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PROGRAMMATIC ADVERTISING

Programmatic Advertising: Definition And How To Do It Right

Reading Time: 11 minutes

If you want to reach the right people while staying within budget, programmatic advertising is your way to incredibly targeted ad space.

Whether you’re just getting started in digital advertising or looking to sharpen your existing programmatic strategies, this guide has something for you. 

We’ll show you how to set clear goals for your campaigns, choose the right tools, and use data to target your ads more effectively than ever before. Plus, we’ll dive into creating ads that grab attention and get results.

Let’s get started.

What Is Programmatic Advertising?

Programmatic advertising automates the buying and selling of digital ad space. It targets specific audiences on websites, mobile apps, social media, and connected TVs. This targeting happens in real time. 

Unlike Google Ads, which focuses on search queries, programmatic advertising uses user behaviors, interests, and demographics. This method ensures ads are relevant and reach people across multiple platforms.

Here are the key elements of programmatic advertising: 

A. Demand Side Platforms (DSPs)

Advertisers and agencies buy ad spaces using DSPs. DSP uses data and algorithms to target ads to the right users, at the right time, and the best price.

You can manage your ads across multiple sites and platforms from a single interface. This simplifies the media buying process. DSPs also provide analytics to track performance and optimize your campaigns.

B. Supply Side Platforms (SSPs)

Publishers manage their ad inventory and sell it more effectively using SSPs.They connect publishers directly to a wide network of potential buyers through ad exchanges and DSPs.

Publishers set up rules for ad safety, decide on ad categories, and set prices. Then, the SSP runs an auction using these settings, and the highest bidder gets the ad space. 

SSPs also help publishers pick the best advertisers through factors like latency, bid rate, and unique demands. They also help in limiting how many times a user sees the same ad, preventing ad fatigue.

C. Ad Exchanges

They help in the buying and selling of ad inventory between DSPs and SSPs. Ad exchange helps advertisers find and purchase ad spaces that specifically match their target audience criteria.

They enable real-time bidding, where ad spaces are auctioned quickly as web pages load. These exchanges collect vast ad inventories from various sources, available for advertisers to buy. 

Publishers, on the other hand, aim to get the highest bids for their spaces through these exchanges. This maximizes their revenue. Both advertisers and publishers benefit from Ad Exchanges.

01 programmatic advertising - Programmatic Advertising Definition

One great example is the Amanda Foundation which leveraged behavioral and geographical targeting to connect animals at Los Angeles shelters with potential adopters.

They placed display ads to reach individuals most likely to adopt specific breeds. For instance, someone who enjoys a quiet home life and prefers smaller breeds might see an ad featuring chihuahuas or toy terriers. The campaign creatively paired pets with taglines reflecting shared lifestyle traits between the pet and the potential adopter. 

02 programmatic advertising - Programmatic Advertising Example

Mastering Programmatic Advertising: A Step-by-Step Guide

As you go through each step, pay close attention to the strategies and the tools you will need to master programmatic ads.

1. Set Programmatic Advertising KPIs

Your KPIs should directly support your business objectives. By doing so, you optimize your advertising efforts and grow sustainably.

Break down your business goals into campaign-specific objectives. For example, if your main business goal is to boost online sales, you might set a campaign objective: Increase conversions to 20% within the next quarter.

Select KPIs that accurately reflect how well your campaign is meeting its goals like: 

  • Increasing Brand Awareness
  • Enhancing Audience Engagement
  • Driving Website Traffic
  • Generating Leads
  • Boosting Sales and Conversions
  • Improving Return on Investment (ROI)

Here is a table that shows brand objectives and their respective KPIs

03 programmatic advertising - Programmatic Advertising KPIs

For each KPI, establish clear, quantifiable targets. These targets should be specific, measurable, achievable, relevant, and time-bound (SMART). For example, instead of setting a vague goal to “increase website traffic,” aim for a specific increase in percentage over a defined period.

