Real-Time Bidding (RTB) is just a small section of the vast technological landscape of algorithmic media advertising purchases (programmatic), the volume of which is expected to surpass $95.2 billion by 2032. This technology can take into account hundreds of parameters, ranging from user behavior on websites to information from CRM systems and even data on weather conditions, in order to determine an optimal bid per ad impression for an advertiser.
With programmatic, the best minds of your business can eliminate their routine tasks and reduce operational costs. How did this become possible? Let's explore.
Making 86% of global ad revenues: The role of programmatic advertising
In simple terms, programmatic is an automated way to purchase and sell ad inventory in real time (enabled by real-time auctions). All this becomes possible thanks to the platforms that fall within the programmatic ecosystem. The core platforms are the demand-side platform (DSP), which is a platform that is used by advertisers for media buying, and the supply-side platform (SSP), which is a platform used by publishers to sell ad inventory.
After registering on DSP, an advertiser, marketer, or independent media buyer adjusts the targeting and budget conditions according to their own objectives. Then, the platform automatically bids on suitable ad requests coming from SSPs. If the information in the SSP request (data about the user and ad placement) corresponds to the ad campaign requirements, DSP starts bidding in the RTB auction. The highest bidder wins, and their ad is getting served to the user.
With these simple algorithms, programmatic has managed to conquer the world — currently, a bigger half of total global ad budgets come to programmatic: by 2026, programmatic will account for 86% of overall ad revenue. For sure, the actual process of purchasing ad impressions is not the sole role that programmatic technologies play in managing media advertising, as it also helps businesses in numerous ways we are going to review now.
Core benefits businesses get with programmatic
Automating routines. Thanks to the automated nature of RTB auctions, businesses advertise their products or services without investing much time into the process — the platform bids automatically on the right impressions.
High-precision targeting prevents overspending. The media buying platform does not blindly bid on every potential ad placement; it reacts only to those requests that match the characteristics of the brand’s perfect audience. Thanks to this, advertisers address only those people who will most likely convert (without having to pay for impressions to irrelevant audiences).
Saving your budgets. On programmatic platforms, you can determine online advertising costs for your campaign and allocate even distribution of ad budgets for a particular period.
The largest pool of supply raises brand awareness. Programmatic features a huge global pool of connected supply, which increases coverage and provides better opportunities for raising brand awareness.
Convenient analytics. Programmatic DSPs feature performance reports that can be generated in real time, which streamlines campaign analytics.
Flexibility. Online media buying platforms are usually self-serve, which means that advertisers can make adjustments at any minute and even change the campaign flow when necessary.
AI and ML optimization. AI and ML algorithms analyze bidding activities, clicks on the ads, and other aspects of campaign flow in order to determine the most optimal price strategies for defining bids, choosing ad placements, and more.
Important tips for businesses that start to use programmatic
Omnichannel capabilities matter. Users who visit your brand’s website from a wide range of devices typically bring in greater long-term profitability. That's why businesses should focus on a multi-channel experience when choosing a purchasing platform.
The future is privacy-friendly. The world is rapidly moving towards privacy and the proof of it is third-party ad cookie shutdown in Chrome, Apple’s IDFA restriction, as well as tightening of international privacy frameworks (GDPR, CCPA, and more). In relation to this, brands need to diversify and allocate some part of their ad budgets toward contextual advertising, which doesn’t rely on cookies for targeting.
Innovative formats foster engagement. Advertising is no longer bound solely to desktop and mobile advertising. These days, ads can foster completely innovative experiences that engage and surprise. For instance, brands can target their audiences outdoors with dynamic creative displayed at interactive digital out-of-home (DOOH) billboards or interact with users via Smart TVs (thanks to CTV advertising).
Your banner design is still important. Programmatic can automate and optimize a lot of things when it comes to advertising; however, creative design still determines 70% of campaign success. Try to create creatives tailored to the interests of each of your audience groups and launch individual programmatic campaigns. Why is it important? With a personalized advertising strategy in place, more than 79% of businesses easily reach their revenue goals.
The bottom line
Businesses can enhance the efficiency of their media advertising by leveraging the advanced mechanisms offered by programmatic platforms. From precise targeting to budget planning and intelligent optimization, these are all capabilities of programmatic platforms that businesses can use to expand audience reach, increase engagement, and reduce costs associated with irrelevant impressions. However, it's important to remember that even automated campaigns need to be regularly reassessed, analyzed, and improved, so be sure to compile a strong ad personalization strategy along the way.