Programmatic Advertising 101: The Why, What, and How.

The comprehensive guide to programmatic advertising for better results.
The comprehensive guide to programmatic advertising for better results.

What is Programmatic Advertising?

BCG projected programmatic media buying and selling to reach $43 billion by 2020. Essentially, programmatic has become the bread & butter of the digital marketing media distribution businesses as the projected market value represents nearly 60% of the digital advertising markets.

Not long ago, advertising agencies were the primary brokers between ‘media-spot sellers’ and brands. Agencies would generally charge a 15%-20% commission on helping brands acquire the right media-spots in print, radio, television, and outdoor to suit the brand’s targeting needs.

As Google connected many ad inventories, it became easier to streamline the media buying process in the digital marketing space. Programmatic advertising is an automated approach to buying media-spots for showcasing your ads as a brand or agency on a publishing website. It helps the media buyers better understand the traffic, target specific users, and reduce the lead-time generally spent in buying media-spots. For publishers, this is an effective way to monetize their traffic that can now be used as the audience for certain brands and advertisers.

Programmatic is executed on Demand-Side Platforms and Supply-Side Platforms. Google Ads is the key tool that helps advertisers and brands search for media spots based on their target audience preference.

The brand or advertiser locks the requirements and submit the bidding strategy. Then, the programmatic platform aggregates the media inventory and runs auctions in real-time or in advance. 

Generally, the idea is that the media-spot would go to the advertiser with the optimal mix of high bid price and ad relevance. Bid price plays a major role in helping advertisers get access to media-spots with a higher chance of traction at using quality and consistent traffic metrics.

The Programmatic Process: Visit, SSP or DSP, Bidding, Publishing, and Clicks

Intuitively, this process is easy to understand. A user clicks on a website URL, and the website-owner puts the relevant ad spots on the page for auction using a Sell-Side Platform (SSP). The advertisers and brands get to know about it using Demand-Side Platforms (DSP). They match the ad spot and the person’s visit with their idea of the ideal target audience, intent, and other metrics. The advertisers who find the spot and the user relevant submit a bid. The highest bid with the most-relevant ad content gets selected, and the ad is published. If everyone involved in the process did her/his job with finesse, the ad would generate a click and, later, a conversion.

Here is how the process unfolds in detail:

1. Background Data on the Visitor Gets Aggregated by the SSP: The sell-side platform plays the role of understanding users visiting a particular website. Data-points like cookies, past browsing history, purchases & preferences, and other key insights are used to determine the user’s profile.

2. Auction: The publishers have the freedom to choose from a set of methods to sell their inventories – Real-Time Bidding, Private Marketplace Auctions, Preferred Deals, and Programmatic Guaranteed. RTB is a common form of auction. Here, the advertisers use the DSP to see the available inventory and traffic coming to these spots. Post this, they submit the bid. The highest bidder wins but has to pay only $0.01 more than the second-highest bidder. The amount of $0.01 keeps growing between consequent bidders.

When RTBs are conducted with invite-only media-buyers, and some inventory is allocated at a premium to certain buyers, it becomes a private marketplace auction. It is generally conducted by websites that have a large amount of traction and can single-handedly serve a large portion of large buyers’ media needs.

Preferred deals are forms of negotiations where the advertiser and the publisher enter into a private negotiation before the media space hits the private markets. They get to discuss the targeting opportunity available and its value. The buyer gets an early look at the inventory about to be made available. Then, she/he gets the right but not the obligation to but it at a certain price.

Automated guaranteed takes the form of traditional media buying and augments it with technology. Here, the media buyer and seller enter into a private negotiation, and there are no auctions. The buyer can hence use very specific targeting and add clauses like frequency capping. Such deals make sense only when the buyer has a clear idea of what spots are necessary for its brand and how to value them.

3. Publishing: Programmatic advertising also has a component of what happens when a user clicks on the ad. Generally, the user gets redirected to another website, termed as a landing page. Earlier, the landing page and its relevance to the ads did not matter much for the publisher and platforms like Google that facilitate media buying and selling. Google has put more rigorous checks and balances to deal with ad frauds. Quality of the ads has hence become a major factor in deciding who wins the bid.

