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What is Programmatic Advertising?

Never heard of programmatic advertising?

That’s OK… A lot of people don’t know about this marketing mechanism – even within the industry. In fact, a whopping 1/3 of Canadian marketers don’t know about programmatic advertising. Even those who do know about it often don’t know enough to properly (and lucratively) utilize this strategy. As it stands, the programmatic market is expected to top $10 billion this year and double in size by 2016.

Numbers don’t lie. This is big.

What is Programmatic Advertising?

About 20% of digital advertising real estate is being bought and sold by machines. When boiled down to its core, this is what programmatic advertising is about; it’s the process of using automation to purchase and sell media. It encompasses open auctions, private auctions (i.e. invitation only), preferred deals/unreserved fixed rate deals, and guaranteed deals. This means the term ‘programmatic’ could refer to any one of four different types of transactions and as such, the term should not be used in general to refer to any one type.

Why Use Programmatic Advertising?

Because, quite frankly, you won’t have a choice. Like we said, this is going to be big.

There are many perks of going programmatic:

Programmatic advertising can help bring your business into the world of automated media acquisition – a world that is expanding practically exponentially. Globally, brands are spending big bucks on programmatic technology so that they can maximize, optimize and ultimately stretch their media dollar. It is estimated that by the end of 2014 well over 40% of worldwide digital display ad spending will be funneled through real-time programmatic advertising avenues. Avenues like real-time bidding (RTB) exchanges (where media buyers try to outbid each other in mere milliseconds to win specific ad impressions on websites) and programmatic direct (where media buyers haggle with sellers one-on-one and get dibs on the first look at the publisher’s best inventory before it goes to real time bidding) will provide the basis for these transactions.

With this global movement toward programmatic advertising, your business won’t be able to avoid it for long – at least if you want to make it in this ever-evolving industry.

As it stands, marketers who are programmatic advertising savvy predict their businesses were investing 15.9% of their total digital spending on this new form of marketing. These same professionals expect that this amount will almost double in three years.

This sort of marketing is both time and cost efficient. It removes people from the equation of buying and selling ads and frees up time for you to engage more with your ultimate customer; the one actually on the end of the transaction – the one that matters. Companies who ignore the trend will find themselves struggling to keep up with more agile, proactive brands. Instead of reaching out and really interacting with your customer, you’ll be blunting the connection – kind of like trying to shake hands with a club.

The Challenges… Yes, there are challenges.

There’s a lot to know about programmatic advertising and it can seem like a slippery subject. Understandable. This type of marketing is relatively young and due to its youth, it’s also experiencing some growing pains. For instance, the automated nature of this beast has raised concerns about fraud. Thankfully, the industry is actually on top of this potential issue and has created an effective accountability program. Of course, buyers also need to do their due diligence, making sure to choose vendors carefully and know their supply sources. It all boils down to not being naive. If a deal looks like a scam, it probably is. Likewise, publishers need to do their background work and ensure that they are on the lookout for suspicious traffic patterns.

In other words, while machines will be doing most of the work, you still need to have a human element involved – really involved.

How to Proceed?

Get involved.

You’ve already completed the first step and educated yourself. Next, you are going to want to decide what kind of programmatic advertising will work best for you. It’s understandable if your head is still reeling a bit from all the information we’ve just discussed. Let it sink in. Once you have a handle on the basics, you can do one of two things:

1) Trial by Fire. If you have the time and resources, you can certainly go it alone and slowly acclimatize yourself to this new terrain. We recommend formulating a programmatic advertising plan and then contacting a RTB ad exchange or a firm that facilitates programmatic direct interactions. Or, you can just ask for more information.

2) Seek Professional Help. If the idea of coming up with a plan for programmatic advertising is enough to make you want to chew your own head off, consider enlisting a professional to help you get a better handle on the route that will work best for your company and your brand.

What’s most important to remember is that each brand is unique and it’s impossible to prescribe one plan of attack for everyone – even for businesses in the same industry. The possibilities of programmatic advertising span a veritable ocean, so test the waters slowly at first. Remember, programmatic advertising is still in its infancy and while you should definitely get involved, you do have time. Once you have your bearings, however, jump on in.

Seriously. The water’s just fine.

Need help getting your sea legs? Feel free to contact our programmatic advertising pros.

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