Almost $60 billion will be spent on programmatic advertising this year. According to eMarketer, 84.9% of all U.S. digital ad spending will be spent programmatically in 2019, and this number is only expected to increase. Programmatic isn’t new, but what advertisers need to know how to use it efficiently is constantly expanding. So, keep reading for a break down of how programmatic works and the major challenges associated with it.
What is Programmatic Advertising?
Simply put, programmatic advertising is the digital automation of buying and selling online advertising using data to decide which ads to buy and how much to pay for them,” explains Kenneth Kulbok of LinkedIn Programmatic.
This technology streamlines the process of consolidating digital advertising efforts for media such as banner ads on websites, mobile ads on apps, and in-stream videos in one platform.
“If you’re asking me what the thing of the future is, it’s sequencing and making sure you’re serving relevant content, and not overexposing people to one message,” Steve Weeks, director of media strategy and planning at Adobe, told eMarketer earlier this year. “A programmatic platform allows you to do that better than you could going direct.”
How it Works
Using artificial intelligence (AI) and real-time bidding (RTB), programmatic ads are placed for online display, social media advertising, mobile and video campaigns, and traditional TV advertising.
One of the primary buying tools used in programmatic advertising is an automated buying platform called a demand-side platform (DSP). Advertisers and agencies use DSPs to purchase ad inventory from exchanges cheaply and efficiently.
On the other hand, a supply-side platform (SSP) is software that allows online publishers (aka people who publish ads) to manage their ad inventory. SSPs are most often used by publishers to fill their inventory with advertisements and to sell those ads.
So, DSPs are what advertisers use to buy ad space and SSPs are what publishers use to sell ad space.
Programmatic Recommendation: Publisher Manager—a module within Lineate’s DataSwitch platform—manages auctions across unlimited DSPs and mediates across dozens of 3rd party SSPs to ensure brands get the best price possible for their ad space. Publisher Manager uses custom bidding algorithms, a creative audit tool to guarantee ad quality, and dynamic price floors to automatically adjust ad prices based on industry trends and advertisers’ bid histories.
Programmatic Advertising Challenges
Lack of Platform Transparency
Transparency within advertising is a hot topic, and the issue is no different in regards to programmatic ads. In fact, according to eMarketer, a lack of transparency around media buys was the #1 challenge of programmatic buying according to media agencies worldwide in 2018.
At the end of the day, transparency and accountability result in better ROI for advertisers. Because of this, the demand for transparency continues to grow and the SSPs and DSPs that maintain transparent practices will win over their counterparts.
EMarketer reported that 78% of programmatic buying tech owners and 45% of non-owners believe a lack of transparency around media buys is a major challenge within programmatic advertising.
“The theme [in ad tech] over the last 12 months seems to be, how does the industry help programmatic become more transparent?” Katie Evans, Telaria COO, told AdWeek. “And we’re seeing a lot of measurements and metrics rolled out—not only for preventing fraud—but simply to allow buyers and brands to know what’s going on.”
In an attempt to reduce potential risk advertisers will continue to opt for platforms that implement safeguards, provide whitelist and blacklist capabilities, know their inventory, and are frank about fees.
Quick Tip: If transparency within programmatic advertising is a concern for your company, Lineate’s Publisher Manager can help. Publisher Manager packages first-party audience and viewability data with inventory to guarantee ads that are clear about who’s likely to click.
Marketers are well aware of the huge role data plays in their strategies and campaigns. However, data can’t be useful unless it’s clear and credible. A lack of access to accurate and consistent marketing data a common challenge among all types of businesses.
According to Dun & Bradstreet’s 2019 Data-Driven Marketing & Advertising Outlook, “the big challenge with data is actually getting to it and using it.”
In fact, 31% of marketers surveyed said measurement and metrics are the biggest hindrances their company faces with programmatic advertising. When marketers were asked about their top obstacles to data-driven marketing success, a third said inaccessible customer data was their largest issue.
Additionally, eMarketer reported that 52% of media agencies worldwide said access to quality data was their biggest challenge of programmatic buying.
In 2016, programmatic advertising contributed $25.48 billion to the digital advertising market, which increased $17.5 billion from the year before, eMarketer reported.
This type of advertising isn’t going away any time soon. Reports show programmatic use is holding steady, and programmatic ad spend will continue to rise. So, what are you doing to cut through the ad noise and capture consumer attention with better programmatic advertising?
To ensure you know exactly who it is you’re targeting when filling ad space, schedule a demo of our data orchestration platform, DataSwitch, today to see how our Publisher Manager platform can increase bids, boost fill rates, and improve eCPM for your brand.