Everything You Need To Know About Programmatic Advertising

One of the most pervasive and fundamental shifts in digital marketing that has occurred in recent years is the introduction of programmatic advertising.

This form of display advertising allows brands to access enormous libraries of ad space in every corner of the digital landscape through a single, easy to manage platform. By replacing the older method of negotiating directly with advertisers on a case by case basis, advertisers can rapidly spread and update their advertising campaigns at significantly lower cost.

So what exactly is programmatic advertising and why should you care?

While you might be scared by its technical sounding name, it’s actually a fairly straight forward concept. We break down everything you need to know in our complete guide below.

What is Programmatic Display Advertising?

Programmatic Display Advertising is the process of displaying ads on websites your customers visit and managing that process using a real-time bidding platform.

It is the union of automation in ad buying, and data, which allows the buying and selling of digital media based on audience signals, making each impression bought more in target than ever before.

Programmatic display advertising happens each time you load your favourite website, and each ad you see loads in approximately 100 milliseconds, which is extremely fast. By targeting your ads to websites that are high traffic and have relevant users, you can keep your business in the front of mind of users most likely to convert to sales.

The History of Programmatic Display Advertising

Before Programmatic Display Advertising, if an advertiser wanted to purchase ad space on a relevant website, the process was entirely manual.

The client or agency would need to contact the individual websites directly and negotiate with the seller the amount of impressions they wanted to buy. They would then need to forward ad copy, optimize for that particular website, and trust that the seller would actually show the ads the number of times they paid for.

The main metric for transacting Display ads online is a Cost Per Thousand (CPM) impressions. Alternatively, you can negotiate a monthly rate for the ad space, much like a billboard ad on the side of the highway. The ‘M’ in CPM is actually the Roman numeral Mille which stands for thousand.

Being on one website alone may not be effective enough to reach your target audience. Once an advertiser wanted to scale to hundreds or even thousands of websites, they would quickly realize it became very time consuming and complex to manage conversations and plan space on such a plethora of different websites.

The Dawn Of Ad Display Networks 

Ad display networks (Google Display Network) were created in order to aggregate publisher inventory into a single package. This allowed advertisers to have a centralized hub to buy ad space. It provided publishers the ability to sell off their inventory at a larger scale.

In the beginning, it was hard for advertisers to keep track of exactly which websites their ads were shown on. Some clients feared this lack of transparency would negatively affect their brand. Thankfully, as the online ecosystem has evolved, the demand for more transparency has grown and now individual URLs can be purchased fully transparently, and at scale.

Along came tools such as DBM (Doubleclick Bid Manager) and Google Adsense, which tapped into larger Networks such as Google Ad Exchange. This allowed buyers to make real time bids for ad inventory across multiple display networks. Similar to how the stock market operates, the price of online ad space fluctuates daily based on demand from buyers in the market, seasonality, unique visitors on certain websites and demand for users with specific online profiles.

At first this helped shift the balance of media buying power back to the buyer side, and allowed greater flexibility for the advertiser and more sales for the publisher. However, as the technology has evolved, it has resulted in advertisers needing more technology logins to manage each campaign, and made it more expensive for buyers to manage their entire ‘stack’ of different technology platforms.

Programmatic display advertising provides a tremendous amount of audience and campaign data for brands to make more transparent buying decisions.

To date, the focus has been on technology and how to make the most of real time bidding and programmatic-direct in order to improve efficiency. The challenge for advertisers has always been the ability to fully understand their target audience using the full Consumer funnel in order to effectively optimize marketing spends. In general the funnel goes Awareness, Consideration, Intent, Loyalty.

Why is data important? 

Data can come in three main forms, first party, second party and third party. This is generally collected in the form of cookies from internet desktop or mobile web, and Mobile Device IDs powered by apps.

So with all the hype, what is the truth behind online data?

First off, for data to be legitimate, it must be anonymous. Laws are in place to protect consumers and their data from exploitation and theft, and all advertisers must follow these procedures or else face severe consequences. Consultus Digital is 100% compliant with all current laws in North America and takes data privacy very seriously.

First party data is great, because it is your own! As a brand, perhaps you have a CRM system, or email list, collecting dozens of data touch points. This can be made anonymous, modelled and merged online to send effective messaging to these people who already know you.

Second party data is when websites collect data directly, and use that data to model advertising campaigns. Some brands even partner with websites to model data, which powers their own ad efforts.

Lastly is third party data, where aggregators like BlueKai place pixels across thousands of websites, and create online profiles for dozens of behaviours. This data is for sale and can be used to power your brand to reach the effective audience.

