By Nicholas Galante
Media buying has evolved tremendously in the past few years with the increased utilization of programmatic media buying systems.
Traditionally, advertisers would reach out directly to publishers to negotiate direct deals to get their products and services displayed to the masses. Then, ad networks came to fruition, allowing the purchase of inventory on a scale not seen previously.
Once advertisers learned they could buy bulk inventory through aggregators, real-time ad exchanges emerged that acted much like the financial markets, trading remnant impressions that publishers could not sell directly through in-house sales teams.
This has ultimately lead to automated or programmatic media buying, made possible by technology known as real-time bidding (RTB).
What is Real-Time Bidding (RTB)?
RTB refers to the purchase of digital inventory on an impression by impression basis, facilitated by DSPs in an auction setting. Every impression is bought and sold instantaneously, from multiple SSPs and exchanges, and allows advertisers to access mass inventory in real time.
Are Programmatic & RTB the same?
No – RTB is merely one feature within the programmatic ecosystem. Programmatic is large scale automation using real time systems, machine based transactions and algorithmic intelligence.
This enables marketers to serve multi-channel placements from a single dashboard, with data acting as the primary in campaign creation, implementation, and optimization.
How much does traffic cost?
The primary force at work in an RTB environment is dynamic bidding. Every impression has a unique value, depending on advertiser criteria and the digital makeup of the impression. The more important question is – what’s the value of this impression to a specific advertiser?
Ultimately, prices are dictated by real time market conditions. Reach, frequency, user demographics, and behavioral variables are important considerations in how impressions are valued in each respective DSP.
Targeting capabilities have seen seismic changes in the digital marketing realm. With the introduction of cookies and UDID, agencies and advertisers are now able to gather concrete data points about consumers viewing a page or loading an app.
With operating system, browser, geographical, and device information, you can now set targeting criteria at the microscopic level. Incorporating audience pools from 3rd party data sources adds additional layering, and creates unique audience segments, targeting exactly the right user at the right time.
In short, every impression is analyzed individually based on its specific characteristics – it is then bid on accordingly depending on if it matches the advertiser’s targeting criteria.
What is the future of Programmatic inventory?
Within the past year, new types of inventory sources are becoming available. Standard IAB units are the norm, but now new inventory sources are on the programmatic horizon, including social, mobile, video, and rich media.
Publishers that initially balked at the prospect of offering their inventory through DSPs, with the sometimes misguided belief that their margins would be cut in half, are now setting up private marketplaces to sell their unsold inventory directly through private exchanges.
As publishers increase their amount of qualitative ad space through programmatic, the line between remnant and premium inventory is fading.
“The amount of US digital display ad dollars transacted via programmatic channels will total nearly $17 billion by 2017.” -Magna Global
Programmatic is here to stay.
What does this mean for the advertising industry?
It means a new way forward. In the era of smart data, programmatic media buying will continue to evolve from just display – to additional channels including native, video, and mobile. We have just started to pick the first fruits from the revolutionary way of advertising, and the picture is becoming clearer: cross channel marketing is the next act.
The biggest challenge we now face is to connect the user pathway across devices, to map the touch-points between desktop and mobile, to ensure we’re engaging the right user, at the right time, on the right device.
“By 2017, it is predicted that programmatic sales will largely overtake traditional direct-to-publisher transactions with RTB and non-RTB based programmatic channels accounting for 83% of all US digital display ad spending.” -Magna Global
With AppleID, GoogleID, and recent advances made in probabilistic mapping, we will soon have the ability to connect and target across devices. To reach and engage target audiences at every point in the funnel, on every device, with online and offline media purchased through this new medium.
The technological advancements, control, and cost efficiency gained through Programmatic will play a key role in shaping the future of Digital Marketing.
Nicholas Galante is a senior yield analyst with Direct Agents.
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