Programmatic advertising: what’s this for, what are the advantages

Those who are interested in online marketing are, without a doubt, familiar with the notion of programmatic advertising. However, despite the fact that this method has been around for about a decade, not all companies are yet taking advantage of the opportunities offered by this kind of advertisement. One of the reasons for this is that many users don’t really know what programmatic advertising means.

What is programmatic advertising?

Programmatic advertising is a purely digital form of advertising. It uses AI-generated algorithms to determine the best ad placement by product type and target audience. To distribute advertising space among advertisers, this automated system organizes auctions in real time.

The price of advertising in the form of a banner, video or text varies depending on different parameters, in particular on the number of potential buyers. For the optimal choice of place and time of ad’s publication, programmatic advertising is based on target data regarding the purchasing behavior of potential customers.

How does bidding work in programmatic advertising?

While the site is loading, the bidding process runs in the background as part of programmatic advertising.

If a user visits, for example, an online store, his user data is transmitted to AdExchange (a platform for selling and buying programmatic ads). This platform then compares the data with advertisers’ criteria and a real-time auction is held. These processes take place within milliseconds while the site is loading. The average load time is 2.6 seconds. The bet usually lasts between 50 and 100 milliseconds.

Then the candidate with the highest bid can post their ad in the space provided.

For example, if an advertiser has made it clear that they only want to run ads for women between the ages of 30 and 50, and the user is 60, it is unlikely that the ad will be posted on their screen (i.e., the user in question will likely see another ad). Conditions can be extended to other criteria.

If a user leaves this online store without making any purchase and sees this store’s advertisement again when visiting another website, the advertiser has undoubtedly specified the following criteria for publishing their ads: “Show our ads to all visitors who have viewed our page without making a purchase”.

What are the benefits of programmatic advertising?

One of the biggest challenges for e-commerce companies is the complexity of the customer buying decision process. The client comes to the company’s website through different channels, through different search engines and different social networks, then leaves it and, perhaps, looks at it again later from his phone or never looks at it again.

Instead of publishing advertising only on websites related to the same topic, programmatic advertising significantly reduces the loss of online advertising. It allows you to deliver personalized advertising to the user regardless of which channel he uses, and also gives you the opportunity to take into account certain types of activities or specific demographics.

The use of programming platforms with their algorithms leads to a significant increase in the effectiveness of Internet marketing and to a noticeable reduction in costs compared to the old advertising processes.