The Essential Guide to the Programmatic Advertising Landscape

March 17, 2015 Emma Cullen

Programmatic advertising is slowly becoming the norm for advertisers across the world with around 50% of all digital display advertising is now bought programmatically.  This guide will show you the different types of programmatic advertising, as well as the challenges and future of the area. Plus, get an exclusive introduction to the programmatic creative!

This article will look at the current state of the programmatic advertising landscape as well as the problems, needs and future developments of the area that is making digital advertising about more than just click-through rates.

Programmatic Today

Today, programmatic advertising is mostly focused on the media buying stage of the digital advertising campaign process, namely through two channels: real-time bidding and programmatic direct. Lauren Fisher, in her programmatic advertising outlook for 2015, identifies that within these two main programmatic branches each contains two sub-branches, as identified and explained below:

Real-Time Bidding (RTB)

Real-time bidding is a popular form of programmatic advertising that is well established. Many advertisers use this method through advertising exchanges and DSPs. This treats the advertising inventory buying as an exchange, where a pool of impressions are available for advertisers to be purchased through auction type bidding. This allows advertisers to only buy the impressions they want at the price they want based on information of the person who is going to view the ad. Two different types with in RTB can be established: open exchange and private marketplace. Open exchange is an advertising exchange that is open to any advertisers to use. The quality of the inventory cannot always be guaranteed, but the CPM is often quite low. On the other-hand a private marketplace offers what is often known as ‘premium inventory’

Programmatic Direct

Programmatic direct, also known as programmatic premium or programmatic guaranteed can be considered as direct buying 2.0. With the dawn of programmatic advertising many publisher became concerned with having unsold advertising inventory left over. On the other side of the coin, advertisers were concerned that they would not have access to premium inventory as they did with traditional direct buys. Within programmatic direct there are two identifiable sub-categories: programmatic guaranteed and preferred offer.

Check out this infographic for an even better overview of the different types of programmatic ad buying: Programmatic ad buying Cheat Sheet

The Problem with Programmatic Today

However, this focus on development of programmatic ad buying is fundamentally flawed. Whilst the technology to buy advertising inventory has developed with leaps and bounds over the past decade, the tech to produce the creatives in order to complement such powerful platforms has had not the same attention.

This means that whilst advertisers and publishers are investing in complicated technologies to publish ads they are finding that the ad production needed to make this laser-targeted campaigns successful is not achievable using traditional creative production methods. For the majority of advertisers, building creatives has changed little over the past 20 year causing ad production to be incredibly slow and inflexible. In short, advertisers using traditional display ad building methods are simply not effective enough to create the amount of creatives needed to take full-advantage of programmatic advertising software and are losing out on the benefit of using such solutions.

Recent statistics and trends are also showing that the traditional way of building creatives is simply not producing the results that advertisers want. A recent report, “The Critical Need for Programmatic Creative“, from AppNexus and CPXi highlighted this, as three major discoveries were made:

1. “The more ad sizes a campaign uses, the better the performance. Campaigns using the top three display sizes have a CPM less than half that of campaigns using only the 300×250 unit, and campaigns with seven display sizes have a CPM 60% lower (all while CTR increased).”

This indicates that in order for a campaign to reach its full potential then advertisers must produce a huge amount of variations which, using traditional ad production, is incredibly time consuming, and wastes expensive resources on repetitive work.

2. “Non-traditional display units, such as the Full Banner (486×60) and the Square (250×250) had the lowest bid price for both CPM and CPC.”

Again this indicates that advertisers need to move away from traditional methods and formats in order to create campaigns that reach their full potential and get the best possible return on investment.

3. “To compete effectively in today’s programmatic media landscape, advertisers need to be able to leverage as many ad sizes as possible, but the cost and time associated with creative development make this unattainable for most.”

The traditional way of creating banners is therefore killing off creativity as advertising production becomes focused on time, resources and reproducing creative sizes rather than creative production.

Overall these discoveries show that in order for programmatic advertising to be effective, advertisers must take a holistic approach to programmatic, rather than only focusing on the media buying stage of the process.

The Need for More Programmatic

“Programmatic advertising has turned media buying on its head, and created an ecosystem in which online advertising is both more efficient and more effective,” says Jeff Hirsch, President of CPXi in a recent report. “The next challenge for brands is to be able to iterate high-quality creative on-the-fly that can keep up with the fast paced world of real-time bidding.” Further, Lauren Fisher at eMarketer, in her Programmatic Advertising 2015 Outlook, highlights the need for higher-quality ads.

Programmatic advertising has therefore created an even greater need for the display ad production process to change. In media buying it has been made possible for advertisers to automate portions of time-consuming work with such platforms and let algorithms to take over, allowing one person to manage the advertising whole workflow. This process should also be applied to display ad creative production, where one designer can quickly produce an advertising  campaign with all the sizes and translations needed to in order to take advantage of programmatic buying are created automatically. Further, a need for flexibility is created by the real-time nature of programmatic buying.

Further, it is predicted that programmatic ad buying will expand further both into new channels such as wearable technology, as well as into traditional channels such as TV. This further demonstrates that markers and advertisers understand the need to run targeted advertising campaigns.

Solution: The Programmatic Creative

The clear solution here is to combine programmatic with creative (photo: Flickr)

The solution is incorporate a programmatic approach to the creative development process. It is ineffective to produce creatives individually, but rather all creatives in all sizes, variations and translations should be produced simultaneously with no need to code or think about file format or screen size, downloading or hosting. It is time to remove all processes of creative ad production that can be automated. Further programmatic advertising needs a solution that makes display advertising creatives as flexible as social media and as personal as a conversation with the ability to make changes on the fly, a solution that allows advertisers to take advantage of the power of programmatic ad buying.

Final Thoughts: Next Step for Programmatic

In this article we’ve established that the future of programmatic advertising lies it its ability to expand and diversify. Whilst advertisers today are aware of and are using programmatic ad buying, but need to find other programmatic solutions in order to make the most of programmatic advertising as an integrated ecosystem. The main take-aways from this article are:

  • Programmatic advertising is becoming the norm for digital advertisers, but only programmatic ad buying;
  • Programmatic ad buying has highlighted the need for the  programmatic creative;
  • There are already programmatic creative solutions on the market solutions on the market allowing advertisers to automate ad production;
  • Programmatic advertising will force advertisers to produce better quality and more flexible creatives;
  • Programmatic is expected to grow and expand in different ways, so now is the time to start advertising programmatically.

What do you think the future holds for programmatic ad buying and programmatic creatives? 

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