What is Programmatic Advertising?

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Advertising is a funny game. You place ads in places where you hope prospects will see them, with messages that you hope will change their behaviour. In the past, it was pretty straightforward: call up your local bus bench, billboard, TV, or Radio Account Manager, ask them for rates, sign a contract and you’re good to go. What has really changed with online is the capacity to report and track results with a finer degree of success, and the ability to customize delivery and messaging programmatically.

Media Buyer vs Media Machines

This used to be the sole domain of the media buyer; an ace advertiser who had relationships with publishers and advertising networks, knowledge of a wide variety of advertising platforms, a keen eye for a good deal on impressions, and past experience on which mediums and messages returned results for a variety of industries. The downsides of everything running through media buyers and media sellers:

  • The process was labour intensive and where there are people involved, man-made mistakes happen. Ads fail to run, cost over-runs and impression under-runs happen, and when creative mistakes like typo’s happened, they sometimes took a long time to fix.
  • Gaps in advertising inventory were undersold
  • Targeting wasn’t as accurate as it could be. If you knew some of your prospects watched a popular TV show, you’d have to advertise to ALL the people on that TV show, most of whom weren’t your prospects.

Programmatic to the Rescue!

Programmatic advertising, sometimes called programmatic media, or programmatic marketing, automates the buying, placement, and sometimes the optimization of advertising. Programmatic advertising has roots in traditional media: many of the ads you see on TV, radio, print, etc are the result of a programmatic buy. It’s important to note that programmatic is a very general, loosey goosey kind of term. Let’s talk about some of the features that are available under programmatic, and some of the platforms that use them.


Real Time Bidding (Auction Model)

Take a big step away from the traditional way of doing a deal with a salesperson for a placement, and you’ve got auction models. Auction models do a great job of fulfilling advertising inventory and ensure that advertising rates are closer to real market demand. They also enable advertisers to vary the rates that they’re willing to pay based on how well targeted the ad buy is. Google’s AdWords was a HUGE step forward on the auction model due to the breadth of targeting methods and their ad auctions. It had, and still has, the capacity to dynamically auction ad buys on millions of key phrases every day. With an auction happening dynamically as the user searches, taking into account advertiser spend limits, ad quality, and user satisfaction, it was Real Time Bidding on an entirely different planet as past efforts had been.

Results Based, Algorithm Bidding

Take the real time bidding model that enables you to pay what you want for placements, take the fantastic business goal KPI’s that online advertising enables you to track, mash them together with an algorithm that buys based on results, and you have results based, algorithm bidding. Like no other advertising possible, this allows for scalable, predictable business results. On a small scale, you can configure 2 advertisements to show for a particular Ad Group in AdWords and let the platform decide which performs better. On a slightly larger scale, you can have conversions influence bids using Enhanced CPC. Finally, you can stop worrying about bidding altogether and give up control to the machine with AdWords Conversion Optimizer. It takes full control over bidding to get your advertising dollars to deliver the most prospects possible.


With enough historical conversion data, Conversion Optimizer can calculate what to spend on Google search phrases to get desired results. Like magic, it stops bidding on search phrases that cost a lot and don’t provide results, and starts spending more on those hidden gem phrases that bring home the bacon.

Display Campaign Optimizer does the same thing for image ad campaigns. It uses machine learning technology to understand which placements on which websites generate the best results.

As with most digital advertising platforms, the initial business logic comes from a traditional practice, but the enhancements lie in the tracking, real-time planning, segmentation and automation. Programmatic advertising, like any digital platform, has become a permanent fixture because it is effective and the results are continuous and long term.