Programmatic Advertising in 2024: FAQs for CMOs

A brand marketer's guide to one of the fastest-growing areas of digital media buying

If you work in any area of marketing in 2024, you've certainly heard a lot of buzz around programmatic advertising (or programmatic marketing). But what does it really mean, and how's it any different from digital advertising?

This quick but comprehensive guide to programmatic media buying will help you build stronger relationships with your media agency and make smarter paid media investments.

What is programmatic advertising?

What are programmatic advertising platforms?

What are the benefits?

What are the risks?

Which media channels can be bought programmatically?

Is Google Ads considered programmatic?

What is the difference between digital advertising and programmatic?

What is the role of first-party data in programmatic advertising?

How is AI used in programmatic advertising?

What is programmatic advertising?

Programmatic advertising (or programmatic marketing) is a method of buying and selling digital media (ad inventory) in real time. Programmatic advertising is powered by AI and machine learning to power the auctions themselves, serve targeted ad experiences to consumers, and optimize towards KPIs for efficient marketing efforts.

What are programmatic advertising platforms?

The programmatic auction has two platform sides: demand-side platforms (DSPs) and supply-side platforms (SSPs). 

DSPs allow ad buyers, inclusive of media agencies (like Exverus), to bid on display, online video, connected TV (CTV), digital out-of-home media, audio, and rich media across multiple partners in milliseconds. Examples of DSPs include DV360, The Trade Desk, Yahoo, Nexxen, etc.

Meanwhile, SSPs allow media owners and publishers to manage their advertising inventory efficiently. Examples of SSPs include Magnite, Google AdX / Ad Manager, PubMatic, and OpenX, among others.

Thanks to Eskimi.com for this handy visual

What are the benefits of programmatic advertising?

• Precision Targeting: Programmatic allows you to target specific audiences based on various criteria such as demographics, interests, and behavior. This precision targeting allows advertisers to reach the right people, at the right time, with the highest likelihood to complete the desired outcome (purchase, video view, download, subscription, etc.)

• Real-time Optimization: With programmatic, you can adjust your ad campaigns in real time based on a suite of performance data. This flexibility and ability to learn delivers better results, such as higher click-through rates or conversions.

• Efficiency and Cost-effectiveness: Programmatic advertising automates the ad buying process and provides transparency and efficiency. Additionally, the ability to target specific audiences and outcomes reduces wasted ad spend, making advertising campaigns more cost-effective.

• Access to Premium Inventory: Programmatic platforms often have access to a wide range of ad inventory (and always expanding), including premium placements on popular websites and apps. This access allows advertisers to reach target audiences across a variety of channels with added visibility, control, and opportunity to optimize towards the most successful tactics and placements.

• Data-driven Insights: Programmatic advertising provides detailed data and analytics on campaign performance. This information can help advertisers understand their consumers better and make informed decisions for future campaigns.

• Cross-device Targeting: Programmatic advertising reaches people across multiple devices, including desktops, mobile devices, and connected TVs.

• Brand Safety & Suitability Controls: Programmatic platforms offer tools to ensure ads are displayed in brand-safe environments pre- and post- bid. These parameters can help protect a brand’s reputation by avoiding ad placement on inappropriate sites or within unsuitable content. High quality media placements yield stronger results. 

What are the risks associated with programmatic advertising?

• Complexity and Fragmentation: The programmatic advertising ecosystem is complex and fragmented, with multiple platforms and technologies involved. This can make it challenging for advertisers to navigate and optimize their campaigns effectively without a strategic investment and activation strategy in place.

• Ad Fraud: One of the biggest concerns with programmatic advertising is ad fraud, where bots or made-for-advertising (MFA) websites generate fake ad impressions. This can lead to wasted ad spend and reduced campaign effectiveness, but there are many ways to protect brands from this risk.

• Lack of Transparency: Without proper oversight and transparency, programmatic advertising may seem like an opaque ad buying process, but actually allows for increased transparency and control vs. traditional advertising buying practices.

