Programmatic trading: a new era for the digital advertising industry

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The last several years has seen explosive growth of programmatic buying

Specific Media's UK Country Manager, Paul Oronoz, talked us through the ins and outs of the process that has taken the digital advertising world by storm, namely programmatic trading. We spoke to him about what it entails, and whether programmatic buying technology is the future for the digital advertising industry.

TechRadar Pro: What is programmatic buying?

Paul Oronoz: Programmatic buying is a method of purchasing online advertising through an automated bidding process usually consisting of standard display and video formats, along with audience segments. Programmatic buying is driven by market demand, price, and algorithms created from a large pool of information.

Over the last several years the advertising industry has witnessed an explosive growth in this technology that is set to change the way advertisers, media owners, and agencies operate. Recent research by the IAB (Internet Advertising Bureau) further illustrates this point, with 89% of European publishers, advertisers and agencies all stating that they believe programmatic trading will indeed have a significant impact on digital advertising.

These claims aren't unfounded with figures already showing a sharp increase in the use of programmatic technology – a number that is only set to increase over the next few years. In fact, Magna Global has predicted that programmatic spend is set to triple over the next three years with spend expected to reach $32bn (around £20 billion, AU$37 billion) globally by 2017.

TRP: How are brands using programmatic buying to target their segment audience?

PO: When segmenting audiences, brands can use a number of strategies to reach their desired audience and therefore buying objectives through programmatic buying. There are essentially two primary objectives, either the desire to achieve a direct response result or branding result.

For example, automotive advertisers might want to reach people who are showing interest in purchasing a car and look to drive these people to their site where they can gather more information about a certain make/model. Through an automated bidding process an advertiser can purchase display and/or video inventory, select their audience through 'behavioural targeting' and/or relevant automotive sites and measure the results in real-time (i.e. actions on the automotive sites such as requesting a quote).

In addition, brands are starting to use programmatic buying to achieve branding objectives such as increasing brand awareness. This can include the use of targeted video ads to reach people who are interested in travelling to Thailand, and measuring the impact on awareness of the brand and/or specific offer from the travel company. This way of buying also provides advertisers the ability to buy across all devices (i.e. mobile, tablets, etc.) and geographic areas which can further enhance brand strategies.

TRP: How is programmatic buying changing the market?

PO: Programmatic buying has allowed media owners, brands and agencies more control on reaching consumers online with more transparency, and flexibility on inventory management and costs.

The advent of programmatic buying has signified a new era in tailored advertising, enabling brands to control who they target – regardless of which device the consumer is using. As a result, we have seen significant growth in agencies developing their own platform for programmatic trading through what is typically referred to as an Agency Trading Desk (ATD). We are also seeing brands develop their own in-house Brand Trading Desk (BTD).

This will allow brands better control of their data and increase their transparency. Many brands have already seen the benefit of Brand Trading Desks which allows them to match and tailor their message with specific consumer touch points, offering more relevant information in line with specific consumer needs, which for the brand will result in increased loyalty and sales as well as a stronger presence in the market.

Desire Athow
Managing Editor, TechRadar Pro

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website builders and web hosting when DHTML and frames were in vogue and started narrating about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium.