Title: Why programmatic advertising may be the future of media buying

Mike Page's picture
Authored by Mike Page
Posted Wednesday, May 15, 2019 - 10:39am

Programmatic advertising (PA) rose only lesser than a decade ago but now, it is the most powerful market in the global advertising area. Already now, more than 60% of all ads are programmatically placed on the internet sites thanks to RTB platforms with no human involving behind it. Sure, people do still take part – in starting promo campaigns, measuring them, allocating budgets, adopting decisions, and so on. But the way the advertisement is shown is a computerized manner that is led by Artificial Intelligence. 

Based on what programmatic advertising knows how to place an ad?

Let’s imagine that you sell sneakers. In the old times, 5 and more years ago, you would probably go to the office of some advertising agency and tell that you want a commercial campaign to start. They would offer you a range of sites to buy the banner ads on them and later on, you would sign a contract, deposit money to their account, and blah-blah. These actions would take you several weeks or a month to work out, agree on details, and launch the campaign. 

Now everything of this can be done just in hours, online, using RTB platform. You define your ad campaign parameters, enter them to a PA platform, and this platform will start placing your ads on various sites following its internal logic and self-learning intelligence. 

So how the platform knows where and how to place your ad? Let’s consider following the knowledge that you sell sneakers.

In the parameters of your campaign, you define a portrait of a user from your target audience to whom you want to make impressions of your advert. The platform takes this data and then looks for such clients from people that visit the sites that you define (taking into account blacklist, white list) and their geolocation. It also considers the price of adverts show on these sites, including the range of minimum and maximum price for 1 impression and history of this user online on all available time of record, particularly differentiating their interest in this site or the category of this site (let’s say, ones connected to sneakers or sports in general).

But that’s not just that:

  1. When a client is found, it takes milliseconds for a platform to go to an online auction and select from ads that are waiting to be shown. Based on the highest bid for this particular impression now, it selects the highest bid (which pays the most money for 1 impression) and shows this ad – yours in this case – to a user. 
  2. The AI on the background of PA platforms takes into account hundreds of factors and build their connections in order to make the placement of your ad as efficient as possible, trying to show it only to those people who will click on an ad and buy your product with the highest probability.
  3. All decisions, bids, and solutions take roughly several milliseconds to complete – and they recurrently repeat for each new impression for each new online page, doing so zillion of times a day on the entire Internet, which make them million times more effective than dealing with a human being who would adopt decisions on what ad shall be shown where and buying a place for that, manually dealing with bureaucratic way of agreeing and all connected paperwork. 

The above-mentioned makes everyone believe that programmatic advertising and RTB networks not only may be the future of media buying but it is a heart of media buying already.