What Is Role Of AI In Programmatic Advertising?

AI in programmatic advertising uses machine learning over campaign metrics and user behavior to learn and understand audiences that are most likely to convert. This learning allows campaigns to be optimized in real-time by refining the audience targeting to increase conversions.

This learning over time helps in showing the right ad to the right customer at the right time. The campaign evolves by getting very specific so that an increasing section of the audience that is targeted, click on the native ads and convert.

Cost efficiency and time efficiency shine through as the advertiser only pays for ads delivered to the right audience at the right time. Computers driven by algorithms do the hard work of buying and selling ads, placement and optimization of ads in real time (also known as Real Time Bidding or RTB), with hardly any human intervention and consequential errors. The non-performing ads can be weeded out thus reducing wasteful spend.

US Programmatic Ad Spending Forecast 2020

In 2019, programmatic ad spending will reach $59.45 billion in 2019, accounting for 84.9% of the US digital display ad market. This report looks at the trends driving investment to $81.00 billion by 2021, breaking it down by transaction type, format and device.

In 2020, display ad spending in the US will rise by 5.5%, despite the pandemic. This report outlines our complete estimates of digital display ad spending, including breakouts by format, transaction method, industry, major ad sellers and more.

Source: Emarketer.com

What Is Programmatic Advertising?

Programmatic advertising is the use of automated data-driven technology in the form of machine learning algorithms, to buy and sell ad inventory online.

This encompasses all types of ads like mobile, native, video and display on various platforms like desktop, tablets, mobile phones, digital streaming and connected television. For increased user convenience, this huge variety in advertising is built into a single technology platform.

Evolution of Display Advertising

In its infancy, display advertising started off with advertisers or buyers contacting the publishers or sellers to buy advertising space online.

The publishers built websites with rich content. They rented ad space to potential advertisers. Though cumbersome, this system worked back then.

Early Example Of Display Ad Network

Google AdSense in its early days is a typical example. Publishers created sites rich in content and signed up for AdSense.

Google connected the advertisers with the publishers by buying space on publisher websites and showed the advertisers’ ads through contextual targeting. Google maintained the whole system of paying out publishers for renting ad space and showing ads of buyers, which it continues to do today in AdSense’s advanced form.

Agencies And Ad Networks

Agencies jumped into the fray to connect advertisers with their target audiences. The media planners specialized in creating media plans for which they had to contact publishers who had access to the relevant audience.

With the internet exploding, and millions of sites coming into existence, ad inventory supply outpaced demand. This is when Ad Networks came into the picture to help media planners access different categories of publishers’ unsold ad inventory at varying price levels depending on the quality of audience targeted.

Supply Side Platform (SSP)

Supply side Platform was born to help publishers handle the complexity of selling categorized ad space to agencies and individual advertisers. This platform managed the relationship between publishers and ad networks, by helping publishers control how their ad space is sold and get the best bang for their buck from the third parties.

Display Side Platform (DSP)

A similar platform evolved from the buyers’ perspective to help agencies and advertisers in the effective buying of ad inventory. It was called Demand side Platform. This allowed buyers to manage their ad buying within a single platform.

Today, we have a superior single technology platform incorporating both publisher and advertiser interests whereby DSPs and SSPs have merged to form the Real Time Bidding (RTB) programmatic advertising platform, driven by automation and data.

Programmatic Advertising In 2020-21

Programmatic advertising campaigns enables advertisers to buy variety of ads on publishers’ sites using algorithms and data, all the while ensuring the right audience is targeted at the right time, and respectful of the advertising budget.

The superior data driven algorithms via real time bidding marks the buying and selling of ad impressions in an auction in real-time. Winning the auction shows the winning buyer’s ad at the specified spot on the seller’s website. All this happens on a single platform integrated with ad exchanges and SSPs. Examples of ad exchanges include Google Ad Exchange and OpenX.

Superior Targeting

In pay per click (PPC) advertising, targeting and relevance are the cornerstone of a great PPC campaign. Programmatic advertising campaigns allow high degree of targeting and relevance through control, precision and adaptability, similar to PPC campaigns.

The ads that do win the auction on selected sellers’ sites is based on a combination of cost and the likelihood of delivering best results.

Identifying The Right Customer

Gone are the days of – Build the site and they will come – kinda thinking. The machine learning algorithm is always learning in the background to identify your ideal customer and locating them at the right places on the web. Your business ads are shown at those locations where the chances of conversion are really high.

Selecting The Right Ad

The algorithm also chooses your best ads to display in the right context. This is also based on the ad’s previous performance related to user behavior. The smart ad placement aims for high click through rate (CTR) and high conversion rates, whatever the call to action may be.

In addition, the algorithm also does the work of negotiating the cost of the ad placement for a specific location on the publisher’s site so that it is a prime location that has users’ eyeballs and not wasting money on a spot that is hidden from user view.

Real Time Bidding (RTB)

As per our Programmatic Advertising discussion above, RTB can be considered its critical subset.

Real time bidding invokes an auction in which all the advertisers’ bids are considered and the winner’s ad is displayed in the slot that is being bid for. All this is done in real time and the decision made in lightning quick time.

