Understanding Programmatic Advertising: A Beginner’s Guide

If you or your business uses online advertising, you may have heard people rave about how programmatic ads are disrupting digital marketing.

Your ad could be brilliant, but if it’s not in the right place and targeted at the right people, your campaign will never reach its true potential.

According to recent studies, almost 90% of consumers are open to having two-way conversations with brands about their products or services. This emerging brand of conversational commerce gives brands an opportunity to use well-placed (and well-crafted) programmatic ads to spark back-and-forth engagement.

As AI in digital marketing continues to evolve and become widely adopted across all areas, working with the right autonomous technology will help to boost output while improving the return on investment (ROI) of targeted ad campaigns of all shapes and sizes.

Did you know? Even in 2022 alone, around 75% of leading marketers used AI technology to improve their programmatic advertising and media buying initiatives, according to Statista.

So, if you nod when people claim programmatic advertising is a game-changer but don’t understand why, you’re in luck.

Here, we break down what programmatic advertising is, explain targeting best practices, and examine four brands that are doing it right.

What is programmatic advertising?

Programmatic ad buying is the use of software to buy digital advertising. While the traditional method includes requests for proposals, tenders, quotes, and negotiation, programmatic buying uses algorithmic software to buy and sell online display space.

A sophisticated way to place advertising, it uses traffic data and online display targeting to drive impressions at scale, which results in a better ROI for marketers. It can also yield great results for both SMEs and global brands. So don’t ignore it even if your organization is small. 

But, it’s not the complete automation of the ad-buying process. Traditionally, you manually prepare insertion orders or ad tags, which can be labor-intensive. With programmatic advertising, marketers have more time for the optimization and improvement of ads to drive campaign success.

What are programmatic advertising platforms and tools?

Programmatic advertising is a powerful tool and global spend is expected to surpass $594 billion in 2024, and beyond (Statista). The US is a big spender on programmatic ads—but the UK and countries in the MENA region are catching up fast (OnAudience).

How and why is programmatic advertising successful?

Quite simply: yes, it is successful because it’s efficient, targeted, and scalable.

One of the key drivers of the uptake in programmatic advertising is AI and how it is changing marketing.

At this point in the game, 76% of leading marketing decision-makers believe that the influence of AI will shape their programmatic advertising better in the coming years. A testament to the value that this ever-evolving branch of digital marketing has to offer brands across industries.

Programmatic advertising works for marketers as it’s an efficient use of both time and resources. And, armed with increasingly sophisticated autonomous capabilities, brands and marketers alike stand to improve their output, as well as the impact, of their targeted programmatic advertising strategies.

With programmatic advertising, you can rely on an algorithm that will determine where your ad money is best spent. 

All you have to do is feed your programmatic solution information about your campaign, audience, and key performance indicators, and the algorithm will do the hard work.

If you’re looking to optimize ad spend, boost your organization’s ROI, and resonate with your target audience, programmatic advertising has the potential to help you thrive.

How can you succeed with programmatic advertising?

Now that we’ve established the benefits of programmatic advertising, let’s explore how you can use it to your advantage in digital marketing campaigns.

1. Know your marketplace

Figure out what’s involved by doing some research. As a marketer venturing into a new area of advertising, you will encounter many new ideas and terms, so take the time to get to know them.

By understanding the programmatic advertising playing field and gaining a deeper understanding of how your competitors are approaching their campaigns, you’ll forge foundations for your own efforts. Knowing your terminology will help you get ahead of the pack, too.

2. Set your programmatic advertising goals

As with anything in digital marketing, it’s important to have your goals set from the start. To do this, you should use existing data to determine the type of advertising awareness you need and build an effective strategy that will help you to determine short- and long-term goals.

