Programmatic advertising, where machines purchase ads instead of humans, has made advertising faster and more efficient. Instead of buying an ad from a salesperson with human negotiation and a manual insertion order, programmatic advertising makes ad buying easy, fast, and automated.
Now, programmatic ad buying can also be combined with artificial intelligence to purchase the perfect ad slots that meet users’ preferences, capitalize on social media trends, and optimize marketing investment. In this article, we’ll look at why programmatic advertising is so prevalent today, how it will continue to take over advertising in the future, and how to make sure it doesn’t backfire.
How Does Programmatic Advertising Work In Practice?
When advertisers programmatically purchase ads from major networks or publishers, the entire ad auction and purchase process occurs as the user’s browser loads the page or immediately afterwards.
Companies no longer make just demographic buying personas to understand their audience; they use data collected from ad and tracking networks and automatic ad buying to present the perfect ad for their audience. As we’ll see in the next section, this property makes programmatic advertising very effective.
Why Is Programmatic Advertising So Popular?
The primary driver for the huge success of programmatic advertising is that it increases return on investment. By allowing advertisers to show users the right ad at the right time based on their browsing history and other information, users get relevant, targeted advertisements.
Lots of different data points are taken into account to serve users the perfect advertisement:
Demographic information about the user, Context of their visit, Preferences of the user, interests, etc.
Because ads are bought and sold quickly without human involvement, the process is also more efficient from a financial standpoint. In general, companies spend less on advertising overhead for their return on investment.
How Exactly Does AI Factor In?
AI takes on a number of important roles in the programmatic advertising process:
- Predictions for how the campaign will perform, which allow it to optimize ads for better return on investment.
- Per-user personalization so that users who see ads are likely to actually click them.
- Finding which type user can be reached with which channel and design, to ensure that ad spend is well-targeted.
- Improvements in the real-time bidding process to get the best deal possible.
As a transformative way to deliver increasingly relevant advertisements to specific groups of users at a low cost, programmatic advertising is revolutionary. While it works very well, it’s important to remember that human knowledge and intuition still has an important role in the advertising process.
For instance, in the aftermath of Kobe Bryant’s death in January 2020, many users noticed that they were receiving ads for Kobe memorabilia—something that fans found tasteless and inappropriate given the situation. In this case, AI-powered programmatic advertising saw what appeared to be a great opportunity to display ads for his jersey and similar products, when in fact it was the opposite. Maintaining human oversight and using these powerful tools carefully can avoid backfiring situations like this one.
If programmatic advertising is used intelligently and humans step in at the right times, it can be an extremely useful tool to make marketing more effective.
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