The Basics of Programmatic Ad Buying [INSIGHT]

Looking to tap the efficiency and keen insights promised by programmatic? Here’s what you need to know about programmatic platforms and partners.

Simply put, programmatic is a data-driven way to buy and sell ads through new technology platforms. Why should advertisers care? Because studies say that within two years, nearly 90% of all digital advertising will be bought and sold this way.

Programmatic appeals to advertisers because it can give them a much clearer idea of their return on investment. It provides the insights they need to tell what is working, what could be working better, and how to change things to improve results.

Interested? To help get you up to speed, here’s our primer on programmatic—a basic overview; what to look for when choosing technology platforms; and our approach to programmatic.

What makes up the perfect platform?

Gigantic piles of ad inventory: Online publishers deliver billions of pages to consumers daily, and these pages include spaces for advertisements—inventory for buying ads. Ad exchanges aggregate inventory from many different publishers, large and small, and to excel in the programmatic game, a platform needs access to gigantic piles of ad inventory, on PC and mobile, to give advertisers the best choices.

Unique ad inventory: In addition to offering lots of inventory, a successful programmatic platform needs to offer high-quality premium inventory you can’t get anywhere else. Typically, premium inventory is guaranteed, which means if an advertiser buys it, they are guaranteed that their ads will show up there.

Unique data: A great programmatic platform combines three major types of consumer data to give advertisers valid insights into campaign performance and return on investment:

•     First-party data: Publishers such as Yahoo have lots of proprietary data about their consumers. In our case, this data comes from a variety of sources including registration, search, mail, and media consumption, as well as behavioral, demographic, and geographic data.
•     Second-party data: Advertisers have their own data about the people who click on their ads and buy their products.
•     Third-party data: Information services companies such as Experian, comScore, and Nielsen have additional information about consumer behavior and purchasing that publishers and advertisers don’t have.

Precise targeting: A key tenet of programmatic is being able define a target audience an advertiser wants to reach (e.g. Males 15-34) and then find them, wherever they may roam in the digital realm.

Insights: More than data, insights are learnings from ad campaigns. They are ah-has. A great programmatic buying platform brings data together so it can be analyzed and understood, using tools that make predictions and recommendations that lead to those ah-has.

One such tool is a data management platform (DMP), which allows advertisers to create a target audience using first-, second-, and third-party data, reach that audience anywhere on the Web, and accurately measure what worked best in order to improve results over time.

Algorithms: When dealing with piles of inventory and complex combinations of data, algorithms help smart people make smarter decisions. Programmatic platforms use them to automatically optimize an ad campaign by shifting money from one area that might not be working so well (e.g. search ads) to another area that is working better (e.g. native ads).

Another important algorithmic component of programmatic is real-time bidding (RTB). An advertiser bids for specific ad inventory through an auction, and if it wins, its ads show up instantly.

A choice of buying styles: Top programmatic platforms offer both self-serve and managed service.

•     Self-serve is like ordering a la carte from the menu at a restaurant. This service can be used by millions of advertisers, who pick their target audiences, identify how much they’ll spend, create ads with images and text, and launch their campaigns. As each campaign runs, they get data and insights about its progress, and they can make adjustments to improve results.
•     Managed is like a like concierge service. All our big advertisers have account managers who help them manage their campaigns on our network. These managers know a lot about our audience and our network and can help big advertisers get the most from the money they spend with us.

A “buyer-centric” approach: In a traditional advertising buy, the publisher controls the inventory a buyer can get by offering packages that determine location and some targeting parameters for the ads. Programmatic lets the buyers determine which inventory they’ll purchase from a publisher’s offer.

Courtesy of Yahoo Insights