Here are some programmatic advertising goals you could consider:

• I want to establish more brand authority in my niche
• I want to drive more mobile app engagement
• I want to push more people to certain products or services
• I want more people to sign up to my SMS or email marketing channels
• I want to build trust and inspire repeat custom
• I want to increase overall digital sales

By outlining your core goals, you’ll give your programmatic campaigns and content a definitive direction, earning a healthier ROI from your efforts in the process.

3. Keep the human touch in mind

Just because programmatic advertising relies on increasingly sophisticated algorithms and machines, that doesn’t mean it is devoid of a human touch. 

There are different platform types, some of which offer fully- or half-managed services, such as War Room. Others provide technical platforms, like Digilant, that allow you to run your programmatic buying activities.

From there, you will need to allocate skilled marketers to plan, control, and optimize your buying. Ultimately, to enjoy the best possible success, you will need to find the perfect marriage between automation and intelligent human intervention. So, don’t rely on the algorithm alone to yield the best results for your campaign.

To strike the perfect balance between autonomous technology and human intervention, it’s vital you work in harmony with the programmatic advertising technology that aligns with your goals.

By knowing how to work well with your AI-powered programmatic ad platform of choice, you’ll be able to understand how to optimize your inputs and target the right customer segments at the times in their journey when they’re most likely to engage.

4. Protect your brand from fake news

As discussed, one challenge of programmatic advertising is that its reliance on algorithms can lead to ads appearing in the wrong place, such as sites that promote fake news.

The evolution of AI has actually stoked the fake news fire when it comes to marketing content and communications—programmatic advertising is no exception.

Since last year, the generation of ads containing fraudulent information and articles crammed with harmful propaganda has risen by an alarming 1,000%. The sheer output alone threatens to flood the digital space with misinformation and content that could seriously damage a brand’s reputation.

To avoid this issue and navigate your ad strategy with diligence, you should ensure that your demand-side blacklist is constantly updated and monitored for inappropriate sites. Some platforms allow for the exclusion of entire categories from ad spends, which can be particularly helpful.

Another option, which is important if your product is sensitive, is to use a whitelist. This will give a list of approved (rather than denied) sites. 

This approach will narrow your ability to reach your audience and possibly make it more expensive, but it will ensure no explicit or offensive material is associated with your ad.

If you use an agency, ensure they do all they can to exclude low-quality and sensitive sites from having your ads served on them.

5. Watch for programmatic ad fraud

Around 22% of paid ad spend was eaten up by fraud in 2023 alone.  Still now, consumer privacy and ad fraud is also an issue for advertisers, especially on mobile and Connected TV (CTV).

So how can your business deal with fraud? The first thing to do is look at budget vs. reach. Marketers have been fixated on reach when it comes to programmatic advertising, which can leave campaigns open to abuse through bots. 

If a deal looks too good to be true when bidding for ad space, then it probably is! Try not to fixate on reach but couple it with traffic quality to avoid generating fake traffic. 

Another thing your organization can do is ensure ads are compliant with privacy regulations as many of Apple’s or Google’s apps that do not have a privacy policy often lead to ‘dangerous permissions’. Avoid being one of those brands. 

The core types of programmatic advertising

When it comes to programmatic advertising, there are a host of AI-driven platforms out there to explore. 

Let’s take a look at the core platforms and concepts in the space.

Demand-side platforms (DSPs)

DSPs are like superheroes for advertisers and agencies. They swoop in to help them buy ad space across the internet, using cutting-edge tech like real-time bidding. 

This lets advertisers target exactly who they want, based on things like age, interests, and browsing history.

Supply-side platforms (SSPs)

SSPs are like the backstage managers for publishers. They help websites sell their ad space to the highest bidder using the same real-time bidding tech as DSPs. This is an invaluable platform for publishers looking to drive revenue from their websites or digital assets.

Ad exchanges

Picture a bustling marketplace where ads are bought and sold in the blink of an eye. These ad exchange spaces bring advertisers and publishers together, making sure everyone gets their chance to connect with the best-targeted ad placements.

