Programmatic Buying 101

You may have come across the term “programmatic buying” during your daily sojourn online. It is a relatively recent (last ten years) way to activate digital media. Since inception, programmatic buying has grown fast, with eMarketer predicting that 2021 will see $80 billion dollars transacted programmatically. But what is programmatic media buying? What are the benefits of programmatic buying? Is it something of which you can take advantage?

What is programmatic buying?

Programmatic ad buying is the automated purchase of digital ad impressions using real time bidding (RTB). Data is used to create and segment audiences, allowing advertisers to pay for ads delivered to the right people at the right time in the right environment. Highly-targeted campaigns can be activated – at scale – across any device or ad-supported website or digital content provider (like Tubi, Vudu, Crackle, etc.).

Ads are served by bidding on individual impressions that fit the buyer’s target audience. On the buy side, this is done via a Demand Side Platform (DSP). On the sell side, inventory is put up for bid via a Supply Side Platform (SSP). A DSP (or several DSPs) housed at an ad agency or media buying company is called an Agency Trading Desk (ATD), or Trading Desk. And, because we are throwing out terms, the buying and selling takes place on an Ad Exchange. Ad Exchanges are basically marketplaces for impressions, and they allow DSPs to buy targeted ads across a range of sites at once, as opposed to negotiating buys with ad networks or sites.

Benefits of programmatic buying

  • Trading desks purchase ad impressions directly from the sellers – no middlemen. This can help lower costs. While there is no guarantee that costs will be lower, advertisers who buy from a reputable ATD can be sure that they are getting the right price for the right audience because of the next point.
  • Transparency and control. Through programmatic advertising, advertisers can see down to the site level how ads are performing against specific audience segments, devices, ad sizes, etc. Because it is a bidding system, there is more control over cost and how much an advertiser is willing to pay for a click or conversion.
  • Changes and optimizations are made in real-time.
  • It’s an omnichannel approach to buying. Audiences are increasingly fragmented, so reaching them wherever they spend their time is crucial. DSPs are built to target audiences wherever they are, and DSPs can reach customers across smartphones, tablets, desktops, and TVs at the same time.
  • Better planning and buying. Who knows an advertiser’s customer better than their ad agency? Agency Trading Desks have a vested interest in ensuring campaign performance more than third-party partners. This is important if an audience is too niche to target efficiently or if advertisers are not sure how their ads are being targeted.
  • Reduced waste. Because audiences are directly targeted, there is less waste.
  • It is an inherently safer ecosystem. Brand safety parameters are able to be monitored more closely by allowing advertisers to blacklist sites they know are unsafe.

A large portion of media buying is already programmatic, so odds are that many digital ads are being purchased via a DSP without the advertiser knowing how the buy is being transacted. We recommend a programmatic partner that provides transparency, ensures the targeting is correct, provides actionable reporting insights, and has a vested interest in campaign performance. There are many reputable companies to choose from, including us from the DSP side. And Hoffmann Murtaugh’s agency trading desk will be launching in 2021. Stay tuned for more news about the launch!

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