The best way to maximize the benefits and minimize the risks of programmatic buying is to work with a seasoned media agency that specializes in media planning and data analysis across the ever-changing traditional and digital media landscape.

Which media channels can be bought programmatically?

Programmatic platforms can be used to buy media across a variety of channels, such as: 

• Display Advertising: This includes standard display banner ads, rich media ads, and native ads that are displayed on websites and apps.

• Video Advertising: This includes pre-roll, mid-roll, and post-roll video ads on YouTube and other video streaming services. Optimal video ads are between :06-:30s for digital advertising.

• Mobile Advertising: Includes all mobile devices, smartphones, and tablets, across apps and mobile websites.

• Social Media Advertising: Social media platforms offer similar buying platform options for ads, allowing advertisers to target specific audiences on platforms such as Meta (Facebook/Instagram), TikTok, Snapchat, and LinkedIn. There are also ways to connect social and programmatic activations for continuity in digital advertising campaigns.

• CTV: Connected TV devices, such as smart TVs and streaming devices, allowing advertisers to reach audiences watching streaming content. Over-the-top (OTT) video content is often included in this category.

• Audio Advertising: Audio ads that are played on streaming services, podcasts, and other audio platforms.

• Digital Out-of-Home (DOOH): Some DOOH providers offer programmatic buying options, allowing advertisers to purchase ads displayed on digital billboards, screens, and signage -- for example, Vistar and Place Exchange.

• Paid Search: While not traditionally considered part of programmatic advertising, some platforms offer programmatic buying options for search ads, allowing advertisers to bid on keywords in real time and can connect to other media types for optimization and continuity.

• Retail / e-Commerce: Includes on and offsite retail media networks, e-commerce digital shelves, and purchase data and trends that can be used for enhanced audience targeting and measurement for online and offline sales.

Is Google Ads considered programmatic?

Yes! Google’s Display & Video 360 (DV360) platform allows advertisers to programmatically target specific audiences, buy ad inventory across a wide range of channels, and optimize campaigns in real time. 

What is the difference between digital advertising and programmatic advertising?

Digital advertising is a broad term that encompasses any form of advertising delivered through digital channels, such as websites, social media, mobile apps, and search engines. It includes both traditional direct buying and programmatic buying. 

Programmatic advertising is a specific method of buying and selling digital ads that uses automation and data to optimize targeting and campaign performance. 

What is the role of first-party data in programmatic advertising?

Programmatic buying is all about precisely targeting the right audience segments with the right advertisements, so understanding your audience deeply is essential. 

First-party data is information collected directly from a brand’s customers. This is the most valuable data because it is unique, relevant, accurate, and in most cases only available to that brand.

• First-party data is sourced from website behaviors, purchase history, surveys, contact forms, etc. and can also be referred to as CRM data.

Comparatively, third-party data is publicly available and comes from other external (sometimes unknown) sources. First-party data enables strong audience builds to implement strategies and tactics within advertising campaigns (re-engagement/retargeting, suppression, modeling/lookalike etc.)

(As a side note, zero-party data is information that a current or potential customer has willingly and actively offered, though this is sometimes used interchangeably with first-party data.)

In addition to audience targeting, advertisers can also use first-party data for personalized messaging, retargeting, measurement and attribution, and increasing revenue.

How is AI used in programmatic advertising?

Long before AI became a cultural phenomenon, it was the engine driving programmatic advertising platforms through advanced machine learning.

AI-powered algorithms analyze vast amounts of data to identify patterns and trends in user behavior – that data is used to create highly targeted audience segments based on demographics, interests, and online behavior, as mentioned above. 

As AI technology evolves and advances, so too will programmatic buying capabilities. But it’s not perfect yet – let our Managing Director, Talia Arnold, explain:

Learn more about the potential use cases for generative AI in media planning overall, and subscribe to our Paid Media Insights newsletter for more insights and updates on the rapidly evolving world of programmatic advertising.