Programmatic – The Online shopping model of doing Online Advertising!

Anup Kumar | Date: July 17, 2018

As we got used to digital media, we got a new kid on the block called programmatic. Programmatic is still a mystery for many. Some are going bananas, and some are going nuts in trying to comprehend or decode. Meanwhile, offline media is slowly becoming programmatic in the developed world. Therefore, it is important to make friends with this new kid in our neighborhood that is here to stay. As a first step, let’s demystify Programmatic.

There are two ways the advertising businesses are run in media.

  1. The traditional way – humans dealing with humans as buyers and sellers

Buyers commit a certain amount to get a certain inventory at a certain rate.

Multiple pricing model – Rate/10sec, CPM/CPC, Rate per Sq. Cm, Paid/Bonus etc.

The buyer sends a manual order along with the creative depending on the medium –  TV(Beta), Print(PDF), Radio, Digital (image/audio/video file) etc.

Ads are scheduled manually by the seller’s team. The ads are seen by everyone that medium is exposed to.

The same ad goes to all website visitors on a particular website; the same ad is served to all the TV viewers of a particular program and the same OOH ad is seen by all crossing the road that day. Net-Net – Manual interaction (time consuming), human dependence (relationship and error prone) on Rate & Placement of ad, limited Targeting options and leaves very little control over the entire process and negligible ability to optimize in real time.

  1. The Programmatic Way: Automated Buying & Selling through software

No Fixed commitment required.

Unified pricing on a bid basis – CPM.

You buy a type of Audience rather than a website or a program on TV or a particular section/page of a newspaper.

The ads are uploaded online by the buyer and one can customize the creatives and audience on the go.

Optimize in real time (Can Start/Stop/increase/decrease multiple parameters anytime).

Three basic requirements for Programmatic

Automation (Buy/Sell/Implementation/Billing) – Aggregation of inventory at a central server (Ad Exchange).

Technology for Real-Time Bidding – Real-time closure of Bids & Sale in a complex bazar, with multiple buyers & sellers; Must lead to real-time implementation of ads.

Data on Audience – ability to Identify, Segment and Customize the audience (basis digital behavior/ demography etc.) and must allow customized ads to be served to various audiences at the same time.

It’s possible to do all of the above currently on the Digital media and such a model of doing targeted and automated advertising is called Programmatic. All big digital media companies have their own programmatic eco-system like Facebook, Google (AdWords which encompasses – Search, GDN, YouTube), Twitter, LinkedIn etc. Here you can simply log-in and buy ads by selecting your own budget, market, audience, creative, KPI etc. Then there are other platforms and programmatic companies who have multiple publishers on board and you can plan/buy/serve ads as per your requirement in the Display, Video, Native, Mobile and other environments.

Think of programmatic as an E-commerce portal where you go to buy a particular product whenever you want to, basis the Rate, Offer, Rating & Review of the product/Seller etc. You can order any product from any part of the world to be home delivered. Similarly in Programmatic, one can buy space for the banner, native or video ads by paying for the target audience one wants in the pin-code, city, state or country to be targeted. All of this can be done in real-time from anywhere.

In the Programmatic world – You don’t need to buy an entire farm when you need (and can buy) only a dozen bananas and few nuts.