WHAT IS PROGRAMMATIC ADVERTISING?
Traditionally, media has been sold by ad sales people responsible for negotiating a price for inventory on various mediums. Unfortunately, at least for the job market, with programmatic advertising buying, there is considerably less need for human salespersons.
Increasingly, mobile advertising is being purchased programmatically through ad exchanges using real-time bidding. An ad exchange uses an automated auction format for the buying and selling of mobile advertisements. What this means is that the publisher will accept the highest bid for its advertising space any any given moment. In contrast, a mobile ad network will purchase the ad at the lowest possible price at the same given moment. It is supply and demand at its finest — prices are established according to real-market conditions and in real time. Think of it as a fluid market of mobile advertising, where the price is set based on real-time value at the time of the transaction being made. Programmatic buying has brought speed and efficiency to mobile media purchasing.
PROGRAMMATIC ADVERTISING USING DSP’S
Efficient mobile advertising commerce involves several entities: ad exchanges, a mobile ad network, a demand side platform (DSP), an ad server, and a real-time bidding engine. A DSP is a piece of software the enables advertisers to purchase display ad inventory in an automated fashion via real-time bidding exchanges. To take advantage of the power of a DSP, an advertiser will most likely have to use the services of a mobile/digital advertising agency, such as Purplegator, that has access to the DSP. It is not likely that an individual brand will make such an investment.
The DSP enables an agency to maintain efficiency on multiple buys by using a single mobile advertising interface rather than having to deal individually with many different mobile ad networks. By utilizing a host of different mobile ad networks, the agency can benefit its clients by consistently obtaining the best possible rate for the mobile advertising inventory at any given moment.
By utilizing an agency with a DSP, the advertiser gains wide access to maximum inventory and laser-focused targeting. It also gains the ability to serve ads and bid on ads, plus track and optimize the mobile advertisements — all in real time. It is an enormous amount of information to keep track of, and it can only be done through the use of an effective DSP solution. Without DSPs, mobile advertising would be considerably less effective and more expensive, as advertisers would have to work with numerous ad networks, and the advertisers could not be assured that they were obtaining the best price in every instance.
It is difficult to imagine a mobile advertising world without DSPs. DSPs have helped to remove costly salespeople from the equation and have made the system far more efficient by making the process of purchasing mobile advertising like the stock market, where prices are adjusted based on supply and demand and current market conditions.
With a DSP, mobile impressions are auctioned off to the highest bidder at that very moment. The result is a “fill rate,” more commonly referred to in a real-time bidding environment as a “win rate” for the advertiser. The win rate is the number of ads purchased divided by the number of attempts to purchase an ad. In other words, the DSP, on behalf of a specific advertisers, contacts 100 publishers and bids on ads from those publishers. Of the 100 ads the DSP attempts to purchase, six are actually purchased. That makes the advertiser’s win rate 6 percent. The advertiser can adjust its bid price upward to get an improved win rate or to gain exposure on more premium sites, or it can adjust the bid downward to be more conservative, thus resulting in a lower CPM, fewer gross impressions, and more ads running on less attractive sites.
In addition to DSPs, there is another element to making programmatic buying work for mobile advertising. That side interfaces with the publisher wishing to sell advertising space on their site. This is known as the supply side platform (SSP). The SSP interfaces with ad networks and ad exchanges to make the programmatic inventory available to advertisers. In most cases, publishers are competing against each other by offering the best price, because many advertisers only want their advertisements to be seen by the most coveted person and do not necessarily care on what site it is seen.
TARGETING PEOPLE, NOT PLACES
Mobile advertising targets people, not places. What do I mean by that?
Let’s say you are looking to target pharmaceutical executives who are attending a national trade show. You could purchase a billboard in the city and hope that some of the right fish swim by and see the billboard. Or, you could target those executives, and only those executives, by utilizing third party data to identify them, then send them an advertisement via your DSP when they are in the city hosting the trade show. NO WASTE!
With programmatic advertising, you may not necessarily know where you will serve your advertisement to those executives, because you don’t know in advance where you’ll find them. Hence, you are targeting based on who you want to reach first, and where you reach them becomes less important. Hence, targeting people, not places.
Bob Bentz is the author of Relevance Raises Response: How to Engage and Acquire with Mobile Marketing. He is also an adjunct at the University of Denver where he teaches the graduate level course in mobile marketing.