Programmatic Marketing – Everything You Need To Know
Programmatic, by definition, just means automated.
If you are looking into programmatic marketing, you are really just looking into automated digital marketing efforts.
Programmatic marketing or advertising bids on available inventory in real time to win placements for advertisers that match that current campaign’s objectives.
To simplify it a bit more, most programmatic marketing refers to display ads.
You most likely will find display ads on this blog post, these are examples of programmatic advertising.
Websites use Supply-Side Platforms (SSP) to place available inventory on their websites.
Usually on the back end of a website, this looks like an empty square.
An SSP communicates with a DSP (Demand-Side Platform) to place ads.
Basically, if I am an advertiser and I want to target people who hobby farm (yes it’s a real thing), I want to be able to utilize websites that have similar contexts.
If a website is focused on the new tools farmers can use to raise better goats, I want to be on that platform with my client’s product.
The request would go from me (the advertiser) to the DSP (Demand-Side Platform).
Then the DSP would search through the SSPs (Supply-Side Platforms) for inventory or websites that match my targeting criteria.
This all happens in less than 50 milliseconds.
What does programmatic advertising mean?
Programmatic advertising is automated online advertising.
Utilizing machine learning and 1st, 2nd, and 3rd party data points, programmatic advertising can get your products in front of the right audience.
As technology is an ever changing world, programmatic advertising stays a bit consistent.
At least on the advertisers end, it stays consistent.
Advertisers still upload ads and the accompanying landing pages, then the DSPs use the SSPs to find the right inventory to bid on in real time.
So when new websites launch or new social media platforms, this just means the available inventory to bid on is growing.
Programmatic advertising exceeds 96 billion dollars in ad spend each year.
The statistics show it growing more and more each year.
Television ads are starting to be bought programmatically and should become an 8 billion dollar programmatic tactic by 2023.
Programmatic advertising terms:
DSP – Demand Side Platform
SSP – Supply Side Platform
DMP – Data Management Platform
VOD – Video On Demand
RTB – Real Time Bidding
Walled Gardens – A closed ecosystem where the technology provider has full control over the data. For example, utilizing a companies email list for advertising would be buying into their walled garden.
1st Party Data – Demographic or personal information collected first-hand by a website or business (example: your email list or customer list).
2nd Party Data – Demographic or personal information collected by another company and they sell it to you (example: Facebook or Google).
3rd Party Data – Demographic or personal data collected by a business that has no direct connection to the visitor (example: Nielsen or other market research companies).
Contextual Targeting – Targeting based on the contexts or topics of a website or application
Behavioral Targeting – Targeting based on past actions or behaviors a user has shown online
Addressable Targeting – Targeting all available online consumers a Demand Side Platform has access to, usually with more defining targeting rules placed (example: mothers ages 30-45).
Retargeting – Targeting an audience that has already seen or engaged with your business or products.
Publisher Waterfall – A process used by a publisher or Supply Side Platform to sell all remaining inventory most effectively (Usually separating inventory by quality of placement).
What is the best way to learn programmatic Media buying?
If you are a marketer who wants to learn programmatic media buying, here is a great place to start.
Being able to offer programmatic advertising services to your clients is a very powerful closing tool.
Not every agency offers it, so it will definitely set your agency apart from the rest.
The barrier of entry to programmatic advertising is far higher than SEM or Paid Social advertising.
To be honest, the best way to learn programmatic is to work for an agency that already offers it.
Then after several months to a year of eating, breathing, and living programmatic you will be an expert.
Typically to use a Buy-Side Ad Server (similar to the Google or Facebook ad dashboards for Programmatic) you have to have a minimum ad spend.
“Programmatic” is not synonymous with “Cheap”.
When speaking to programmatic vendors such as Digital Remedy, you may find a contract with a minimum monthly ad spend north of $30,000-$50,000 per month.
If you already have several clients who are wanting to start programmatic advertising, you may be able to curate a total ad-spend across clients that exceeds the minimum spend.
Unfortunately, if you are a smaller marketing agency you may need to stick with Google Display Ads instead of Programmatic ads.