4. Ad Exchanges and Ad Networks: Some people, even within the programmatic buying space, use these terms interchangeably. They are different in one key manner – ad exchanges are like stock exchanges. The inventory of ad spots instead of different capital market products is available for buyers to acquire. Ad Networks are like stockbrokers that facilitate the transaction by advising on the right ad spots and aggregating relevant ad spots for the buyers. Google operates AdSense, one of the largest ad networks in the world. Google also operates the DoubleClick Ad Exchange, accessible only to the largest publishers and buyers in the world.

Types of Programmatic Advertising: Real-Time Bidding and Programmatic Guaranteed

Real-Time Bidding (RTB) and Programmatic Guaranteed are two of the most common programmatic buying methods. Here’s a detailed look at both these processes that underpin the efficacy of this method:

Real-Time Bidding

RTB is one of the oldest forms of programmatic buying processes in the digital landscape. The entire process gets triggered as soon as a user is about to visit a website or a link. If listed as available inventory by the publisher, the inventory available on the page is made visible with the background data on the visitor. The advertisers have already set the criteria and automated or manual bidding process. The bids that are the highest and have an optimal ad quality to keyword match tend to get selected for primary publishing.

The key difference between Real-Time Bidding and other processes is that RTB allows buyers to pay attention to each impression’s value and price. Instead of auctioning the ad spot, RTB is auctioning the impression. Hence, advertisers and brands can use campaign insights, keyword research, CTRs, and other metrics to understand whether the bidding process is helping them or not. Based on this, they can optimize their creatives and monthly or daily budget.

While RTB processes are convenient, they are also quite opaque for both the publishers and the advertisers. The publisher is not aware of what ads would be running on its website, and the advertiser is not what its ad will display. Since Google happens to be the biggest player operating between the two, offering both ad networks and exchanges, the issue of reliability never really emerges. Besides, as far as the targeting on the impression is accurate, the advertiser can still expect conversions or engagement irrespective of where the ad is published.

Programmatic Guaranteed

Programmatic guaranteed takes the traditional media-buying process and adds a layer of efficiency using algorithms and AI. Earlier, many work in guaranteed media spots was manually processed and often resulted in pricing inefficiencies where advertisers grossly overpaid or underpaid for a media-spot. With programmatic guarantees, each agency can practically access website traffic intelligence reports in a more structured manner and apply the same relationship management processes at scale.

BCG conducted a detailed study on programmatic guarantees. The key reasons why programmatic opens up new doors of value for both publishers and advertisers:

a. It creates a more transparent mechanism since both the buyer and the seller are aware of who is on the other side.

b. It provides more streamlined revenues for the publisher and, at the same time, saves the advertiser from increasing inventory prices and fluctuating impressions.

c. It creates productivity on both sides of the deal. Agencies can witness nearly 30% savings in time without losing the insights on the available ad spots.

d. Agencies can leverage the relationships to buy programmatic guaranteed inventories in bulk and then make them available to their clients in smaller portions.

Many of these ideas have already been executed in other openly and closely traded markets, like capital markets. While the smaller brands, agencies, and publishers might not capture all the efficiencies of programmatic guarantees at the moment, the landscape is rapidly evolving. BCG estimates are programmatically guaranteed to replace the declining conventional digital reservation mode.

Why Should You Consider Programmatic Advertising?

1. The Majority of Online Ad Inventory is Sold On Programmatic Media Buying Platforms. Close to 85% of all digital display ad inventory is sold via programmatic methods. Thus, irrespective of what market you cater to, programmatic would be covering most of the available media inventories. 

2. Transparency in Pricing & Budgeting, Comparable Ad Performance, and Predictive Capabilities.

The key reason that makes programmatic buying and selling so effective & efficient is data availability to the publishers, agencies, and brands. Essentially, the entire campaign budgeting processing can be shifted to a more accurate bottom-up approach that focuses on cost per impression and scales it up across timelines. This helps in maintaining price transparency. It allows the advertisers a fair estimate of their monthly ad spending. The publishers get a reasonable understanding of potential revenues.