Data management platforms (DMPs)

DMPs are highly analytical programmatic advertising buying platforms. They gather and analyze all sorts of data about internet users, helping advertisers understand their audience on a deeper level and target their ads with pinpoint accuracy.

Ad networks

Ad networks are like the smart interconnectors in the programmatic world. They link up online advertisers with a wide range of publishers for the best possible ROI-driven programmatic advertising outcomes.

Ad servers

In many ways, ad servers are the unsung heroes that ensure ads get delivered to the right people at exactly the right time in their journey. They’re like the traffic controllers of the digital advertising world and help to restore order as well as pinpoint accuracy when it comes to highly-targeted programmatic advertising campaigns.

What are good examples of programmatic advertising? campaigns

These real-world examples of programmatic advertising demonstrate the power of this cutting-edge promotional medium in action.

Magners

By harnessing the power of programmatic advertising platforms, prDOOH technology, and data-driven AI innovation, leading alcoholic cider brand Magners launched a mobile-based retargeting campaign that resulted in universal marketing success.

This impressive programmatic advertising initiative saw the brand launch head-turning interactive mobile ads driven by machine learning-powered geo-fencing technology in four UK cities where people were most likely to spontaneously buy tickets to an event.

By harnessing autonomous technologies to build detailed targeted audiences in each city, Magners was able to deliver ads that inspired action at precisely the right time and location as (targeted) people wandered around city streets.

This innovative approach resulted in Magners selling out all four of its sponsored events, with people on the waiting list hoping for a piece of the action at every location.

Missing People – Child Rescue Alert

As something of an innovator in the space, the charity Child Rescue Alert moved to programmatic ads in 2016 in response to a lack of financial resources to “save lives”.

The move to programmatic allowed the charity to move from issuing one targeted appeal ad a week to targeting users by the areas in which children have gone missing.

Director of Funding Ross Miller said in Marketing Week: “When we first started using out-of-home (outdoor advertising), 50% of children we appealed for were found alive, when we switched to a more programmatic use of out-of-home our response rate went to 70%. People respond to a message that is relevant to either where they live or a location.”

IHG

Hotel group IHG, the parent company that owns the Holiday Inn and Intercontinental chains, began running programmatic ads to encourage users to book directly with them, rather than with third-party sites like Expedia or Booking.com.

In the travel industry, third-party sites can take commissions of between 15% and 24%, so direct spending can make a huge difference to hotels.

IHG’s programmatic ads targeted consumers who were thinking of making a reservation with an ad including a `book direct price’ option.

As former COO Matt Luscombe told Marketing Week, the campaign was a major success.

“By using advanced targeting capabilities through programmatic, we are able to find a broader range of people looking for accommodation and target them with our book-direct message. Buying lots of banners online just didn’t have any effect except for surge marketing, which has been tremendously effective.”

Luscombe says that IHG’s plan was a shot in the arm for hotel brands.

“The hotel industry has now woken up,” said Luscombe, who claimed other hotel brands including Hilton and Marriott are now following his company’s lead.

Audi

To prepare for the launch of its customizable vehicle, automotive brand Audi set itself the aim of further personalizing its marketing efforts and crafting a campaign that lived up to its iconic slogan, ‘Vorsprung durch Technik’ (‘Advancement through Technology’).

Working in close collaboration with Google using display and Video 360, Audi took a data-driven approach that combined all customer data rather than relying on siloed information. That way, by using programmatic techniques the marketing team could optimize its most valuable consumer touchpoints.

In addition to capturing behavioral data for improved marketing segmentation, the  brand offered users the chance to customize their dream car online from a choice of 6,000 possible combinations. These individual designs were then used to create personalized dynamic ads that resulted in double the efficiency of standard ads. While buying programmatic ads resulted in a conversion rate four times higher than ads bought through traditional methods. 

By buying ads programmatically, you can enjoy an average conversion rate four times higher than those purchased using traditional methods, and Audi is a testament to that very notion.

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