It just sounds complicated, doesn’t it?
Thankfully; the truth is this is just another case of buzzwords gone wrong – and the actual concept behind it is quite simple.
Particularly if you’re at all familiar with how Google or Facebook ads work – it should be a fairly straightforward one to grasp.
And if you’re not, read on too, because we’ll demystify how they work as well.
Here’s everything you need to know about programmatic advertising as a South African business:
What is Programmatic Advertising?
Programmatic advertising is the process of using automated (programmed) systems to bid on digital ad placements in real-time.
This is done to enable precise ad targeting and more efficient use of advertising funds, all while requiring less work on the part of the advertiser than manually deciding where to place each ad.
How Does Programmatic Advertising Work?
In the past, the advertising industry as a whole was based around the selling of ad real estate on behalf of clients.
In the early days of online advertising, this model continued – with agencies and online advertising networks serving as intermediaries to help choose the websites and placements your online ads were shown on.
Then programmatic advertising came along and largely replaced this model, with software taking on the “intermediary” role.
Every time an eligible user accesses a website with a programmatic advertising system installed, the software automatically starts an ad auction to determine which ad gets shown.
The auction winner is determined by a variety of factors, including how much each contender is willing to pay and how relevant their ad is to the user in question (based on any meta-data the site has about the user).
If this sounds familiar, it’s because it’s almost exactly the same principle on which Google and Facebook advertising works – just applied to online ads across different websites.
Advantages of Programmatic Advertising
- Increased efficiency
The main advantage is that programmatic advertising software can “vet” who ads are shown to much more precisely and quickly than any human being ever could.
This lets you reliably and quickly set up ads across a huge number of websites, and ensures your ads are delivered to the most relevant people possible every time.
All of this is based on targeting parameters that you or your agency decide, which still allows a great level of control over who you want your ads shown to.
- Set costs
Programmatic ads typically work on a pay-per-click (PPC) bidding model – also letting you control how much you’re willing to spend on each click.
What’s more, this price is set across all the different websites on the same network – rather than requiring you to negotiate pricing with each one.
- Cross-platform reach
Up to this point, we’ve been using the example of online display ads shown across websites – but this is far from the only medium you can access using programmatic advertising.
The same campaign could be targeted at desktop users, mobile users, apps or video sharing sites with minimal effort.
This lets you reach customers wherever they are, and reap the benefits of repeated brand exposure.
Disadvantages of Programmatic Advertising
- No “human element”
There’s something to be said about the human-to-human element that we just can’t replicate with automated systems right now, and we’re not sure we ever will be.
What you do lose by programmatically assigning ads is the human insight into unusual or daring ad placements that a programmed system would never consider.
When you’re trying to run ads across an enormous number of websites this is unfeasible – but if you have a very niche business it may be worth still considering manual ad placements to get the best “bang for your buck”.
- Inappropriate matching
The secondary disadvantage of relying on an automated system is that it lacks human discretion.
Depending on the system, controversial content may be overlooked and before you know it your ads are being shown alongside something you would never want to endorse or be shown alongside.
Businesses have made great strides in combatting this, to be fair, so it’s not too much of a concern when you’re using a larger, more established, platform.
- Potential for abuse
Lastly, unfortunately, programmatic ads can also be rife with exploitation within the industry.
Disreputable digital marketing agencies often use programmatic ads because the results are much easier to fake than regular ad placements.
For instance, they might use a bot system to click on your ads a thousand times – and then charge you for a thousand impressions.
The thing to look out for here is both the reputation of the company in question and their billing model.
Be particularly of digital marketing businesses which charge you on metrics that aren’t directly related to sales for this reason – we recommend sticking to either flat retainers or billing on bottom-line sales.
Are Google Adwords Programmatic Advertising?
Yes! Google Adwords are perhaps the most prolific example of programmatic advertising on the internet today.
While there’s no formally agreed-upon definition for what exactly constitutes programmatic advertising – Google Adwords match all our criteria we laid out to a tee.
The main components of Google Adwords are the Google Display Network, which is used to show display ads across websites, and Google Search Ads, which show ads on the Google search results page.
They both use an automated system to generate ad auctions and try to match ads with the best possible recipients.
The only difference between the Google Adwords system and the strictest definition of programmatic advertising – is that it’s restricted to only the Google suite, and Google affiliated websites.
But, they have such an enormous reach, now even incorporating YouTube and countless mobile apps, that many businesses don’t even need to consider any other platforms.
Are Facebook Ads Programmatic Advertising?
Facebook Ads are a little trickier to categorise – but in general yes, Facebook Ads are also programmatic advertising.
The main contention here is that all of their ads are run exclusively across Facebook platforms – so depending on if your definition of programmatic advertising includes cross-platform functionality, it may not count.
We think it does because their ad system still uses all of the exact same principles of programmatic advertising – and they even let you take it a step farther using ads with dynamic content drawn from your website.
We hope this helped you understand the principles behind programmatic advertising, and how it underpins the world of digital marketing.
It’s still a developing field, so definitions may vary, but this is our most objective take on what it really means.
Programmatic ads are, in our opinion, one of the underpinnings of what makes digital marketing so great.
It’s the ability to scale ads much faster and more effectively than ever before – with much more precise data on your exact ROI.
If you enjoyed this article or found it helpful, check out more e-commerce marketing content on the inSyte blog or listen to the inSyte Podcast.
This article was brought to you by Syte.
We’re a specialist e-commerce digital marketing agency dedicated to driving up your bottom line.
If you need any help running your business’ programmatic advertising strategy, regardless of the platform, feel free to reach out with the form below or check out our case studies page to see what we’ve been able to do for our clients.