3. It Gives You Deeper, More Comprehensive, and Real-Time Insights.

Since a lot of focus is on impressions, the advertisers get a very good understanding of the audience they are catering to. It helps in optimizing campaigns and creatives to produce more value for the brands they are servicing. At the same time, the audience gets to derive value from the process with the impetus on matching ads with relevant content on the user’s page or queries. As all the insights are available in real-time, advertisers can watch the evolution of the audience’s behavior across a timeline and optimize their campaigns for better positioning.

4. Automated Media Buying Reduces Space for Errors and Frees Up Human Capital.

Brands, agencies, and publishers that are still using traditional guaranteed media buying & selling practices rely on manual processing of data, availability of inventory, and sale of ad spots. Problems like overselling or underselling at the publishing side and overpaying or underpaying at the advertisers’ side have been consistent in the manual processes for media buying.

Publishers and agencies can shift to programmatic buying to save resources and reallocate them with augmented capability to the programmatic guaranteed space. 

5. With Airtory, the Entire Process of Planning, Executing and Optimizing a Campaign Can Be Streamlined.

Airtory enables you to get a better understanding of your audience with real-time analytics, premium trackers, and systems established to detect fraudulent traffics. Simultaneously, you can use rich media ads for higher CTRs and engagements to get higher ROIs from your campaigns. With landing-page designing templates, you save resources that would have otherwise gone into design reworks. With all the data and capabilities available in one space, you can produce more value with lesser resources at the behest of foresight and optimization attained using analytics.

In Conclusion

Programmatic advertising already governs a large majority of ad spots available in the digital landscape. This space will only grow with categories like programmatic guaranteed generating more values for the brands, agencies, and publishers. Airtory, the preferred tool of key networks like Google, MediaMath, and AppNexus, produces more value for the brands, agencies, and publishers. To know more about how you can produce value with Airtory, click on this link.

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What Makes Rich Media Ads Better than Other Ad Formats?

Rich Media Ads yield substantially better engagement rates against plain text or banners.
Rich Media Ads yield substantially better engagement rates against plain text or banners.

A Primer on Rich Media Ads

The primary difference between rich media ads and other forms of ads is its focus on engagement. While other ad formats focus on lead generation or brand awareness using creative imagery, copy, or CTAs, rich media ads give the brands and agencies the freedom to use videos, interactive elements like games, and other media files along with the conventional text and images.

Since rich media ads have a wider scope of application, they cover a large set of metrics. For instance, apart from the usual CPA, CPC, CTR, and other similar metrics, rich media ads tend to measure pause rates, skip rates, expansion rates, 75th percentile video completion rates, etc. Along with this, there is an element of permission-based advertising as many rich media ad formats tend to unfold into their full form only after a user interacts with it.

Google accepts the following as the different variants of rich media ads:

Banners.

The banner rich media ads have a fixed size on the page. In terms of loading, the page loads before the ads. This way, the larger file size does not get in the way of the page loading speeds or hamper the organic rankings of the publisher. Banner ads can carry moving images or videos.

Dynamic Creatives.

Dynamic Creatives change the ad based on the content on the page or the user’s interaction with the embedded link. This is more of a feature that covers banner, expanding, interstitial, and VPAID ads.

Expanding Ads.

Expanding ads grow out of their initial dimensions on the page. They either push the content down, lay over the content, or load before the page, depending on the page’s setup and the ad itself. Expanding ads get triggered as the page after a user interacts with the ad by clicking on it or hovering the mouse. 

Interstitial Rich Media Ads.

Interstitial ads are available as floating assets that hover over the page’s content or are visible between page loading or launching instances. These ads can have an adaptive position that adjusts with the content on the page or a locked position triggered based on the campaign settings.

Google Lightbox.

Lightbox is an innovative format that allows brands and agencies to use their existing marketing collateral like product portfolios, videos, and other files in the form of a slider that covers the entire page. The ad gets triggered after a user hovers the cursor on the ad for two seconds or clicks on the ad, in case the device browsing device is a phone.

Multi-Directional Expanding (MDE).

MDE ads a layer of responsiveness to the expanding ads. The creative expands in a direction opposite to the one which already has an ad. This way, the motion draws attention to the creative, and it gets visibility even on an otherwise crowded webpage.

