If you’re looking to understand what programmatic advertising is and how it works, you’ve come to the right place! Programmatic advertising is an automated method of buying and placing digital ads on a given platform.
It uses machine learning and AI to handle the sale and placement of digital ads, streamlining the process into mere seconds.
Programmatic advertising uses historical traffic data and online targeting methods to put ads in front of people who are most likely to want to see them, which helps to improve conversions and ROI for businesses.
What to know about Programmatic Ad Bidding?
Programmatic advertising distinguishes itself by automating the bidding and placement of ads. An ad exchange is an online marketplace in which advertisers and publishers can bid on advertising space as well as buy and sell digital inventory.
This allows users to choose from an abundance of platforms and websites for the placement of ads, and advertisers can optimize their campaigns by gaining access to real-time data and reporting how their ads are performing at that moment.
Why Choose Programmatic Ad Bidding?
Programmatic advertising is a powerful tool that can help businesses reach their target audience more effectively and efficiently. By automating the bidding and placement of ads, programmatic advertising saves time and resources while improving conversions and ROI1. Here are some reasons why you should choose programmatic ad bidding:
#1. Cost efficiency:
Programmatic advertising allows businesses to target users on a granular level with the help of data, which can help eliminate waste on viewers who are unlikely to be interested in your product.
#2. Real-time optimization:
Programmatic advertising provides access to real-time data and reporting, allowing advertisers to optimize their campaigns and adjust their strategies in real-time.
#3. Improved targeting:
Programmatic advertising uses historical traffic data and online targeting methods to put ads in front of people who are most likely to want to see them, which helps to improve conversions and ROI for businesses.
#4. Streamlined process:
Programmatic advertising uses machine learning and AI to handle the sale and placement of digital ads, streamlining the process into mere seconds.
#5. Access to ad exchanges:
Programmatic advertising allows users to choose from an abundance of platforms and websites for the placement of ads, and advertisers can optimize their campaigns by gaining access to ad exchanges.
Programmatic Ad Bidding Strategies
Here are some of the most popular programmatic ad bidding strategies:
#1. First-Price Auction:
In this model, the highest bidder wins the auction and pays the amount they bid. This is the most straightforward auction model.
#2. Second-Price Auction:
In this model, the highest bidder wins the auction but pays the amount of the second-highest bid. This model is designed to prevent overbidding.
#3. Programmatic Guaranteed:
This model is used when a buyer wants to reserve a specific number of impressions from a publisher. The buyer agrees to pay a fixed price for the impressions, and the publisher guarantees that the impressions will be delivered.
#4. Preferred Deals:
This model is used when a buyer wants to reserve a specific number of impressions from a publisher, but doesn’t want to pay a fixed price. Instead, the buyer agrees to pay a premium over the average price of the impressions.
#5. Private Auctions:
This model is used when a buyer wants to bid on a specific set of impressions that are not available in the open market. The buyer and seller agree on a reserve price, and the highest bidder wins the auction.
#6. Real-Time Bidding (RTB):
This model is used when a buyer wants to bid on individual impressions in real-time. The buyer submits a bid for each impression, and the highest bidder wins the auction.
Automated bidding strategies leverage technology to help buyers make informed decisions about their bids. As a result, buyers can spend more efficiently, improve overall campaign performance, and save time by reducing the number of manual bid changes made.
What factors influence Programmatic Ad bidding decisions?
Programmatic Ad bidding decisions are influenced by several factors, including:
#1. Bidding strategies:
Programmatic advertising uses software that is driven by AI and machine learning to automatically bid on and purchase digital ad inventory. There are different bidding strategies available, such as maximize conversions and target CPA.
#2. Real-time bidding (RTB):
RTB refers to a buying method used to purchase a single impression via an auction-based system in real-time. Contrary to common misconception, RTB is not synonymous with programmatic.
RTB is always programmatic, but programmatic encompasses more than just RTB.
#3. Bidding models:
There are different bidding models available, such as first-price and second-price bidding models. In the first-price bidding model, the buyer pays the exact amount they placed for their bid.
In the second-price bidding model, the buyer pays $0.01 more than the second-highest bid.
#4. Bid factoring:
Bid factoring is a tool that gives advertisers control to optimize precisely targeted campaigns, and it does this by providing a means of manually defining multiple bidding tactics.
This feature allows advertisers to factor up or down on their bids based on variables such as geo, device, time-of-day, or day-of-week to optimize their campaigns.