In the end, all of this effective advertising ties back to the discussion around brand measurement. Advertisers can finally understand if ads were seen and if they reached the right audience. They can learn what audiences thought about ads and if these ads changed perception via brand lift. They can also review what audiences did as a result of seeing their ads.

In the area of attribution, it’s now possible to analyze the purchase path from initial impression to conversion, to understand the various segments of audience touch points most frequently leads to your desired action.

What is Attribution? 

Attribution is the science of determining how effective your ad campaigns are.

What is important to your brand, and how did your media help drive these goals? This is determined through a mix of performance metrics for display, video, search and social media campaigns. Understanding and choosing the best attribution model will ensure that all advertising campaigns are given credit for the conversions that they contributed to your website.

Having the correct attribution model is crucial. Choosing the wrong model could result in loss of revenue for the advertiser. It also helps for brands to take a step back and think, what are the most important things I want to achieve from my media mix?

The Different Models of Attribution

First off, what is a conversion?

Generally considered the most important Key Performance Indicator (KPI) online, a conversion is when a user takes a desired action on your website or social page. This can be a purchase, email list sign up, requesting a test drive, liking a social post, or simply watching a video. The actual conversion action is tracked with a Pixel, a small 1×1 size piece of code, which fires when that certain action loads. This is how reports can attribute the total number of conversions that happen on your website.

So how are these conversions attributed to your online media?

First-Click

In the “First-Click” attribution model, all credit for a conversion is given to the first touch point or digital marketing channel a user interacts with .

For example, a user sees a banner ad online, clicks the ad, then makes a purchase on your website. Every ad this user sees after the purchase is not counted towards the attribution.

Last-Click

Conversely, the “Last-Click” model gives all credit for conversion to the last touch point or digital marketing channel a user interacts with. Similar to First Click, this model disregards any other touch points the user interacted with previously.

For example, after Googling your brand and visiting your website, a user saw a Display ad on their favourite website, clicked the ad and made a purchase on your website. The initial Google search is not counted for Attribution.

Linear

In the Linear attribution model, credit is spread evenly across all clicks in the path to customer conversion. For example, if a user watched a YouTube ad and clicked through to your website, and then clicked on a social post, and then clicked on a display ad, YouTube Video, Social Post and Display ad would all receive 33% for a conversion.

Multi-Touch / Weighted 

The last mainstream attribution model is the Multi-Touch or Weighted model.

In this method, your digital marketing agency would decide what the best conversion touch points are for your brand, and give them a custom weight accordingly. This is generally considered to be the most evolved and preferred attribution method.

As an example, let’s say a campaign starts with Youtube videos, Display advertising, and Google search (consisting of Google Ads and SEO). After some time, it becomes clear that each of them contribute in some way to the success but with different amounts of importance. Your Account Manager determines that YouTube and Display advertising each contribute 20% of conversions, but Search drives the most conversions at 60% weight. This would be considered a full funnel attribution model and can help clients understand their success online.

Many advertisers have historically based metrics on just the first and/or last click. These methods are ok, but they do not provide the true insight of which ads influenced the final conversion. At Consultus Digital, we are always pushing clients to become a lot savvier when it comes to identifying the right metrics when looking at conversion data. The industry is moving away from first and last click models due to the more evolved models that provide a true window into a customer’s path to purchase. That’s why multi touch pathways need to be considered in the ever complex media ecosystem.

Benefits of Multi-Touch Attribution 

The multi-touch attribution model in programmatic display advertising allows marketers to understand and credit multiple touch points along the buyer’s journey.

This is applicable not just for one campaign, but those learnings can be reused over and over again to improve even further. Multi-Touch is the only model that shows the true customer journey, from the top of the funnel engagement to the point of conversion. Using a multi touch approach allows the advertiser to credit the ad that influenced the final conversion.

More Data

Multi touch attribution allows the advertiser to identify more insight on their audience, and understand what ad is most relevant to consumers at each phase of the buying funnel.

Budget 

Having a clear understanding of how a marketing campaign is performing enables advertisers to allocate the budget more efficiently across upper and lower funnel buying stages. It also shows that not all dollars can be allocated to conversion targeting only, brands must still participate in the upper funnel branding to entice new consumers to explore their brand.

Cross Channel Influence

When running display ads in conjunction with paid search ads, data has shown to lower cost per acquisition by 48%, compared to running a standalone Pay Per Click (PPC) campaign. Multi touch attribution campaigns will show the influence Display and Search have with each other, resulting in more transparent performance tracking.

Are you looking to utilize the power of programmatic advertising to boost your own brand’s visibility online? Consultus Digital is the leading programmatic advertising agency in Toronto, specializing in unique and powerful campaigns that drive real results straight through your door. Contact us today and find out how we can boost your brand fast!