What is Programmatic Advertising?

The projection for 2019 of the digital advertising market in India is 30% of the total investments in advertising. 57% of digital adv is linked to display ads (banners, videos, etc.), while 43% are related to other types (text ads, for example). Among the display ads, around 20% will be linked to Programmatic Advertising (30% private marketplace; 75% open marketplace).

In 2018, two trends were recorded in India:

  • Exponential growth of investments in private marketplaces (20% of the total);
  • Investment growth in video formats (18% of the total).

The fundamental principles of Programmatic Advertising can be summarized in 3 characteristics:

  • Programmatic: all the phases of the process take place within an automated platform;
  • Real-time: the impression is purchased at the same time as it is available;
  • Data-driven: the purchasing logic of advertising spaces is transformed. We move from buying space to buying an audience.

The forecast of average growth of the Programmatic Advertising market worldwide is + 36% / year. In the USA, 55% of the video ad is delivered through Programmatic Advertising platforms and in 2018 it will grow up to 63%. Also in the USA, 85% of publishers and 72% of advertisers use Programmatic Advertising.

The point of view of the SSP

The basis of Programmatic Advertising is artificial intelligence, but the component that makes an advertising campaign efficient is certainly the intellectual capacity of man. Exploiting the computing power of PCs allows people to be more efficient and able to perform tasks in less time. However, the decision-making and strategic activity remains external to the automation of the Programmatic Advertising and is fundamental for the success of the advertising action.

The objective of the SSPs is to make the buying and selling of spaces more and more automated and one of the main activities is the exchange of information with the DSPs.

Until 2018 the online ad developed through 3 main channels:

  • Direct sale of advertising space through the sales office;
  • Advertising networks;
  • Real-time bidding.

Subsequently other channels were developed such as private marketplaces where the Programmatic Advertising model was being used.

The idea that emerges today is to bring all channels into a single platform that allows publishers to manage placements internally automatically (even those sold by the sales office).

The point of view of the DSP.

DSP is the main tool used by advertisers to plan their own adv campaigns. DSPs allow the customer or agency to enter and plan the advertising campaign within the platform in total autonomy.

The re-targeting actions that can be planned through the DSPs are very accurate because the DSPs learn information about users based on their web browsing. The information comes from the publisher’s websites and is found through cookies. The advertiser thus acquires information on audience behavior and can monitor it within the DSP platform.

Furthermore, thanks to the use of monitoring pixels, installed on the advertiser’s website, users are further profiled based on the actions carried out on the site and based on conversions. In this way the user profiling is maximum and is defined based on the navigation on the advertiser’s site and on the other monitored sites. Many DSPs also provide a crawler that analyzes the advertiser’s site and all monitoring pixels installed, including those of third parties (eg Google Analytics).

DSPs acquire ad exchanges (transaction information) from SSPs to create clusters based on the target. They also acquire socio-demographic information on the target using also third-party tools, an activity that is not very effective in India due to the low quantity of advertising delivery which in turn causes a regular change of the reference target at a socio-level demographic. The analysis and acquisition of behavioral data through cookies is instead more effective for the Indian Territory.

Furthermore, for better efficiency and guarantee of publication, the DSP usually sign agreements with publishers and SSPs so as to be able to publish the announcement at the best time.

The DMP point of view.

The objective of DMP is to maximize the effectiveness of advertising campaigns on Programmatic Advertising platforms. The strategy shared by DMPs is to exploit data to generate valuable information.

The main functions of the DMP are:

  • Data collection: acquiring data from the outside (visits to the store, purchase, mail, etc.). The data is reorganized by the DMP, a specific scheme is not needed;
  • Data management: organize and manage data;
  • Data activation: use the data aiming at the audience;
  • Synchronization with DSP and SSP.

DMPs acquire a multitude of data:

  • First part data: data owned by the company (owned media data);
  • Second part data: data acquired from your digital campaigns (paid media data);
  • Third party data: data acquired from external suppliers (external data

DMPs can also retrieve data from display ad displays. In this way they exploit the number of views made by a single user to understand what he has seen and what he is interested in.

DMPs associate this data to a person, exploiting:

  • The identity of the profile;
  • Events (views, clicks, etc.).
  • Through these two elements and thanks to the collected data, a story is reconstructed that is associated with a profile.

DMPs try to qualify profiles through this information.

DMPs usually also have a semantic engine: through a crawler they analyze the pages viewed by the profiled users and in this way (associating the profiles / interests to the pages) they divide the web pages into the 32 IAB categories to identify the topics covered.

Moreover, the inferential engine of the DMP allows us to infer and identify all the users who are part of a given target, comparing them with an already profiled reference sample.

DMPs synchronize with DSPs using segments (users with common features) that can be determined through 3 modes:

  • Direct: through cookies;
  • Clusters: socio-demographic profiling (eg 25-year-old women).
  • Twin: segment extension through comparison with a sample of users already profiled directly (eg registered on the site).

These segments are used later in the DSP campaigns.

DMP is also useful for publishers (publishers) because it allows users to learn more about the site. This is information that can be sold to SSPs (advertisers) who thus acquire more information about the audience.

About 40% of users delete cookies, causing a “forfeiture” of the profile. It must be considered however those cookies are once again present at the first reopening of the browser, so the profile is rebuilt within a few hours.

Industry trends for 2019.

  • Ad blocking: 56% of users use tools to block advertising, which is why the advertiser’s challenge is to create non-invasive advertising in order to try to reverse the trend.
  • Secure Ad Serving: the new iOS 9 allows advertising to be blocked anywhere inside the device.
  • Death of Flash: with the new Chrome Flash update it definitely becomes an obsolete technology. The new Chrome and the new Firefox do not allow you to view multimedia material in Flash, unless you activate it manually.
  • Internal Ad Tech consolidation: new and increasingly innovative products and services are being created every day regarding the adv. For this it is necessary to know in detail the evolution of the sector.
  • Native advertising: the ad must be contextual and non-invasive. This is the answer to ad blocking.
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