These are some of the factors that influence Programmatic Ad bidding decisions. However, it’s important to note that programmatic advertising is a complex field, and there are many other factors that can influence ad targeting and delivery.
How to determine the right bid amount with programmatic Ad bidding
Determining the right bid amount with programmatic Ad Bidding can be a complex process, and there are many factors to consider. Here are some general guidelines to help you get started:
#1. Bidding strategies:
Programmatic advertising uses software that is driven by AI and machine learning to automatically bid on and purchase digital ad inventory. There are different bidding strategies available, such as maximize conversions and target CPA.
#2. Real-time bidding (RTB):
RTB refers to a buying method used to purchase a single impression via an auction-based system in real-time. Contrary to common misconception, RTB is not synonymous with programmatic.
RTB is always programmatic, but programmatic encompasses more than just RTB.
#3. Bidding models:
There are different bidding models available, such as first-price and second-price bidding models. In the first-price bidding model, the buyer pays the exact amount they placed for their bid. In the second-price bidding model, the buyer pays $0.01 more than the second-highest bid.
#4. Bid factoring:
Bid factoring is a tool that gives advertisers control to optimize precisely targeted campaigns, and it does this by providing a means of manually defining multiple bidding tactics.
This feature allows advertisers to factor up or down on their bids based on variables such as geo, device, time-of-day, or day-of-week to optimize their campaigns.
To determine the right bid amount, you should consider your campaign goals, target audience, and budget.
You can also use a CPM cheat sheet to help you plan and set initial ad group bids. The CPM cheat sheet provides a general guideline for planning and setting initial ad group bids.
While the dynamic nature of programmatic media buying does not allow us to forecast CPMs, our Client Experience team is available to help you tailor these guidelines to your campaign’s unique targeting.
What metrics to monitor with Programmatic Ad Bidding
To monitor the success of programmatic ad bidding, you can track several key performance indicators (KPIs) such as;l
1#. Impressions
#2. Click-through rate (CTR) clicks
#3. Viewability
#4. Frequency conversions
#5. Cost per acquisition (CPA), and
#6. Return on ad spend (ROAS)
These metrics can help you define campaign success, set proper goals, measure the results of your campaign, and understand where you need to improve.
To track these KPIs, you can follow these steps:
#1. Identify which KPIs will provide meaningful insights:
Choose the KPIs that align with your business goals and objectives. For example, if your goal is to increase brand awareness, then tracking impressions and viewability would be more relevant than tracking conversions.
#2. Set up processes for collecting data:
Use a data management platform (DMP) or a demand-side platform (DSP) to collect data on your KPIs. You can also use third-party tools like Google Analytics or Adobe Analytics to track your KPIs.
#3. Analyze and report results regularly:
Analyze the data collected and report the results regularly to understand the performance of your programmatic ad campaigns. You can use visualization tools like graphs and charts to present the data in a more understandable format.
What challenges arise with Programmatic Ad Bidding?
#1. Ad Fraud
One of the biggest challenges is ad fraud. Ad fraud occurs when automated systems simulate ad clicks and register fake impressions. This can lead to larger ad spend, smaller reach, and reduced ROI.
In fact, 22% of global total online ad spend (estimated at $84 billion) is wasted through ad fraud. To combat ad fraud, advertising networks are using advanced internal and third-party tools to disrupt ad fraud, such as spotting domain spoofing and unusual traffic pattern.
#2. Data Privacy
Another challenge is data privacy. Programmatic advertising uses large amounts of data from various sources to enable more precise targeting. However, using large amounts of data raises significant privacy concerns.
Consumers are increasingly aware and concerned about how their data is used. Regulations like GDPR in Europe and CCPA in California reflect this shift, imposing strict rules on data collection, processing, and storage.
Advanced data management platforms (DMPs) and customer data platforms (CDPs) allow you to manage data in a privacy-compliant way.
#3. Other challenges include;
Invalid traffic
Brand safety risks, and
Compromised ad opportunities .
However, there are ways to overcome these challenges and plenty of benefits to be had if you choose well.
What are the ways to overcome Programmatic Ad Bidding challenges?
There are several ways to overcome the challenges associated with programmatic ad bidding. Here are some of them:
#1. Combat ad fraud:
Advertising networks are using advanced internal and third-party tools to disrupt ad fraud, such as spotting domain spoofing and unusual traffic patterns.
#2. Ensure data privacy:
Advanced data management platforms (DMPs) and customer data platforms (CDPs) allow you to manage data in a privacy-compliant way.
Additionally, you can use contextual targeting, which relies on the content of the website or app, rather than personal user data.
