How Does Programmatic Advertising Work?

How to Get Started With Buying Programmatic Advertising

How does programmatic advertising work? If you want to know how to get started with programmatic ad buying you are not alone. Programmatic advertising accounted for nearly 85% of the digital display ad market in the United States in 2020, and eMarketer forecasts continued growth. 

Not using programmatic ads yet? It’s time to get in on the action.

Don’t worry if you’re not sure how to get started with programmatic advertising. Here’s a quick guide to help get you underway.

Identify Your Goals

Before you begin creating a programmatic advertising campaign, you need to identify your campaign goals. These objectives will guide the decisions you make as you put together and run your campaign.

You can accomplish a wide range of goals with programmatic marketing. You may want to boost brand awareness, increase sales of a certain product, get people to sign up for an email list or increase traffic to your website, among many other things. Be as specific as you can when creating your goals.

You also need to define your target audience, or who you want to reach with your ads. Once you have everyone on your team on board with your objectives and target audience, you’re ready for the next step.

Understand How Programmatic Buying Works

Programmatic advertising involves a method of buying and selling ads that uses technology to automate much of the process. This ad tech handles the execution of the campaign, significantly reducing the amount of manual work needed and increasing efficiency and accuracy.

There are three approaches to buying programmatic advertising you should be aware of:

  1. Programmatic direct: In this approach, a publisher and advertiser agree on terms for running an advertising campaign in a 1:1 agreement. They then automate the execution of the campaign.
  2. Real-time bidding (RTB): RTB enables advertisers to bid on ad space in real-time. Whenever a user visits a web page, its ad space goes up for auction. The highest bidding advertiser wins the space. This data-driven process is fully automated and occurs in just a fraction of a second.
  3. Private marketplaces (PMP): Advertisers can also buy ad space in private marketplaces instead of an open market. Premium publishers may use these PMPs to offer ad inventory to select advertisers when they want more control over what ads are shown on their sites.

Choose Your Ad Format

With programmatic advertising, you can place ads across all kinds of digital formats. Some of the most common formats are:

  • Display: Displays ads include banner ads and other similar ad styles found on websites. These ads may be static or incorporate animation.
  • Mobile: Mobile ads are becoming increasingly important for advertisers. These ads can appear on mobile websites and apps.
  • Native: Native ads blend into a website’s content more seamlessly than other types of ads. To place these ads, programmatic buying platforms use analytics and AI to determine relevancy and improve targeting accuracy.
  • Video: Video ads are an engaging way to get your message to your audience. They may come in the form of video ads that play before a featured video, video ads placed in the middle of articles and in-display video ads on sites like YouTube.
  • Over the top (OTT): OTT ads are streamed through the Internet to connected devices, such as laptops, smartphones, smart TVs and gaming systems, along with OTT video content. These ads are similar to traditional TV ads but allow for more detailed targeting and reporting.
  • Interactive: Interactive ads are an emerging form of advertisement. They often show up on apps and websites and encourage the user to interact in some way, perhaps by answering a question or playing a simple game.

Choose Your Platform

Another decision you’ll have to make is which AdTech platforms or demand-side platforms (DSPs) you want to use to run these programmatic buys. These platforms include programmatic, social and search advertising platforms. With tdX, our programmatic trading desk, you get access to 18 platforms, including 12 enterprise-level DSPs such as Amazon, MediaMath, The Trade Desk, and DV 360, as well as other leading platforms including Google Ads, Facebook, Instagram, and Spotify. 

Not sure which platform you want to use? We can help! Our trading desk offers unbiased platform recommendations to help lead the way. Our proprietary algorithm ingests 200 specific campaign criteria, and 50 filters to identify your ideal budget, platform, and channel mix to reach your target audience. Learn more about how to choose the right DSP for your campaign, or contact us to talk to one of our campaign specialists. 

Identify Your Budget

One last choice you need to make is how much you want to spend on ad space. Exactly how you do this will depend on which type of programmatic buying approach and pricing model you’re using. Often, you’ll set a budget for each day, and if your budget is reached, your ad will stop running until the next day.

Once you’ve made all of these choices and your campaign is set up, you can launch it. If you’re running an RTB campaign, whenever someone visits the relevant site, your DSP will place your bid. If you win the auction, the site will display your ad.

While you set the total budget for your campaign or flight, you can calculate the value of your ad spend in a few ways: 

  • Cost per thousand impressions (CPM): CPM stands for cost per mille, which translates into cost per thousand impressions. This means you pay a certain price for every 1,000 users who see your advertisement. So if the CPM for a particular ad space is $2, and 10,000 people see your ad, you’ll pay $20. The CPM model is ideal for when you want to reach a broad audience. It’s also useful for campaigns focused on increasing brand awareness and other campaigns that don’t depend on users completing a specific action. CPM rates are generally low compared to other types of rates, but this price varies depending on the inventory source you are using. Going direct to a publisher, for example, will probably cost more than the CPM for an RTB bid. 
  • Cost per click (CPC):Another approach you can take is cost per click, or CPC. With this method, you pay every time someone clicks on your ad. So, if the CPC is 12 cents and you get 2,000 clicks, you would pay $240. Advertisers often use CPC when they want to target a smaller, niche audience. This is also the way you pay if you are advertising on Google AdWords which is where most marketers know it from.

As your campaign runs, you’ll likely want to monitor it so that you can make adjustments as necessary to better meet your objectives.

Want to Learn More?

Want to get started with programmatic advertising so you can reach your target audience and grow your business? AUDIENCEX is here to help. Tell us what your goals are, and we’ll help you choose the strategies that will enable you to reach them most efficiently.

If you want to learn more about programmatic advertising and how it can help your business, feel free to contact us with any questions you may have.