I actually love GDN but programmatic advertising has access to more DSPs and more inventory to advertise on.
Programmatic media buying is definitely a game changer for your agency.
For Business Owners:
If you are a business owner looking to advertise your business through programmatic channels there are two options for you.
You can either outsource to an established marketing agency that currently offers programmatic media buying, like Cordelia Labs.
Your other option, if your budget allows it, is to hire an experienced in-house programmatic media buyer.
Typically the benefits of using an agency outweighs the benefits of hiring someone.
As stated before, to use programmatic advertising you need to hit a minimum spend.
If you are advertising your own business, you have to hit that spend all yourself.
Agencies, however, can pool together ad spend of several clients to meet the minimum ad spend.
This means you could get into programmatic advertising cheaper.
If your programmatic advertising budget is less than $30,000 per month, I would recommend using an advertising agency.
Budgets of over $75-$100k per month might be better to hire an in-house programmatic media buyer because they can dedicate 40 hours per week to your campaign.
As a marketer, working with an agency, we have also seen great success with campaigns that spend between $100k-$500k per month.
I would recommend trying both routes to see what works best for your business.
What is the difference between RTB and programmatic Direct?
RTB stands for Real-Time Bidding.
Programmatic Direct is referring to the direct sale between advertiser and website or app to place a promotion or ad.
In modern day, both of these terms are very similar.
But if you think of advertising in the 1960s where advertisers would have to pick up a phone and call inventory sellers to make a deal.
Then the advertiser would have a spreadsheet to mark which deals they made, and send out the ads via mail.
Programmatic direct uses internet automation to make this process much easier.
Reaching out to websites or apps that have available inventory and negotiating a deal for ad placement.
Through programmatic direct, you can buy guaranteed ad impressions in advance from certain publisher sites.
Real-Time Bidding is when an advertiser utilizes a programmatic vendor that finds placements for the ads in a real time auction through DSPs.
Usually, RTB is sold per-impression.
Important to understand that RTB is a capability within programmatic advertising, but it isn’t the only one.
Most of the time, if you are utilizing programmatic advertising, you are using real time bidding.
However, even though direct buys are a bit more complicated, you can get really good placements.
Some websites even offer Full Page Takeovers which can be very effective at promoting a product.
How do I, as an agency, profit from programmatic advertising?
The easy answer is that advertising agencies charge a management fee to cover costs and expenses on their side.
Within this management fee is the profit margin.
Typically clients will pay a higher management fee if they are seeing results and are happy with their return on ad spend.
Never sell yourself short as an agency, but sometimes for hesitant clients, agencies will cut a deal.
Sometimes these deals have a lowered management fee for the first month, and a gradual increase until month 2 or 3 where the management fee is profitable.
This will allow the client to enter into the contract to test the waters with programmatic advertising.
As an agency, the first month prorated fee should be your break even point.
You never want to lose money on a deal.
After seeing the results from our programmatic campaigns, clients most of the time are more than happy to increase their retainers and budgets for better results.
If you are confident you can get results, this is a good method when first starting out.
To grow your revenue, a lot of times, on top of the management fee an agency will charge a percentage of the media budget as profit.
For example, you might have a management fee of $5,000 per month up to $10,000 in ad spend.
Then once ad spend exceeds $10,000 you may charge an additional 10% of that ad spend.
If your client spends $15,000 on programmatic ads, you would charge $5,000 for your base management fee, then 10% of the additional ad spend over $10,000.
Total management fee would be $5,500.
To grow your revenue even more, you would need to get good enough results for the client to justify a budget increase.
Overtime you can really utilize programmatic advertising to boost your agency’s revenue.
Programmatic advertising is the most efficient way to promote your business, products, or events.
Each year the programmatic advertising industry grows and as technology changes, the main concept of programmatic buying will remain constant.
Programmatic technology is always improving also to deliver the most efficient online ads and marketing campaigns.
If you are ready to step up your advertising campaigns with programmatic advertising, I can’t recommend Cordelia Labs enough.
I currently work at Cordelia Labs so if you decide to work with us, there is a good chance I will be running your programmatic advertising campaigns.