Competing in RTB Auction

Imagine you are an advertiser bidding in an RTB auction. You are in the auction every time a page loads, based initially on your budget. You compete with other advertisers over an array of different sites as you are all competing for specific audience demographics, geographical location, interests and behaviors.

In this case, you are targeting young females in the 20-35 age bracket who are NFL sports fans. Your ads can show on a variety of sites matching this audience and some can be more expensive than the rest. This way, your costs average out and your budget setting is maintained.

How Real Time Bidding Works – RTB 101

For the nitty gritty on how RTB works, this video by Marco Muzzi is an excellent one

Direct Buying

Direct buying is a bulk order of impressions from a particular site, say CBS Sports. You can manually filter out the impressions by a range of factors to restrict the size of the audience. You are buying ads for a specific spot on a certain site.

RTB Vs Direct Buy

RTB takes into account several factors, the main ones being CPM (cost per thousand impressions) and personalization factors in terms of audience targeting.

As you spread your ad over several sites for specific ad slots, your costs stay within your pre-determined budget. The downside to RTB is that if your CPMs are too low, your ads are never going to show.

RTB reporting in real time shows the sites where your campaign works well. If you were to report a campaign that involves traditional media buying, you as the marketer have to track and collect the data scattered across different sources and compile the report yourself.

Direct buying is more rigid in that you get guaranteed number of impressions for a fixed ad spot on the publisher’s site.

This tends to be much more expensive but better suited if you have well defined goals and a fixed period of time to attain them. It also cements the relationship between the publisher and advertiser if the buy is over a longer period of time.

RTB Infographic

This is an awesome infographic from Clearcode that shows the complexity of an RTB Ad Exchange in an infographic.

source: https://clearcode.cc/blog/how-the-real-time-bidding-rtb-ad-exchange-works-infographic/

Keys To Programmatic Buying Success

Programmatic buying is vital for any business to succeed because of its smartness and huge reach. No wonder it is the fastest growing segment in the digital marketing industry. Below are 4 important keys to achieve success in programmatic buying.

Creative Component

Apart from ensuring your campaign ads very well targeted for optimal exposure, the key is the creative for ads. The messaging should be unambiguous and conforming with your brand identity. Create variety of assets and A/B test them to see what resonates well with your audience segment.

Audience And Context

The key to choosing the right programmatic publishing partners is to analyze the audience they attract by way of their content. It should be similar to the niche your business is in. Your business and theirs should share similar audience demographics.

It may not be possible to find partner sites that are identical to yours. This is where context plays a vital role. If you are selling virtual reality headsets, you would be better off targeting virtual reality websites than generic news sites that carry article on virtual reality.

Prepare To Spend More $$ At The Start

Programmatic advertising lets you manage your ad spend in real time thereby gaining maximum exposure for your budgeted spend.

The key here is to make your ads show up and that requires higher bids at the start of the campaign. This enables you to collect click, cost and conversion data rapidly. This trade-off for a higher spend is worth its weight in gold.

With all this data, you can tweak your campaign to optimize it for higher ROI. You have a campaign optimized at the right spend levels that nets proportional conversions. This saves you $$$ in the long run.

Making Up For That Personal Touch

Personal touch in advertising is associated with the benefits gained by working with a or very select group of publishers where the ad slots are already fixed and the ads are homogeneous with the tone, appearance and context of the pages on which they reside.

This advantage is nullified by its inability to scale, the prime reason why programmatic advertising is so popular on automated platforms. In programmatic bidding, you have to ensure your ad is targeting the right audience, on the right device in the right contextual environment.

This can be achieved as follows

• Create ads that blend into a number of potential environments that you envisage when setting up your campaign
• Select a technology platform that lets you work with brands of your choice. These brands would be closely aligned with your goals and style.

Benefits of Programmatic Advertising

Let’s summarize the benefits below

• Superior transparency and control in terms of monitoring in real-time, the sites where ads are shown, the audience viewing the ad and the cost of the ad
• Real-time reporting to show the performance of a campaign from launch to end and keep tabs on it all the way
• Efficient measurement in real-time allows the campaign to be optimized better with tweaks along the way to make it totally efficient in terms of ROI for actual budgeted spend
• Superior targeting of customers based on IP targeting, geographical targeting and contextual keywords
• Retargeting is the cream of the crop as it targets the majority of the audience that do not convert on their first visit to the site
• Amplified reach to target millions of potential customers on the internet at any given point of time, based on audience demographics and other filters specific to the campaign being run.

Does AI In Programmatic Advertising Work?

In short, a huge YES. With figures above from eMarketer, the programmatic advertising spend for 2021 is expected to be $80 billion. This engulfs all other digital marketing channels.

With smart machine learning driven algorithms and superior forms of audience targeting, programmatic advertising has come to stay and is going to dominate the web for a long time to come, with enhanced machine learning capabilities.

At Traffic Alignment, we offer content marketing and seo services to small businesses to help them gain a strong foothold in the digital space, increasing the traffic to their site and hence optimize the conversions for their products/services.