#3. Address invalid traffic:
Invalid traffic can be addressed by using third-party verification services that can detect and filter out invalid traffic.
#4. Ensure brand safety:
Brand safety risks can be mitigated by using brand safety tools that can detect and block ads from appearing on inappropriate websites or content.
#5. Maximize ad opportunities:
Compromised ad opportunities can be addressed by using header bidding, which allows publishers to offer ad inventory to multiple ad exchanges simultaneously .
By implementing these strategies, digital marketers can overcome the challenges associated with programmatic ad bidding and ensure that their ad campaigns are more effective and efficient.
What are there best practices for manual ad bidding?
Here are some best practices for programmatic ad bidding:
#1. Set clear objectives:
Define your campaign goals and KPIs before you start bidding. This will help you choose the right bidding strategy and optimize your ad spend.
#2. Choose the right platform:
Select a programmatic platform that aligns with your campaign objectives. For example, if you want to drive conversions, choose a platform that offers conversion tracking and optimization tools.
#3. Use data effectively:
Use data to inform your bidding decisions and target the right audience. However, be mindful of data privacy regulations and use advanced data management platforms (DMPs) and customer data platforms (CDPs) to manage data in a privacy-compliant way.
#4. Combat ad fraud:
Use third-party verification services to detect and filter out invalid traffic and ad fraud.
#5. Ensure brand safety:
Use brand safety tools to detect and block ads from appearing on inappropriate websites or content.
#6. Maximize ad opportunities:
Use header bidding to offer ad inventory to multiple ad exchanges simultaneously.
By following these best practices, you can ensure that your programmatic ad bidding campaigns are more effective and efficient.
How does programmatic ad bidding align with overall marketing goals?
Programmatic ad bidding can help digital marketers align their advertising campaigns with overall marketing goals in several ways. Here are some of them:
#1. Efficiency:
Programmatic ad bidding uses automated tools to make the process of buying and selling ad space more efficient and cost-effective. This can help marketers optimize their ad spend and achieve better ROI.
#2. Precision:
Programmatic advertising uses large amounts of data from various sources to enable more precise targeting. This can help marketers reach the right audience with the right message at the right time.
#3. Flexibility:
Programmatic advertising allows marketers to adjust their campaigns in real-time based on performance data. This can help marketers optimize their campaigns and achieve better results.
#4. Transparency:
Programmatic advertising provides marketers with detailed performance data that can help them understand how their campaigns are performing and make informed decisions about future campaigns.
By leveraging these benefits, digital marketers can align their programmatic ad bidding campaigns with overall marketing goals and achieve better results.
What success stories exist with manual ad bidding?
There are several success stories of programmatic ad bidding campaigns that have delivered exceptional results. Here are some examples:
#1. Hestan Culinary:
Hestan Culinary saw over 300% increase in BOFU ROAS after switching to programmatic advertising.
#2. The Economist:
The Economist used programmatic advertising to increase its subscription base by 65%.
#3. Coca-Cola:
Coca-Cola used programmatic advertising to increase its sales by 20%.
#4. Airbnb:
Airbnb used programmatic advertising to increase its bookings by 300%.
These success stories showcase the immense potential and remarkable results that programmatic advertising can deliver. By following best practices for programmatic ad bidding, digital marketers can achieve better results and drive revenue growth.
What tools facilitate manual ad bidding?
There are several programmatic advertising platforms that can help digital marketers automate the buying and selling of ad space. Here are some of the most popular ones:
#1. Google Marketing Platform:
A unified advertising and analytics platform that offers programmatic advertising capabilities.
#2. Amazon Advertising:
A programmatic advertising platform that allows advertisers to reach Amazon customers on Amazon sites, apps, and devices.
#3. The Trade Desk:
A demand-side platform (DSP) that offers programmatic advertising solutions for digital marketers.
#4. MediaMath:
A programmatic advertising platform that offers omnichannel marketing solutions .
#5. Adobe Advertising Cloud:
A programmatic advertising platform that offers cross-channel advertising capabilities .
These programmatic advertising platforms provide real-time marketplaces for buying and selling ad space. They use advanced tools and algorithms to automate the process of bidding and buying ad space, making it more efficient and cost-effective for digital marketers.
By leveraging these platforms, digital marketers can achieve better results and drive revenue growth.
Conclusion
In conclusion, programmatic advertising is a powerful tool that can help businesses reach their target audience more effectively and efficiently. By automating the bidding and placement of ads, programmatic advertising saves time and resources while improving conversions and ROI.
