“What is programmatic?” It’s a question we’ve all heard and is frequently asked and answered. Programmatic refers to the process of using software to buy digital advertising. This occurs most frequently in real-time bidding, where advanced technology handles the auction process at a speed it’d be difficult for a human to match.

Essentially, programmatic is an execution method that enables you to govern interactions faster and at a greater rate. However, this doesn’t necessarily mean those interactions or bids are any or always smarter. The reasons of this become clear when we look at the origins of programmatic more closely.

Thinking back to the time before we had an advanced digital advertising landscape, advertisers had little choice but to use context as a proxy for the audience who consumes the content against which they were buying an ad. As a result, they had to make assumptions based on who was believed to be interested in what content. For example, the assumption that certain magazines and newspapers have a certain audience and reader profile. In the early days of digital advertising, this was the model initially employed.

But is soon became clear this was inefficient for all involved. Marketers were wasting spend through inefficient buying and publishers had to rely on sales teams to sell their entire inventory up front. Every unsold impression was lost revenue, and large operations teams had to juggle optimising their yield across potentially competing insertion orders and meeting their advertisers’ KPIs.

The subsequent challenges were twofold. Publishers wanted to make sure they were achieving the optimum rate on every impression, and marketers wanted to make sure they only purchased the people they were interested in. Crucially, both needed to buy people, and not touch points. That’s where data comes in.

Categorising consumers

Fortunately, it was possible to trace the individual behind a given impression. A unique identifier (a device ID or cookie) are present on all devices and browsers, which is linked to every request for content. As these identifiers are sent with every request, there are two immediate upshots:

· It is possible to build up an understanding of an individual based on how they engage across a site, by linking together requests with the same identifier. Moreover, it is possible to define audiences – collections of identifiers – based on common patterns of engagement
· It is possible to serve specific content to a specific identifier. This allows advertisers to buy the audiences – collections of identifiers – that are most valuable to them

Importance of the auction

It’s a well-known fact that an auction is the fairest way for a supplier to get the best price for a unique product. This also applies for an individual impression generated on a given publisher site. Fundamentally, the auction process needs to be as close to instantaneous as possible to ensure that an advert is returned quickly enough so that the user sees it and the consumer experience is not interrupted.

Technological developments have enabled the smooth facilitation of this in recent years. The rise of “real-time bidding” allows publishers to run an auction on any impression generated on their sites, ensuring that they receive the best market price for each impression and that they only bid on impressions generated by target users.

However, it’s impossible for marketers to manage all of these different strategies at scale across all their platforms and partners, in real time. So instead, the answer is to define strategies that can be processed automatically, matching audience types with predefined and pre-designated bid values: generating a programmatic approach to buying individual impressions generated by individual consumers.

The future of programmatic?

For marketers to be savvy about who they’re buying, they need to know what that identifier means to them. Combining all data ensures that they can make the best and most accurate decision, and to do this, they need a tool that allows them to transport consumer insight from whatever repository it lives in and make it available in the programmatic landscape where it can be used in real time. The answer to that question is the DMP and data-informed decision making – which is how programmatic as an execution capability really comes into it.

 

By Alastair Bulger, ‎pre-sales and strategic development director at Experian

 

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