At first, I believed programmatic advertising was going to be really hard to understand, but actually, it’s totally simple. In short, it’s just buying ad space, but taking humans out of the equation. Programmatic advertising is solely done through software and machines, but is the exact same thing as calling up a company and doing it that way. This can’t be done with all types of advertising though, just with digital advertising (which is where most of our advertising is headed anyways). By using this new way to purchase advertising space, it saves a lot of time and money, while improving efficiency. Sitting on the phone with human ad buyers and salespeople has proven to be expensive and even unreliable. Programmatic advertising removes people from the situation, thus making the process much cheaper, improving efficiency, and eliminating any extraneous variables that might make a person not perform their job up to the right standards.
Let me break it down further. Programmatic ad buying is just like buying anything on Amazon or your favorite stores website. It’s strictly done with machines, and only machines. You have a few clicks here and there, and you’re done! No need to deal with people over the phone or in person, making life harder for you. You’re able to get what you want without all the hassle. Now take that, and think of it in the form of buying advertisements! Programmatic gets rid of all the busy paperwork that no one likes in the first place. Originally, buying ads, letting the campaign run, spending money, and then optimizing the campaign took up to a month or longer, and with programmatic, it can all happen in real-time.
So what does programmatic advertising cost? Premium programmatic is commonly sold on a cost per thousand (CPM) basis. These rates can range from $15 to $25 or even higher depending on the type of advertisement you desire. These premium programmatic advertisements will be shown on homepages. As demand for the use of programmatic advertising increases, so does the price for it. Here is a chart (props to Business Insider!) predicting the share of digital ad sales, showing that non-programmatic sales are decreasing as time goes on. Let me put these percentages into actual dollar amounts so you can see the impact! When RTB (real-time-bidding) is estimated at 33% in 2018, that means $18.2 billion of U.S. ad sales will be towards RTB – up from $3.1 billion in 2013!! This growth is going to be driven by mobile and video advertisements. Companies that are hopping on the programmatic ad bandwagon are reaping the benefits. These businesses include Rubicon Project and AOL.
As with anything new and technological, there are going to be some obstacles necessary to overcome in order to make it the best it can be. First of all, there needs to be a way to educate advertisers as well as publishers about what this method of buying ad space is, what it does, and where it can take advertising into the future. Another barrier that’s considered a top priority is navigating through a multi-device landscape, being able to go from smartphone, to tablet, to laptop, and back again. According to those that work with programmatic advertising, there just isn’t an easy way to do this – but that’s not to say this can’t be done. There’s also the risk of losing cookies, which are currently essential for advertisers and marketers to help inform them of buying behavior. If these cookies are taken out of the equation, that could pose a problem for agencies and marketers. One more problem with automated placement, is the fact that advertisers don’t want their ads to be shown with content thats low quality or not even relevant, as well as being put next to controversial content. There needs to be a better method of putting ads in the right spaces As for TV ad space buying becoming programmatic…it’s hard to tell what the future holds. Many people are stubbornly against that idea, even though data has shown a 4% increase in programmatic TV ad buying from 2014 to 2015. While that increase may be small, and the total is only in fact 5%, it’s still an increase, which should be given credit!
Next, I’d like to talk about native advertising and what that is. Simply put, native advertising
“is a form of paid media where the ad experience follows the natural form and function of the user experience in which it’s placed.”
The rise of native advertising has advertisers now integrating their ads directly into the content. The key word there is integrating; making sure it flows well and matches the actual content that it’s part of. These ads are supposed to have the same look and feel of an editorial piece, and so far, it seems to be working well for advertisers. Native advertising techniques are still new to the game, and it’ll take a long, long time before they ever surpass any other techniques. Here’s why,
- Tracking the analytics for native advertising has proven to be very difficult because they haven’t matured enough to be at the same standards advertisers expect from other forms of advertising campaigns.
- Audience targeting isn’t refined enough for native ads to swoop in and take away the ad spend of current forms of digital advertising.
- Consumers are becoming more aware of native advertising tactics and don’t want to feel the sense of being tricked into reading pieces that are just trying to sell something.
Native advertising has so much hype and controversy surrounding it, that native ads themselves aren’t gaining the brand awareness, it’s the fact that people are talking so much about the technique of native advertising in general. It has all this publicity, but sort of for the wrong reasons. Measuring the ROI for native ads is hard right now, but as this technique becomes more commonplace, it’ll be easier to gather the data needed to check its performance. As the hype dies down, it will be easier to tell if the return on investment is coming from the ad itself, or if it was only coming from publicity.
As for the future of both programmatic and native advertising, I believe they both will be around, and for the long haul. I think programmatic advertising has a bright future, and it will only be a matter of time before TV gets taken over by it. Many people believe this could never happen, but never say never! I’m sure this isn’t the first advertising method that people were skeptical about at first. With native advertising, I believe it will take a while before it becomes a prominent space in a companies ad spend. The hype of native advertising as a topic needs to calm down dramatically before we can understand if it’s even a useful way to advertise in the first place! As more and more “premium” advertisers migrate their ad spend towards digital, I definitely recommend programmatic advertising. It’s not going anywhere and it’s only becoming more and more popular. Over the next few years I predict lots of tweaking will be done in order to overcome the aforementioned obstacles, and it’ll be hard to find a reason not to spend money with programmatic advertising. As for native, I still recommend it because just like programmatic, it’s not going anywhere; but i also recommend waiting a while for the hype to die down and then evaluate if it’s worth it to invest in.