This is the last of three parts of Your Handy Guide to Programmatic Advertising which, co-authored by Amit Halawa-Alon and Paul Jacobson. The first part is available through this link and the second through this link.
One obvious benefit is that real-time exchanges are far more efficient than the manual approach. Publishers can establish their parameters for incoming ads and advertisers and advertisers can make their bids, set their budgets and let the underlying systems match winning bids with inventory and place ads almost immediately. A side benefit for both advertisers and publishers is that programmatic advertising liberates them from relatively mundane tasks to focus on bigger and more elaborate campaigns.
Programmatic advertising is more than just an efficient marketplace. We’ve mentioned how programmatic advertising enables better ad targeting and how this can result in ads that are more appealing because they are more relevant to the consumers who see them. Targeting tactics are varied and very exciting for advertisers and publishers, alike.
Search retargeting enables advertisers to target consumers based on historical search keywords. This tactic exploits consumers’ intent which is evidenced by the things they are searching for. The challenge is how long search terms remain relevant for advertising purposes but these search terms remain far better intent signals than more general signals used in more traditional ad placements.
Data used to inform search retargeting is gathered from website search widgets, analytics mechanisms, search engines and other similar sources. The emphasis is on your data sources and not third party data providers.
Audience targeting is similar to search retargeting although it relies more on behavorial data from third party data vendors. These datasets tend to be more substantial and better segmented into more useful segments. The challenge with audience targeting is that the external data comes with a premium on top of the usual inventory cost advertisers would expect to pay.
Perhaps one of the more interesting targeting tactics is contextual targeting. This method uses contextual or semantic analyses to analyze website content and categorize it for ad targeting purposes. It is an effective strategy for limiting ad spend by focusing on the most relevant target market but it is also possible to focus too narrowly, especially if combined with other targeting methods so it requires a fairly good understanding of the ideal target market.
Contextual targeting works best with more semantic signals so focus on text-rich web pages and is used effectively in advertising models such as in-image advertising. Another benefit of this tactic is that the cost premium on top of the usual cost for inventory is relatively small.
Taking programmatic advertising further
You probably have a good sense of just how effective programmatic advertising can be when it comes to desktop display ads. You may be thinking about what this could mean for mobile and that is where programmatic advertising becomes even more interesting.
Consider how much time you spend using your mobile phone each day and how smartphones have become primary computers for a growing number of people. Your mobile phone is probably almost always with you and when you need to find something, do something on the go, you increasingly turn to your smartphone to get things done.
Mobile devices offer advertisers the benefit of real-time contextual awareness. Your phone probably has location-aware services running in the background and a growing number of mobile apps are using your location at any point in time to present you with highly relevant information. The Foursquare app uses signals from your daily activities and from your friends’ activities to learn what appeals to you and then makes personalized suggestions tailored to your preferences.
Facebook just updated its mobile app to include a similar feature called “Place Tips”:
From friends’ recommendations to information about the places and things that interest you, Facebook helps you connect with the world around you. To better show you this content at just the right place and time, today we’re launching a new feature called place tips. Place tips will show you fun, useful and relevant info about the place you’re at.
The opportunities for advertisers include hyper-local targeting that may be time-specific too. An example could be being able to tell potential customers about a limited special on pizza or ice-cream that is only available for a few hours from a particular store in their immediate vicinity. Alternatively, advertisers could simply use consumers’ geolocation information to present them with ads for a local neighbourhood retailer when those consumers are in the area. It is a great way to limit spending and increasing conversions with hyper-relevant ads.
The emerging “wearables” trend takes this even further. Imagine being able to send a notification to a consumer’s smart watch that a nearby store has a special on bottled water when the consumer is on her way back from a run which she used her smart watch to track.
As programmatic advertising becomes more personal, a significant challenge is taking adequate steps to protect consumers’ personal data. While personal data is a powerful tool to make ads more relevant and engaging, processing that data adds a fair amount of scrutiny from regulators and consumer watchdogs which are increasingly concerned about misuse of that data and seemingly frequent data leaks.
Participants in the programmatic advertising ecosystem are going to have to think carefully about justifications for processing personal information; data retention and data security.
Is programmatic advertising just hype?
The short answer is “no”, despite all the jargon being used in discussions about it. Programmatic advertising isn’t going to magically fix low conversion rates but it does offer advertisers a powerful option to present more relevant ads to more specific market segments and, in the process, preserve limited advertising budgets.
It can be tempting to think that programmatic advertising is the only game in town. It is certainly a compelling option but it comprises a variety of methods of placing ads programmatically. More traditional, direct ad placements are still attractive in many situations and the lines between the more traditional ad placement models and programmatic advertising are increasingly blurred and traditional channels connect to ad exchanges, Supply Side Platforms and Demand Side Platforms.
Remember, too, that this isn’t just about technology and data driven advertising for the sake of it. Beyond the efficiency, targeting and cost benefits to advertisers and publishers, consumers are the ultimate beneficiaries of programmatic advertising because it should make advertising a more useful and relevant experience. To quote AdWeek’s article “Programmatic Advertising for Dummies”:
Beyond automation, programmatic should be about making advertising better, some argue. “This is about selling dog food to dog owners,” as one executive puts it succinctly.
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