Push-Down Ads. 

These ads push-down the content on the page and show the creative at the top. This format is available both in permission-based and triggered formats. However, once a user has been shown the push-down ad format multiple times for the same ad, it will get triggered only if the user clicks on it. Hence, the brand and the agency have to provide creatives for both the user-interaction-based and automatic push-down ad.

Video and Video Player-Ad Interface Definition.

Both Video and VPAID ads are designed to target videos. The VPAID format allows you to place ads before, between, or after the published-video content on YouTube. The video format allows you to place the video file in a rich-media format.

How are Rich Media Ads Different from Other Ad Formats?

The Distinctive Features of Rich Media Ads

Just by looking at the primer on rich media ads and the types of formats available, it becomes easy to determine that the focus is one creating engagement and making the ad stand out against typical video ads or static banner ads. But, it is worth exploring for every brand, agency, and publisher – what are the forms of distinctive features pertinently available only with rich media ads:

1. Audio and Visual Elements.

If you look at it from a first-principles perspective, rich media ads have wider ‘basic ingredients.’ Text ads have just the textual information and data available, which generally revolve around product data, seller information, and ongoing offers. Creative static banners have just the image, copy, and CTA to attract the user, establish the brand, provide relevant information, and direct the user to a landing page. Video ads can tell a story and have a CTA, but they tend to have an expensive production cost and running.

Rich media ads have more fundamental elements in the visual and audio sphere for the same ad spot. For instance – in a space where a static banner would only give limited information, a Google Lightbox ad can create an ‘on-demand landing page’ with the user’s permission as soon as the user interacts with it. Similarly, while video ads tend to slow page loading speeds, rich media ads tend to get loaded after the entire page has been loaded. This helps the publisher keep the loading times in check, even if it supports relatively heavier rich media ads.

2. Permission-Based Triggers. 

For most conventional ad formats, the user did not have any control except exiting the page, closing down the ad, or refreshing the page. Some of these actions were necessary to get rid of intrusive ad formats. While this deteriorated the user experience, on the one hand, it made the publishers face increased bounce rates and the advertisers to pay for false positives in the form of clicks that were not intentional.

Many rich media ad formats have an embedded functionality of unfolding only when a user interacts with it. For instance, Lightbox allows the advertiser to virtually showcase all interactive marketing collateral like videos, product images, and texts on the page in an expansive format. The ad gets triggered only when the user hovers the cursor on it for two seconds or clicks. This ensures that only the people who find the ad interesting are interacting with it, and the advertiser has higher chances of conversions per view. False positives get eroded, and the publisher doesn’t have to worry about the bounce rates since the UX on the page is not disrupted by intrusive ads.

3. Added Layers Like Gaming Increase Engagement.

Even the most memorable static banners and videos can only have one-way communication with the user before redirecting to a landing page. Rich media ads designed as games allow the users to stay on the page and get an immersive experience. While this creates engagement for the user, it helps the advertiser and the brand garner increased brand awareness.

The rich media ads that have embedded games tend to deliver the brand’s message more effectively. That can be one of the key reasons why they can be used for brand awareness and improve user intent for buying the product, i.e., lead generation. In one of our earlier posts, we explored how Mike’s Harder Lemonade generated 75 seconds of interaction on the ad unit, where typical video ads cannot cross 10 to 20 seconds. The same campaign helped the brand to grow the purchase intent by over 53%.

4. Sizes of Rich Media Ads and Their Impact on Page-Loading Speeds.

Some publishers and agencies that are considering the operational aspects of the campaigns are often under the misconception that rich media ads can slow down the page loading speeds. At the same time, the publishers are worried that this will increase bounce rates and decrease the page’s organic ranking. The advertisers are worried that they will pay for ad spots with decreasing user-traffic or sub-optimal traffic flow.

Google has supported its rich media ad formats keeping the page loading speeds in mind. That is why most of the sub-formats in rich media ads have a ‘polite download technology,’ which loads the ad after the entire page has been loaded. So, if the decreased page loading speeds were your only concern and stopping you from exploring rich media ads, you should immediately consider including them in your ad spots and campaigns.

