEs and small businesses too.

How does programmatic advertising work?

In programmatic advertising, a real-time auction happens to see which advertisers win the bid and get displayed on the website. When a visitor loads a website, the programmatic platform analyses the visitor's data and other traffic data.

This is to identify if the visitor is most likely to click on any options and convert. Programmatic data is capable of collecting and analyzing visitors’ data as it collects cookies of different visitors. Cookie has customer data based on their interactions with the website.

Advantages of programmatic advertising for advertisers; Advertisers get into the demand side platform to see the available ad spaces, audience segments, bid prices, and many other data with the help of DMP (Data management platform).

Benefits of programmatic advertising for publishers; Publishers of different mediums (mobile, laptop, tablet, etc.) can list their ad space vacancies through the supply side platform. The ad exchange happens here through the interaction between the supply and demand side platform.

Types of programmatic advertising

Based on how advertisers and publishers work and how the ad gets displayed, programmatic advertising is classified into the following:

1. Real-time bidding

Visitors want to see relevant ads to discover new products. Advertisers want to connect with potential customers through ads. RTB (Real-time bidding) connects both of these.

RTB allows advertisers to bid on available digital advertising spaces through ad exchangers or SSB platforms. It allows advertisers to optimize their targeting and advertise with closely related audience segments.

However, advertisers won’t be able to find out the website where the ad is published and live. You only get to know whether you have won the bid or not. And the inventory purchase is not guaranteed here. You can only bid and wait.

2. Private marketplace

A private marketplace is an exclusive advertising medium for advertisers to reach a wide number of audiences at once. Prominent and well-known websites host the private marketplace and rent out advertising inventories to small businesses.

This is not open bidding. Only selected advertisers can participate based on an invite.

You will know if you have won the bid and also know where your ad is placed exactly, unlike RTB. Advertisers prefer private marketplace even if they are slightly higher in price than the above models.

This is because a private marketplace gives more control to the ad owners to place their ads in a high-performing space. They won’t be shocked to find their ad next to irrelevant or inappropriate content.

3. Programmatic guaranteed

Here, the ad space buyer negotiates with the seller for an ad space that’s already reserved for the buyer. This type of programmatic advertising is only for premium inventories that will fetch you good traffic and returns.

The advertiser can see for themselves the available ad spaces and where their ad will be placed. The seller will choose one of the buyers and let them know the price to seal the ad space deal.

While setting the price, the seller and buyer also discuss other factors like ad position, impressions, no of ads, duration of the ad, and final price. The major drawback is that there is no room for negotiation.

4. Preferred deals

A preferred deal is when a seller and buyer involves in one-on-one bidding on an unreserved inventory. The inventory is still not guaranteed as it’s not reserved for you. You can optionally negotiate the price with the seller before it goes for the open auction.

There is no auction and no bidding here. You can check out the inventory and decide if you want to buy or not. These are not premium inventories, so the impressions might be low; but it still has its own audiences.

You can make a decision based on the target audience you expect to see the ad. As there is no compulsion to buy the inventory, you can review and select only the deals that will get good ROI.

One of the attractive benefits of programmatic advertising of this type is that it gives you flexibility. You invest only if necessary.

6 Benefits of programmatic advertising

If we list down the advantages of programmatic advertising for small businesses, the list will go on. Advertisers love it for the fact that they are easy to deal with than traditional ad space reservations. Some of the obvious benefits of programmatic advertising are:

1. Targets specific audience

Every product has a specific audience set that falls under a certain category. You cannot play guessing games if you want your ad to perform well. But manual methods don’t guarantee better-performing ad spaces as it’s entirely based on speculations and manual deals.

Programmatic advertising shows you the proper placement and takes it to the right audience who takes desired actions.

It’s a win-win for both seller and advertiser as they make money out of it. And it works for the audience, too, as they chance upon the products they need the most.

2. Increased transparency

New advertisers want to track everything to create efficient and scalable advertisements that outdo previous results

They need transparent ad platforms that openly let them access and assess their ad performances. You cannot randomly bid on an ad space without knowing where it’s placed or how your ad will fit there.

Programmatic advertising rules out this disadvantage and creates fair opportunities for advertisers and publishers.

Other than transparent pricing and spending, you also see who displays your ads, who sees them, how long it’s out there, and much more. When you know insights other than mere impressions, you can design narrowed down and extremely targeted ad copies.

3. Improved efficiency

The results of programmatic advertising are data-driven. They can guide you in creating and placing ads that generate the expected results. You can optimize your current campaigns and tune them to bring more unique visitors to your website.

