Advertising's new addiction: Programmatic buying

Programmatic ad buying has permeated every media platform and brand marketers are taking notice.  In 2013, marketers spent $3.36 billion on programmatic ad buying — and eMarketer estimates that it will soar to $8.5 billion in the next 3 years.

In fact, in 2013 nearly 50 percent of all brand marketing budgets were allocated to programmatic ad spend and it is expected to rise to 83 percent by 2017.

By 2020, I predict that 95 percent of all digital ad buying will be done programmatically.

But, in order to maximize the performance of an ad through programmatic efforts, marketers must understand the evolving technology and how to build a winning strategy.

What is programmatic?

Programmatic buying is the automation of media buys through digital platforms.

It is a more efficient delivery method for the same content that is already being pushed by brand marketers. The system automatically optimizes ad placements and sells the inventory at a price that advertisers are willing to pay.

However, just like any technological breakthrough, programmatic comes with its own set of challenges.

For agency and brand marketers, the top three programmatic ad concerns include the quality of the inventory, transparency of the process and the technology used to place the ads. Let me address each one of these concerns.

Quality inventory?

Some say that programmatic ad buying is limited to low-quality, remnant inventory. This is no longer the case and in today’s marketplace many premium placements can be accessed programmatically.

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Private marketplaces allow advertisers to access premium inventory that a publisher has reserved for specific buyers. This invitation-only auction is similar to an open auction, except a publisher restricts participation to select buyers and advertisers. It still requires a one-on-one interaction and relationship with the publisher, but gives advertiser an opportunity to access premium inventory programmatically.

Transparent and targeted

Programmatic auction technology has been criticized for its lack of transparency and fraudulent traffic.

There are a lot of companies that are making strides to match true buyer intent and pricing goals with available inventory. Look for services that provide real-time results and expose the true valuations of seller assets. This includes data monitoring through third party verification tools like DoubleVerify that can guarantee the ads are contextually relevant and the traffic is authentic.

One way an advertiser can address transparency concerns is to incorporate whitelisting and blacklisting into their campaign. This way, advertiser can guarantee that their ads only get placed on the sites that matter most.

Performance

Using data-driven targeting, brand marketers can optimize their programmatic ad spend and learn as they go.

Unlike a traditional media buy, brand marketers should focus on buying the audience instead of impression. Consider using retargeting services like AdRoll or ReTargeter to follow the user across the internet. If an advertiser manages their budget and paces their spend, they can effectively reach the audience that cares about their content.

The performance of the optimization algorithm becomes smarter as advertiser continues to purchase. The more data, the more insights, the better the campaign.

Set to soar

Programmatic ad buying is making strides across the industry as marketers continue to incorporate it in their campaign budgets. It is easy to see the scales tipping when the biggest social networks in the world, Facebook and Twitter, are joining Google in investing heavily in programmatic ad buying.

Facebook recently doubled down on programmatic by purchasing one of the largest video ad networks, LiveRail, for over $400 million.

In order to maximize the value of programmatic, brand marketers need to use intelligent delivery guided by advanced targeting and sophisticated, goal-oriented metrics.  If we learn to use it right, programmatic just might prove its power in the same way that search engine marketing eventually did.

Above: Alex Debelov

Alex Debelov is the co-founder and CEO of Virool, a leading video distribution platform that has promoted videos for thousands of companies including Intel, Sony, Coca-Cola, Samsung, Anheuser Busch and Mitsubishi. Alex graduated from Y-Combinator in 2012 when he founded Virool to help anyone promote their YouTube video, from the struggling musician to the Fortune 100 company.  Prior to Virool, Alex co-founded The Kairos Society, the world’s largest student entrepreneurship organization. Alex graduated from Babson College (#1 in Entrepreneurship by U.S. News and World Report) with a degree in Technology Entrepreneurship and Design. For his achievements in growing Virool, Alex has been recognized as Entrepreneur Magazine’s Top 5 Emerging Entrepreneurs in 2013, and was named a Top 5 College Entrepreneurs by Entrepreneur Magazine in 2010.