2. Select Your DSP

Select your DSP based on your specific needs, goals, and budget. Take the time to research and evaluate different platforms, perhaps even testing a few with smaller budgets, to find the best fit for your programmatic advertising strategy.

  • Inventory Access: Choose a DSP with access to diverse and premium ad inventory across various channels and formats.
  • Targeting Capabilities: Look for advanced targeting options to reach specific demographics, interests, and behaviors efficiently.
  • Technology & Performance: Evaluate the DSP’s programmatic ad buying efficiency, real-time bidding capabilities, and optimization algorithms.
  • Data Management & Integration: Ensure seamless integration with data management platforms and the ability to utilize first-party data.
  • Analytics & Reporting: Select a DSP offering comprehensive analytics and reporting for detailed campaign insights.
  • User Interface & Ease of Use: Opt for a user-friendly platform with intuitive navigation and setup processes.

Some popular DSPs you can choose from are: 

  • The Trade Desk
  • Google Display & Video 360 (DV360)
  • MediaMath
  • Adobe Advertising Cloud
  • AppNexus (Xandr)
  • Amazon Advertising
  • Centro Basis
  • Criteo

3. Set Your Campaign Parameters

Your campaign parameters define how your campaign will run, who it will target, and how success will be measured. Here’s a concise checklist to guide you when setting your campaign parameters: 

3.1 Objective

Define what you want to achieve (e.g., brand awareness, lead generation, conversions). Specify your campaign’s goals clearly in the ad platform to guide all other settings and decisions.

3.2 Budget

Set your total budget and daily spending limits based on your campaign objectives and forecasted returns. For example, if you have a $10,000 budget for a month-long campaign, you might set a daily spending limit of $333.

3.3 Target Audience

Specify demographics, interests, behaviors, locations, and devices. For example, if you’re marketing a high-performance sports car, target affluent men aged 35-55. They live in upscale city areas and have an interest in automotive technology and luxury lifestyles. They frequently browse automotive blogs and luxury goods websites.

3.4 Ad Formats

Choose the types of ads you will use (e.g., display, video, mobile). For example, video ads are great for engaging the younger demographic on YouTube or TikTok. 

3.5 Creative Specifications

Outline the creative requirements for your ads. This includes the design, messaging, calls to action, and overall branding. For instance, if your target audience values sustainability, highlight how your product or service is eco-friendly. 

Your ad design must feature natural motifs and earthy colors that reflect eco-friendliness. Use messaging that emphasizes the environmental benefits of your product or service. For example, “Made with 100% recycled materials” or “Join us in reducing carbon footprint.” 

3.6 Bidding Strategy

Decide on your bidding approach, such as Cost Per Click (CPC), Cost Per Thousand Impressions (CPM), or Cost Per Action (CPA). For example, if the focus is on maximizing website visits, a CPC strategy is most effective.

3.7 Flight Dates

Set the start and end dates for your campaign. For example, if you’re promoting a seasonal product like sunscreen, run your campaign during the spring and summer months.

3.8 Geotargeting

Specify geographic locations where your ads will be shown. For instance, if you’re a restaurant owner in New York City, you would target the ads in the NYC area.

3.9 Dayparting

Determine if your ads will run at specific times of the day or week. If data shows your audience is most active on social media during weekday evenings, schedule your ads for those times. This increases visibility when your audience is online.

3.10 Frequency Capping

Frequency capping limits how often the same user sees an ad over a set period. Set your limit in your ad platform’s settings to avoid annoying users. It’s better to set it to 1-2 impressions per user in a day. Make sure to gradually increase or decrease your frequency capping based on analytics insights.

4. Decide On Your Bidding Approach

It determines how you pay for ad placements and how aggressively you compete for ad space. Here are the most common bidding strategies to consider: 

4.1 Cost Per Thousand Impressions (CPM)

You pay a set amount for every 1,000 impressions your ad receives. Use CPM if your goal is to boost brand awareness and visibility. This method is great for top-of-funnel campaigns where exposure is the main objective.

