Programmatic Advertising: Types, Examples & Strategies

Programmatic advertising is a digital marketing strategy through ads that has become an integral part of marketing efforts.

However, what is programmatic advertising, and how does it differ from other types of ads?

In short, programmatic ads are a digital marketing method that uses automated technology to buy and display ads in real-time.

In the following article, you can delve deeper into what is programmatic advertising, how it works, and some terms related to ad-based marketing. To learn more, read the discussion below.

What is Programmatic Advertising?

To balance the massive technological innovations, creative teams and sales marketers must master various potential approaches, one of which is programmatic advertising.

Programmatic ads are a method of selling or buying digital ad space that is done automatically or programmed.

Essentially, this programmatic ads technology combines artificial intelligence (AI) and complex algorithms to make real-time purchases of ad inventory.

In the past, long before the existence of these advertising methods, the entire process of buying ad space was done manually, which was more time-consuming and resource-intensive for businesses.

Therefore, various platforms have emerged as a solution to improve the efficiency of advertising campaigns. 

With this approach, advertisers can focus more on optimization and other strategic steps, as the administrative process will take place automatically.

Types of Programmatic Ads Channels

Here are 6 types of advertising channels that you can use:

1. Display Ads

Display ads are visual advertisements shown on various websites. These ads can be images, banners, or animations appearing at different positions on web pages. This type is suitable for enhancing brand awareness by capturing visual attention.

2. Video Ads

Video ads are moving advertisements that appear on online video platforms or similar websites. Video ads can be categorized into 3 types:

• In-stream Ads: Appear just before video content is played, such as on YouTube.
• In-display Ads: Appear in search results, usually in the form of recommended videos.
• Out-stream Ads: Appear within video content or general content.

Video ads can maximize user experience visually and are suitable for conveying more complex messages or capturing attention with visual narratives.

3. Audio Ads

Audio Ads generally can be broadcasted on music streaming platforms or podcast services. It appears in the form of audio clips embedded in the middle of audio content. 

This type is effective for reaching audiences listening to audio content and is more suitable for delivering ad material that doesn't require visual display.

4. Social Ads

Social ads frequently appear in the form of feed or story ads, depending on advertiser preferences. Suitable for reaching target audiences based on age.

5. Native Ads

Native ads are designed to blend with organic content on specific platforms. They can be sponsored articles, product recommendations, or ads integrated into the content flow, usually featuring sections like "Read More."

6. DOOH Ads

Digital Out-of-Home Ads are digital advertisements displayed outdoors, such as digital billboards, screens in shopping centers, or public transportation stations. They use digital technology to display messages that can be changed rapidly.

Why Is Programmatic Advertising Important?

Just like other activities that can be automated, programmatic advertising also offers its ease and benefits. Some of them include:

1. Personalized Advertising

With the help of artificial intelligence, this type of digital advertising helps businesses display highly personalized ads based on a target audience database, such as demographics, preferences, and interaction opportunities.

2. Increased Reach

These types of ads can also help businesses reach audiences through various online channels by supporting cross-device targeting strategies. 

As a result, advertisers can reach their audience across various devices, including computers, tablets, and mobile phones.

3. Flexible Ad Formats

Programmatic ads are not limited to one type of ad format. From display ads to video ads to native ads, this platform supports various creative formats. 

This provides advertisers with the flexibility to choose the format that best suits their campaign message and the preferences of the target audience.

4. Simplified Access to Ad Inventories

With automation within the process, businesses can navigate and select ad inventories that align with their marketing strategy. 

Moreover, programmatic ads can recommend ad inventories that are most suitable for the targeted audience profile through smart algorithms.

5. Improved Conversions and ROI

With in-depth data analysis, it enables businesses to achieve a high level of precision in targeting audiences. 

Ads customized to user preferences, behavior, and demographics are more effective in motivating actions and increasing conversion rates.

6. Accelerated Response

With programmatic ads, you can obtain data on ad performance and analyze it directly. This means responsiveness to such performance can also be provided more quickly. 

For example, if a strategy is not yielding the desired results, advertisers can promptly respond and make changes without waiting for the campaign period to end.

How Programmatic Advertising Works

Programmatic ads is a pioneer in the world of digital marketing that can optimize ad purchasing and display in real-time.

With this type of digital ad, your business can reach the right audience in a matter of seconds. So, how does it work?

1. Collecting Visitor Data and Website Information

When a user accesses a web page with ad space, information about that website and the visitors accessing it is sent to the ad exchange.

The collected information includes geographical location, search history, user device type, and demographic characteristics.

2. AI Analyzes Visitor Data

In the ad exchange, artificial intelligence (AI) plays a central role. After obtaining information or visitor data, this technology then analyzes it to understand their preferences, behavior, and characteristics.

AI processes the data at high speed to determine visitor profiles and assess the potential value of ads for specific advertisers.

3. Determining the Highest Bid through Real-time Bidding

What is real-time bidding? In programmatic ads, this term refers to the process in which advertisers compete to have the opportunity to display their ads to specific visitors.

Real-time bidding (RTB) opens opportunities for advertisers to adjust their bid prices directly based on the characteristics and preferences of visitors.

In this stage, the bid prices for ad space will be based on how well web visitors match the target criteria of each advertiser. Of course, the highest bid will be the winner entitled to display their ads.

4. Displaying Ads in Real-Time

Once the highest bid is determined, the ad material from the advertiser will be automatically uploaded to the available ad space on the related website.

This process occurs within seconds to ensure that ads are displayed at the right and most effective time.

How to Use Programmatic Ads

Learn the steps below if you want to start implementing a programmatic advertising strategy:

• Understand the terms and platforms involved in this advertising process, such as DSP, ad exchange, and so on.
• Define the goal of your ads. Is the ad aimed at maximizing brand awareness, increasing organic traffic, or conversion rate?
• Identify a suitable platform, which could be Google Ad Manager, Amazon DSP, or others.
• Analyze the budget and determine the bidding strategy to be used in real-time bidding.
• Create ad material as engaging as possible.
• Monitor, evaluate, and optimize ad material that may need improvement in future campaigns.

Programmatic Advertising Examples

To deepen your understanding of what is programmatic advertising, learn about its usage in the example below.

Example:

A seafood restaurant decides to leverage programmatic ads as a marketing strategy to introduce its unique menu and increase customer visits.

Before launching the campaign, the restaurant conducts market research to identify the culinary preferences of its target audience.

Finally, they set the campaign goal to increase public awareness of the uniqueness of their menu and invite more people to try the special dishes at the restaurant

The restaurant chooses a programmatic platform that allows it to target users on popular food delivery apps, food recommendation sites, and social media platforms.

Then, after two months of running the ads, the restaurant received the following report:

• The conversion rate through online orders increased by 20%.
• Public awareness of the restaurant significantly increased, measured by the number of search queries in online searches and social media interactions.
• Direct visits to the restaurant increased by 15%.

This example illustrates how programmatic digital advertising can be used by businesses in the culinary industry to enhance exposure, attract the right audience's attention, increase online interactions, and generate positive conversions in the form of orders and direct visits. 

Terms You Need to Know in Programmatic Ads

If you haven't mastered the concept of digital advertising, learn the following terms to deepen your understanding.

That was the complete explanation of what is programmatic advertising, types, benefits, and how it works to support digital marketing strategies. 

In addition to ads, you can also maximize digital marketing activities with sustainable strategies such as SEO.

Unlike ads that are only displayed for a specific period, producing content for SEO optimization can increase organic website traffic in the long term. 

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