5. Standard Metrics for Measuring the Impact of Rich Media Ads.

Google provides 50+ metrics to measure the performance of rich media ads. That makes this particular format one of the most comprehensively analyzed formats available across Google Display and Search Networks.

While these metrics cover standard formats like impressions, engagements, and reach, you can also analyze the following to optimize your campaign/creatives:

Display Time: This is the average duration for which the ad is visible on the page and is largely related to your bidding strategy and campaign design.

Interaction Rate and Time: This shows the percentage of users interacting with the ad out of the number of users who were shown the ad. Interaction time is the duration for which the users interact with your ad. The metric shows the efficacy of how well your ad can attract and retain attention.

Intentional Engagement: Also known as the dwell rate, the intentional engagement rate measures the duration of the engagement right after the very first touch, click, or interaction with the ad. It specifically focuses on how well can your rich media ad retain attention.

Expansion Rate: It measures the percentage of users who expanded the ad against total impressions. It shows your ad’s capability to generate interest. The initial frame of your ad would be largely responsible for driving this metric.

Average Viewing Time and View Rate: Average Viewing Time shows you the median playing time against the total playing time of your rich media ad. It can give you feedback on the ideal length in time for your ad. The view rate is the number of engagements per view of your rich media ad.

Mutes, Pauses, and Exits: This is a straightforward set of metrics which shows the analytics for your rich media ads that use videos. It can give you feedback on the specific spots in your ads, which triggered action like pause, mute, or even exit.

Conversions and Revenues: Rich media ads have the ability to carry multiple links. This way, you can track which dimension of your rich media ad triggered the action. Hence, measuring conversions at the campaign level and sales for the business becomes easier.

A quick comparison of the different kind of ads

Rich Media Ads, Video Ads, and Pop-Ups: How to Choose the Right Format?

The primary difference between rich media ads and video ads is the fact that video ads can often be intrusive and independent of user-permission. Before the advent and wide-adoption of rich media ads, most agencies and publishers were running video ads in a format that did not seek the user’s permission. Both the video and the audio would start playing as soon as the page was loading. Hence, video ads were popular only on websites that carried critical information and had heavy traffic because that would be the only way to control bounce rates despite relatively slower page loading speeds and intrusive video ad formats.

The advertising ecosystem changed with rich media ads. Rich media ads solve both the problems by getting triggered generally when the user interacts with it. Formats like Lightbox, expanding ads, and push-down ads are common examples of ads that are triggered by user interaction. More than that, rich media ads have a focus on engagement. Hence, instead of impeding the user’s experience, rich media ads try to engage the user with creative use of formats like games and other formats.

Since 2017, Google has been actively penalizing websites that show intrusive pop-up ads without user permission. The Google Display Network is actively updated to ensure no such websites are added to the platform. Additionally, pop-ups and pop-under ads also slowed the page loading speeds, hampering the organic rankings for the publishers. Hence, in essence, pop-ups were not preferred by anyone but the spammers.

However, pop-up ads served a very important purpose – they made the user take action to close the ad; otherwise, the users would often engage with the pop-up ad. In short, pop-ups were the insurance policy for advertisers that allowed them to deliver their message, no matter what.

Rich media ads can achieve the same feat with greater sophistication. Google Lightbox essentially serves more content than a pop-up ever would and is triggered by user-actions. Even the push-down format, which pushes the content to show the ad, can do so for a very limited number of times for one user. After that threshold, the user will have to interact with the ad for it to be triggered.

In Conclusion

Rich media ads provide a more user-engagement-focused, interactive, and creative manner to deliver brand awareness and lead generation campaigns. With sequence ads, you can get easily creative, cohesive narratives across different rich media ads. With embedded gaming ads, you can drive engagement exponentially beyond industry-averages.

The only part that makes rich media ads trickier to produce than their static banner counterparts is the amount of resources necessary to produce the ad assets. With Airtory, you can actively produce different assets in varied, rich media ad formats using prefabricated templates that bring down production costs and timeline. Plus, with real-time analytics-driven campaign optimization and fraud detection, you can control your ad spends on the same platform.

To know more about how rich media ads and Airtory can help you produce value with your campaigns, explore this page.

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