4.2 Cost Per Click (CPC)

Payment is made for each click on your ad. Opt for CPC when you want to drive engagement. This can be used effectively for mid-funnel strategies to bring traffic to your site or landing page.

4.3 Cost Per Action (CPA)

This strategy charges you only when a user takes a specific action, such as making a purchase or signing up for a newsletter. This strategy is best when you can define a clear action that reflects campaign success. It’s effective for bottom-funnel tactics for conversion optimization.

4.4 Cost Per View (CPV)

Used mainly for video ads, where you pay when a user watches your video for a specified duration. Choose this to convey your message or influence viewer behavior. It’s particularly effective for engaging potential customers with compelling story-driven content.

4.5 Fixed Price

It ensures placement but may not always be the most cost-efficient. Go for a fixed pricing model when you need guaranteed placement in highly competitive spots. For example, homepage takeovers or specific high-traffic sites.

Each approach has its advantages and is suitable for different campaign goals. For example: 

  • CPM can maximize exposure
  • CPC can optimize for engagement
  • CPA ensures you’re paying directly for results

5. Go For Multi-Channel Programmatic Advertising

It uses automated technology to purchase ad space across various types of media platforms and formats. This approach allows you to reach your target audience wherever they are, whether they’re scrolling through social media, watching videos online, browsing websites, or even engaging with mobile apps. 

The image below is a good example of a display ad. It’s placed at the header to quickly catch the user’s attention.

04 programmatic advertising - Display Ad example

Here are the key channels to consider for a comprehensive multi-channel strategy: 

Programmatic Advertising Channels Description
Display Advertising Banner ads, rich media, & interactive ads on websites & apps.
Mobile Advertising Ads on smartphones & tablets through in-app ads, mobile-optimized web ads, & location-based marketing.
Social Media Advertising Ads on platforms like Facebook, Instagram, Twitter, LinkedIn, Snapchat utilizing deep targeting options.
Video Advertising Ads placed before, during, or after video content on platforms like YouTube, Vimeo, & streaming services.
Connected TV (CTV) & Over-the-Top (OTT) Advertising Ads on internet-connected TVs & streaming platforms, valuable for reaching cord-cutters.
Digital Out-of-Home (DOOH) Advertising Digital billboards & screens in public places, programmatically targeted to specific demographics or times.
Native Advertising Ads that blend with the content of the platform, such as sponsored content on news sites or social feeds.
Audio Advertising Ads on streaming music services, podcasts, & internet radio, personalized based on listening habits.

The image below is a great example of native programmatic advertising. It integrates with the webpage content, making it less intrusive and more engaging for readers.

05 programmatic advertising - Native Ad example

6. Use Data To Optimize Ad Campaigns

Using data lets advertisers improve the efficiency and effectiveness of their campaigns over time. 

Use data to optimize ad campaigns and make informed decisions to reduce wasted ad spend. Here is what the 5-step process involves: 

6.1 Collect Data

Gather impressions, clicks, conversions, and engagement metrics. Use sources like Demand Side Platforms (DSPs), website analytics, and CRM systems to get this information.

6.2 Analyze Performance

Examine the collected data to identify trends, patterns, and insights. Look for what’s working well and what’s not. You can also hire a marketing intern to help examine your campaign’s performance so you can concentrate on other critical tasks.

6.3 Segment Your Audience

Use the data insights to segment your audience. Understand the users who are most likely to engage with your online ads or convert. This way you can create more targeted and personalized ad campaigns.

6.4 Refine Targeting Criteria

Adjust your targeting parameters based on data insights. Focus on demographics, locations, or behaviors that show higher engagement or conversion rates.

6.5 Customize Ad Creatives

Tailor your ad creatives to better resonate with your audience segments. Use insights from data to identify the most effective messaging, imagery, and calls to action.

5 Benefits Of Programmatic Advertising

This section will explain how programmatic ads boost efficiency, targeting, and ROI. As you go through each advantage, consider if this matches your business goals.