You can play with the copy, style, design, or placement, referring to the insights.

4. Better ROI/ROAS

Programmatic advertising for small businesses works great because they bring in outstanding results for the least money spent. Small businesses don’t have huge budgets. But they expect a considerable outcome out of every marketing spend.

Programmatic advertising is the best for them as they get more impressions and customers with less effort. A majority of marketing campaigns happen on an experimental basis for which small businesses waste their money. programmatic advertising yields instant results and returns.

Hence, marketing teams can utilize programmatic advertising for small businesses.

5. Broader reach

By traditional means, you only find sellers within your location. These sellers don’t have reach beyond their region of support. But programmatic advertising gets you across a wide range of sellers from different regions through a well-built supply side platform.

By advertising on their platforms, you can get a wider reach and cover customers globally. Programmatic advertising isn’t based on just one or a few sellers but a bunch of websites.

6. Targeting beyond CTR

When you display your ad, getting a good click-through rate isn’t your only goal. And a good clickthrough rate doesn’t promise good returns if no one is taking any action. 

So, it won’t be wise to look at only CTR as a measuring factor to tell if a campaign is successful or not.

Looking at this way, programmatic marketing can be beneficial in many ways as it supports advanced targeting and has more to offer.

One of the key benefits of programmatic advertising is the above fact. For instance, you can find lookalike customers and find a new set of people to target. You can do interest-based targeting and find quality leads, who you cannot easily reach in other ways.

Cost associated with running programmatic advertisements

While discussing programmatic advertising for small businesses, it will be hard to exclude the associated cost. The advantages of programmatic advertising can be tempting. But you should also consider the cost involved.

The cost model of programmatic advertising is based on Cost Per Mile and Cost Per Impression. Cost per mile denotes 1000 impressions of an advertisement on a seller’s web page. Depending on the programmatic platform chosen, the cost may vary.

There are also many crucial, varying factors that decide the price. They can be add-on services you opt for namely ad blocking, data management platform, 3rd party verification of sellers’ websites, campaign trackers, and many more.

Depending on the promised impressions, project budget, and display content nature, the CPM cost will be adjusted and revealed. On average, the CPM will vary in between $0.50 to $2. It can go up to $5 or $7 too.

To make it easy for marketers and sellers to calculate the programmatic fee, IAB has released a transparent programmatic fee calculator.

Manage your programmatic ads cost with Volopay

By now, you would have understood that the benefits of programmatic advertising come with a price. Whether you go for programmatic advertising or not, you will have regular ad expenses to manage.

And you need a payment management system that allows you to pay and keep track of expenses in the same place. But what usually happens is marketing teams waste their time on making spreadsheets to keep notes of campaigns and their related spending.

Here is a simple solution for you.

Volopay has corporate cards for one-time and recurring use. They are virtual cards that you can instantly create as much as you need. You can assign one card for each campaign, pay the platform, and check Volopay to view the transaction history.

Volopay corporate cards make it easier to implement programmatic advertising for small businesses.

Also read, Expense management automation to track & manage PPC marketing spends

Frequently Asked Questions
Are Facebook ads programmatic?

Facebook, Instagram, and other social media ads are programmatic. They help marketers reach huge numbers of audiences from any device. The only difference is other sites sell their inventories through third-party ad space mediators. But Facebook has its own ad manager.

Is AdWords programmatic?

Yes. Google Adwords is the pioneer in the programmatic advertising world. Its functions are based on keyword bidding that happens in real-time when someone searches for it.

What is the difference between digital and programmatic advertising?

Digital advertising is a broad, umbrella term to denote online and social media advertising. Digital advertising can be programmatic or non-programmatic. Programmatic advertising is a systematic method of using AI to optimize and automate digital advertising. By 2020, almost 80% of digital advertising are done based on the programmatic advertising method.

What is an example of programmatic advertising?

An example of programmatic advertising is how YouTube displays advertisements before and during the course of a video. It uses programmatic guaranteed advertising to sell its inventories where advertisers can display bumpers, skippable, and non-skippable content. Based on the audiences and their video and channel preferences, you can choose where you want your ads to be placed. From a single platform, you can plan, display, and manage your ad campaigns.

Are ad networks programmatic?

No, ad networks are direct and not programmatic. They work directly with publishers and get their inventories sold by negotiating with advertisers.

What is a demand-side platform (DSP)?

The demand side platform is an interface where advertisers buy and manage inventories of different publishers. This is an automated tool where ad exchange and data exchange happens between publishers and advertisers.

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