The Evolution of Programmatic Buying

Traditional: Advertisers and Publishers
In the old times if an Advertiser wanted to buy inventory from a Publisher, they would do so manually and directly. This was a cumbersome and tedious process which involved negotiations, insertion orders, manual tracking, and long waiting periods (especially for premium sites). The benefits were so-so as the Advertiser had to track the result of each site manually in order to see where they were performing the best. Additionally, because Advertisers bought on a CPM model, they bought impressions in bulk- the same ad on the same site. Regardless who the user was, everyone was seeing the same ad. It was literally like a Jackson Pollack painting- finding the canvas you want to work on and just throwing all your paint on it, hoping that at least one drop reaches the right spot.

As time went on and the number of Advertisers and Publishers grew exponentially, it became impossible for Publishers to sell most of their inventory and for Advertisers to handle the direct media buying process. They would have to be in direct contact with thousands of Publishers at a time in order to maximize their reach. Additionally, manually tracking all of these sites could prove to be impossible. This issue paved the way for the Ad Network.

Ad Networks
An Ad Network is a company that connects Advertisers to a large amount of Publishers. It acts as a type of broker between the Publisher and Advertiser, buying the unsold or remnant inventory of the Publisher in order to sell it to the Advertiser. The Ad Network had technology that enabled them to categorize the inventory, which they could package and sell to the Advertiser. This benefitted the Advertiser because it allowed for them to extend their reach to numerous Publishers all at once and have their ads targeted a little better based on the categorization of the Ad Network. And rather than having to track the campaigns on the Advertisers end, the Ad Network was now responsible for tracking and optimizing each campaign across multiple sites.

And history repeated itself. As time went on, the number of Ad Networks grew and began flooding the market. This put the Publishers and Advertisers in another predicament. Now they had to spend time trying to figure out which Ad Network would give them the best bang for their buck. It also meant, that Advertisers could be buying the same inventory on the same site more than once. Oh, and did I mention that the Ad Network was taking a chunk of the ad profit from the Advertiser?

And thus, the Ad Exchange was born.
Simply put, an Ad Exchange is a technology platform that facilitates in the automated buying and selling of inventory, often through real-time auctions. Unlike an Ad Network, purchasing is not based on a CPM model, but rather per impression. An Ad Exchange is pretty much a giant pool of impressions that allows for advertisers to bid on each impression based on specific targeting criteria in real-time. This allows for the advertiser to make sure each ad they are serving is being served to the right person at the right place at the right time. With the Ad Exchange, the Publisher is now able to gain more revenue by selling off more inventory, and the Advertiser has greater transparency and control over their placement.

So the Ad Exchanges made things better, but Advertisers and Publishers still didn’t have the necessarily tools and technology to really take advantage of the full value Ad Exchanges brought along with it.

So along came Demand-Side Platforms (DSP) and Supply-Side Platforms (SSP). Both of these platforms are very similar, but just serve different audiences. The DSP serves Advertisers and the SSP serves Publishers.

A DSP is sort of the brain on the Advertisers side in terms of the Ad Exchange. It is a platform for buyers which works with multiple ad exchanges, allowing them to buy from multiple sources of inventory. For the Advertiser, it is the interface which allows them to manage their bids, create targeting criteria, aggregate all their user siloed data, do retargeting, and optimize their campaigns in real-time, and have access to results and data from DMPs. It could be seen as a sort of ad network on crack. However, without the huge mark-up and with automated technology capabilities. To sum it up, a DSP is a one-stop shop for Advertisers- all they need to do is submit their ads and wait for the results.

An SSP is pretty much the equivalent but for the Publishers side. Whereas the DSPs goal is to buy ad impressions as cheaply and quickly as possible from the ad exchange, the SSPs goal is to maximize the price of their impressions. The SSPs enable Publishers to have access to multiple Ad Exchanges, Ad Networks, and DSPs all at once- increasing the range of potential buyers.


So now you understand the key players in the Programmatic Buying ecosystem. And all Programmatic Buying is, is the automated process of buying or selling media. And this process is reliant on these key players in order for it to work.

Five superpowers of banner ads we've overlooked

 

Banner ads have gotten a bad rap over the years -- and it's mostly our own fault. For years, digital marketers have focused on click-through rate as the key to success. In the immortal words of the first AT&T banner ad, "Have you ever clicked your mouse right here? You will." If we've learned anything in the last 20 years, you actually won't. Industry standard click-through rates are less than one half of a percent, so it's time to move past that metric and focus on what banner ads do well.

Building awareness

I'm not quite sure how digital marketers overlook this key component of banner advertising benefits -- maybe because it's too hard to measure (clicks, after all, can be tracked with an ad server or web analytics). Brand awareness is the foundation of any businesses marketing success. Traditional media is the bastion of brand awareness (after all, a 30 second spot on the Super Bowl cost more than 4 million dollars this year). There have been countless studies over the years that clearly demonstrate the impact banner ads have on brand awareness. In 2010,  released a study that showed higher offline sales lifts from brands that ran online campaigns compared with similar campaigns that ran on TV.  and other studies are great, but not every brand can afford an in-depth study, so here's another way to demonstrate the impact your display ads have -- monitor search traffic to your site. As you might expect, a natural reaction to higher levels of awareness is an increase in site traffic and, more specifically, increases in site traffic coming from branded organic search traffic. Sure, Google is blocking 90 percent of your keyword search data, but you can still see the remaining 10 percent and usually another 10 to 15 percent of your traffic from Yahoo/Bing. So take a look at those data before and during your campaigns -- if your ads are placed right, you should be able to see a noticeable shift in the search traffic for your brand and/or product terms.

 Targeting

OK, so assuming we’re in agreement on the awareness side of things, let’s talk about reaching the right people. In the last paragraph, I referenced running ads during the Super Bowl. What a great way to reach a lot of people (more than 110 million viewers last year). But how many brands really need to reach an audience that large? And for those that do, how many are really in their target market? On a smaller scale, take a look at your local television station and one of your favorite prime time programs. Do you really believe that everyone watching that show has an interest or need for your product? You can get pretty granular with TV audiences (particularly with cable), but you still can’t get as specific as you can with online. Online targeting is a lot more like direct marketing than traditional media buying. When buying household mailing lists, you can get incredibly targeted — street address, household income, number of people in the home, etc. The list goes on and on, but the trouble with direct mail is that the cost of delivery is incredibly expensive — it’s not uncommon for direct mail pieces to cost $1 or more (including postage) per household delivery. With display advertising, you can put all those same data overlay and reach your audiences for a few dollars per thousand.

It’s time to move all your media to display

So, display ads are the panacea, and you should move all your dollars to display today, right? Not even close! Media mix is still incredibly important. Much as I’d like to, I can’t impart the emotional impact of a TV ad in display. I can’t place a display ad in front of a prospect actively seeking my product like search ads can. I can’t get the visual impact of a billboard or distribute the depth of information I can with direct mail. But we also need to stop looking at display just from a click-through rate perspective. Brand impact and awareness are important. If no one is aware of your product, you’re not going to get sales. So take advantage of the superpowers of banner ads and build awareness with the right audience in unique ways that inspire them to act.