I. Precision Targeting

Programmatic advertising uses your customer data (first-party) and data from outside sources (third party). This approach allows for very specific ad campaigns. Ads are tailored based on demographics, interests, behaviors, and optimal times of day.

This is ideal for targeting niche markets and specialty products. This is especially useful for businesses in the luxury goods sector, where you need to connect with an affluent audience like what these eCommerce sites (high-end watches, luxury nightwear, or premium stress relaxants) target.

II. Large-Scale Audience Reach

Programmatic advertising connects you to a wide network of websites, apps, and digital platforms. This makes sure your ads reach millions of users globally. 

With precise targeting, you can extend your visibility far beyond traditional media’s limits. This approach is set to become a major part of global digital advertising spend.

III. Low-Cost Ad Campaigns

You get better rates using algorithms and machine learning to buy ad space. With real-time bidding on programmatic platforms, you pay only for the ad space you need. 

This saves money, allowing you to invest more in expanding your campaigns.

IV. Multi-Device Campaign Integration

Users who interact with a campaign on multiple devices are 1.4X more likely to convert. Using programmatic advertising, you can reach your audience across smartphones, tablets, and laptops.

V. Insightful Analytics

Programmatic platforms give instant feedback on campaign performance. You can see which ads are effective, who is engaging, and how changes affect results. This allows for quick adjustments to improve campaigns.

Conclusion

Think about how these strategies will align with your marketing goals. Before you start, set clear objectives and define your target audience accurately. This way your programmatic campaigns will deliver the best possible results.

Wondering how to make your programmatic ads more effective and get real results? Check out Flying V Group. We specialize in targeting your ads precisely to avoid wasting your budget. Get ready to boost your online presence and increase sales, no matter the size of your business or budget. Let’s start making your ad campaigns more successful together.

FAQs

1. How Much Does Programmatic Advertising Cost?

Programmatic advertising suits various budget sizes. Ads are usually purchased on a cost-per-thousand-impression (CPM) basis, with rates generally ranging from $1 to $5. The more specific your target audience is, the more you’ll pay for CPM. This setup makes programmatic advertising flexible no matter the size of your business. 

However, these costs can increase significantly depending on: 

  • Demand Side Platform (DSP) used 
  • Specificity of your target audience
  • Market competitiveness 

2. What’s The Difference Between Programmatic And Display Ads?

Display ads Display ads are visual advertisements such as banners, videos, and interactive media. They describe the advertisement format found on websites and digital platforms. They aim to grab attention and guide viewers to products or services.

Programmatic advertising is a technology-driven method for buying media. It uses an automated system to place those ads across various channels. It relies on data and algorithms to target specific audiences in real time.

3. What Are The Types Of Programmatic Advertising?

Each programmatic advertising type offers unique advantages and is suited for different marketing objectives. Here’s a rundown of the 4 primary types

  • Real-Time Bidding (RTB): Ad impressions are auctioned in real-time as web pages load. You can bid in milliseconds for efficient ad space purchasing.
  • Private Marketplace (PMP): Invitation-only marketplaces where select advertisers bid on premium inventory. It offers more control and higher-quality placements compared to open auctions.
  • Programmatic Direct: It’s also known as “programmatic premium”. This method secures guaranteed ad impressions in advance from specific sites. It combines programmatic efficiency with the predictability of traditional buys.
  • Preferred Deals: You negotiate directly with publishers for specific inventory at set prices before it hits the open market. It ensures no competitive bidding and clear visibility of inventory.

Author Bio:

Burkhard Berger Novum™ NEW

Burkhard Berger is the founder of Novum™. He helps innovative B2B companies implement modern SEO strategies to scale their organic traffic to 1,000,000+ visitors per month. Curious about what your true traffic potential is?

  • Gravatar: vip@novumhq.com
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Written by Flying V Group

Founded in Orange County, CA, Flying V Group is one of the top full-service internet digital marketing agencies that specializes in website design, search engine optimization, pay-per-click advertising management, and social media marketing. We are specifically located in Irvine, California. Get in touch with us here!

April 22, 2024

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