What Programmatic Ads Are and How They Work

Programmatic advertising is big. So big that marketers devote around 54% of their budgets to it, according to a Statista report. But is it the right investment for your business?

You may have heard that programmatic can be extremely effective but costlier than other digital ad options. That can make it a trickier choice. Deeper knowledge can help you decide.

Here at Zoe Marketing & Communications, we can help. We've been in digital marketing for 15+ years and work with high-quality programmatic providers.

In this blog, we'll walk you through several key factors, including:

• What programmatic is, simply

• Who ads show up for

• Where ads appear and what they look like

• How it's different from other digital ads

• How long to invest in programmatic

• What kinds of companies programmatic is good for

• Why you'll need to team up with a media agency

• A sense of cost

By the end, you'll feel more grounded and confident about what programmatic is, what it can bring to your business — and possible next steps.

What programmatic is, simply

Programmatic refers to buying digital ads via an automated bidding system. This process starts with tech companies called trade desks, exchanges and demand-side platforms, or DSPs. They secure the ad space on various websites, apps and more. From there, it's managed for businesses by marketing agencies.

The buying and selling happen in real-time, and it's highly targeted based on people's browsing behaviors and interests. This means your ads constantly "deliver" to an aligned audience.

Of course, the goal is to get people to click and take action on your landing page.

Who ads show up for

You can tailor your ads to show up to folks who fit specific criteria, including factors like:

• Geographic location

• Age

• Gender

• Interests (based on pages, content and videos they've browsed, and more)

• Behavior (how recent/many times they've visited certain sites, etc.)

In other words, if you want to reach 20-40-year-old male outdoor enthusiasts around Lisle, Illinois, you can. Some of this info comes from cookies — which, even with growing opt-outs, gather substantial data. Other info comes from third-party ad trackers or aggregators.

Ultimately, programmatic offers access to massive databases that pinpoint ideal audiences.

Where ads appear and what they look like

Programmatic ads can appear on other websites, apps, social media like Facebook and Instagram, videos, TV, email and more. They typically look like the standard image- or video-based ads. Of course, depending on the platform, ads are designed to different sizes and specs.

Common tactics

To dig a bit deeper, here are a few tactics that impact where your ad or message appears.

• Display ads: These tend to have the most targeting options. They're classic ads that pop up on websites and apps people visit.

• Device ID geofencing: This is based on locations people have physically been to — up to a year ago and as recently as three days. It tracks the web-connected devices they carry with them.

• Retargeting: You can serve up ads to people who clicked your ad but didn't take action.

• Email marketing: Emails send to folks who have "opted-in" to get more info on specific subjects.

• Pre-roll video: These 15-30-second ads appear before videos on general websites.

• TV: Options here range from big streaming services like HBO or Hulu to shows on the small screens of smartphones and apps. This is best for branding, not conversions.

Where ads won't appear

Programmatic companies buy space or "inventory" on thousands of reputable sites. Since it's based on people's behavior, you can't control where your ads will appear.

That said, ads won't pop up in unsavory places like adult websites. In fact, sites for explicit or cannabis content, for example, run on different servers. Many companies also maintain "blacklists" that keep your ads off "fake news" and other inappropriate or low-quality sites.

How it's different from other digital ads

You might also be familiar with search engine marketing or SEM, mostly run via Google Ads. SEM is part of an ad network centered on keywords people look up. Programmatic, on the other hand, is automated and based on highly attuned algorithms. In other words, SEM reacts to people's searches. Programmatic is more proactive, based on their actions.

Another common digital option is social media ads. These sites also collect vast user data, though it's limited to the audience within that platform.

It's worth noting that a blend of marketing tactics is best. An agency can help you weigh out your mix of options.

How long to invest in programmatic

Consistent, month-after-month campaigns are ideal. People are constantly moving through the awareness, consideration and decision-making processes.

Aim for at least three months. You'll need a month just to let the algorithm start learning and getting insights. Then, you might need to tweak ad sizes, creative, etc. 

What kinds of companies programmatic is good for

Programmatic is suitable for most businesses at all stages of marketing. It helps with branding and building awareness with people who might consider their product or service. If you want to expand your reach, programmatic is a sound choice.

After all, it's based on online behavior. And very few of us don't start online when we're thinking of buying something. Programmatic introduces you — and keeps you in buyers' line of vision.

Why you'll need to team up with a media agency

Here's the kicker: Individual businesses can't just contact a programmatic company to get started. These companies only work with marketing agencies that can move a larger volume of ads.

This means you must work with an agency. It's a bit like buying a car. You don't go directly to the GM plant, for instance. You visit an auto dealer. In this case, that's the marketing agency.

A sense of cost

The bottom line can vary — depending on the quality of the programmatic company and marketing agency. After all, you want to appear on high-quality sites, apps, etc. And it takes skilled marketers to plan, adjust and optimize your ads.

That said, costs can range anywhere from $1-$15 per 1,000 impressions — aka CMP (that's cost per mille, or one thousand). Note that agencies may also have minimum requirements.

What are my next steps in exploring programmatic?

Programmatic advertising is potent, and you get what you pay for. In this blog, we explored this digital tactic in detail. You learned it's an automated, algorithm-based method of buying ads — which appear for people based on their behaviors and interests.

We also covered where the ads show up, to whom, and why teaming up with a marketing agency is necessary.

Ready to explore that leap? Talk to us at Zoe Marketing & Communications. We'll harness our digital marketing expertise to help you explore your programmatic options.

Still exploring your options? Learn more about other common digital ads, including: 

• What search engine marketing (SEM) is and how it works

• The 7 top types of social media ads and how they work