What is Programmatic Media Buying?

By definition, programmatic media buying is “the automated method of buying digital advertising in which supply and demand partners make decisions on a per-impression basis and adhere to business rules as provided by the operators of each platform”[1]. Also known simply as programmatic, it is an all-encompassing term used to refer to the automated process of buying and bidding on digital display ad space. Primarily driven by demand, price, and data collected using algorithms, programmatic ad buying is continually changing the way the advertising industry works. Real-time bidding or programmatic trading, is used as the primary way programmatic media buying occurs today. It allows advertisers to bid on the audiences they want to reach based on impressions. Simply put, the higher the demand to target a specific audience is, the higher the price is for the impression.

Programmatic media buying uses platforms to facilitate the buying process using a budget decided on by the brand or company paying. Using the set budget, offers are placed on advertising spaces by connecting to an Ad Exchange, which then connects to Ad Networks. These Ad Networks connect to various platforms which choose ad spaces that fit the target market of the brand or company paying for the ads. The target market is refined using data management tools to collect data, giving the owner, brand or company the ability to tailor the programmatic media to desired target audiences. Through programmatic trading, the ability to more accurately control the media and the messages, resulting in campaigns that are effectively targeted and not using a “one size fits all” approach to programmatic advertising.

So, what is a programmatic ad? Programmatic advertising refers to the development of ads which have been targeted to a specific audience. The development of these ads occurs by using data collected through algorithms and made available to the brands based on the consumers internet use. For example, if a brand wants their ads to reach market segments who are showing interest in the products they sell, programmatic techniques can be used to find these consumers and display ads to them which are personalised and tailed directly to them. The automated bidding process allows advertisers to purchase ad space, select their desired consumers through the data collected, and measure the results of the ad in real-time. This allows programmatic ads to be continually developed and made more effective by allowing brands to align messages with consumer needs, ultimately leading to increased consumer loyalty and brand equity.

The development of programmatic ads are produced using software which implements algorithms that have been developed to analyse consumers internet behaviours. This data is applied in real-time to campaigns and used to improve optimization, tailoring the programmatic ads to consumers who are more likely to convert. Programmatic marketing is used to target the primary market segments the brand or company wants their ads to be visible to, taking in to consideration consumer demographics and behaviours based on data collected through the consumers internet use. The data gathered provides insights into the target audience, creating the ability to better tailor marketing strategies. Additionally, these ads can be limited to certain times of the day, frequency of visibility, and placement. This guarantees the ads remain effective by ensuring they are visible to the desired target market at the most effective times.

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