Programmatic Advertising and How It Came To Be

Programmatic advertising evolved because of the need to reach specific audiences intelligently and at an effective cost.

Before we dive into the origins of programmatic first let me share a basic best practice of marketing – targeting.

Correct targeting is one of the most important things you can do in any marketing or advertising campaign. A campaign with the wrong targeting is going to fail. I mean, not all campaigns require highly specific targeting, for example, consumer goods like toothpaste can appeal to almost everyone (unless you don’t care about hygiene.) But generally speaking, there is always some targeting that needs to be done in order for a campaign to be successful.

As a side note, even when the target is broad, it is best to focus on one segment. When the consumer feels you are speaking to them, that’s where the magic happens.

Let’s consider TV spots for a moment when a particular TV show or channel is bought it’s because the research has shown that a particular target is watching that show. Spots are then run in those time slots in order to try and reach that target.

Before programmatic, in order to reach a specific audience individual sites were bought. It went something like this; a planner would log into ComScore, enter target demographics and the then look at the top list of sites and go and request a proposal from them. This planning methodology has been around since the mid 90’s (except for ComScore which didn’t come on the scene until 99). Even to this day many agencies that are not up to speed with programmatic use this methodology when planning for their clients.

Here is how programmatic made this model much more efficient:

Programmatic said:

programmatica dialogue

Here is an example, I like fishing. I may be reading the news online at the moment but as a past time, I still like fishing. So if we were to do things in a traditional sense, the media buy to target me would look something like this:

SITECOUNTRYIMPRESSIONSCPMTOTAL
Outdoors.comUS
100,0008800
Fishing.comUS100,0009900
Yahoo.com/fishingUS100,0007700

But you may only be on those types of sites 10% of your time online.

With programmatic, the aim is to target me as an audience not to target a specific property or site in order to reach the audience. Here’s an example:

AUDIENCECOUNTRYIMPRESSIONSCPMTOTAL
Audience>FishermanUS
100,0004400

Interests>Fishing
US100,0003300

Past Purchases>Bass Pro Shops
US100,0005500

See the difference?

In the second plan which is based on the programmatic principles of audience targeting, not only do we reach our primary target but we do so at a lower cost.

DISCLAIMER: *Programmatic is not to be considered a low-cost alternative*

Yes, often times there is the added benefit of paying less for the target audience but programmatic as a strategy should not just be considered for lower cost.

This post is obviously a very condensed version of programmatic advertising and it’s rise in popularity among marketers, but I hope it provides some insight into why programmatic has become such a big deal.

Comments

This site uses Akismet to reduce spam. Learn how your comment data is processed.