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An Intro to Programmatic Buying

Posted by Neil Pace on Thu, Aug 21, 2014 @ 16:08 PM

Having been in the media industry for several years, when a new buzzword starts making the rounds I wonder if it will stick around. Oftentimes, it's the latest thing everyone talks about and claims to be an expert on, but soon enough people can't even remember what the term even meant. The latest is "programmatic" or programmatic buying. This is a new buying method that was primarily developed for digital display but can also be used for pre-roll, Facebook ads, even television. The promise of programmatic is huge so I hope it's here to stay, but the biggest problem with programmatic right now is that no one seems to know exactly what it means. They just know they need to be doing it. In future posts, we'll expand on the details of the programmatic buying process but for now I thought I'd go over the basics so that we're all on the same page.

A number of industry professionals have their own verbose definitions, and the IAB has listed their own explanation. In the simplest terms, programmatic buying is using technology to automate processes and using data to improve results of your media buy. Let's get this straight first: programmatic does not mean fully automated. There is no button to push or switch to flip that will just create a media campaign and do all the work for you. Additionally, there will never be a future where all humans will be replaced by robots performing programmatic buys. We'll save that kind of thinking for movies from 1984 and its first awesome sequel (because we all know parts 3 and 4 weren't that good).

Programmatic buying can achieve something your media buyers can't through the old method, and that's serve impressions based on the profile of the specific user. Before programmatic, digital buys were typically purchased one site at a time or bought across a network of sites with similar content and themes. Your media team was placing ads on sites that were close to your target audience based on the overall demographic of the site's viewership or the content of the specific page. We couldn't be sure that your ad was being viewed by your specific target. Now, using first and third party data, programmatic allows you to serve your ads to the right person at the right time. If your target is a woman aged 25 to 54 with a household income of $75,000 or more with a propensity for fashion-forward shopping, that's who will see your ad. And it doesn't really matter what site the ad appears on because you know you're reaching your specific target. We call it being "site agnostic." Don't worry; you can still blacklist sites to make sure your ads aren't associated with questionable content.Programmatic IS partially automated. Not the part where strategy and tactics are developed by your media team. That part will always require a human element because the nuances of customer profiling and building strategies are still something that a computer can't perform effectively. Programmatic automates the time-consuming parts historically performed manually by your media buyer, making them think of switching careers: selecting the sites right for a given client from the millions of options available, choosing inventory among the hundreds of options on those sites, confirming availability of that inventory, and negotiating rate for each piece of inventory. Not to say doing it this way is wrong; it's just not efficient. Programmatic can do all this in a matter of microseconds. In using programmatic, your media team can now dedicate more time and resources on improving your campaign's strategy.

So now you know it's partially automated and you know it can reach your specific target. Now you want to know about the price. And this will make you extremely happy. Because most of the process is automated, it is very inexpensive compared to non-programmatic buying. Buying the old way was usually done at a fixed cost per thousand impressions. The more specific a placement you wanted, the higher the rate. The automation in programmatic buying removes nearly all the middlemen from standard buying, so there's no markup, service fees, or any other add-on charges. And the premium placements that would have driven up costs are still available. It can also be purchased in a bidding format, so you can set the price you want to pay much like a pay-per-click campaign, ensuring you never go over budget and keep your costs low. This is what really appeals to our clients.

There you have it--the basics of programmatic. There are details behind the scenes that we will expand upon in later posts, but now you have a better understanding of what programmatic is and what it isn't. The efficiencies and improved effectiveness achieved through this method will benefit both you and your customers. If you're interested in implementing programmatic buying for your media programs, or if you want to utilize our expertise for any other media programs you're planning, click here and get in touch with us. We're ready to help.

Topics: media buying, programmatic, digital media

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