What Does Programmatic Mean?

I’m sure everyone expected me to write this month’s article on the big game, or all the commercials that aired during the breaks, or how the crowd can now make the most insightful and entertaining ads. For example, here is a local ad for Jamie Casino, a personal injury attorney, which aired in Savannah, Georgia, during the game. The commercial was made with iMovie and is a fun example of what an individual can do with modern technology.

What can now be done with technology goes well beyond this creative example – it stretches into our ability to measure engagement, build audiences, and buy media. The tools are readily available for the local business person like Jamie Casino to effectively compete with national brands in the open marketplace. This creates some interesting buying dynamics and poses even more interesting challenges for publishers and brands when evaluating programmatic channels.

For years, local businesses have been able to participate in ad exchanges, which converted search ads into display ads and paired them with relevant content. This produced good results for publishers delivering meaningful CPMs, but the quality of the ads and the creative left much to be desired. Many publishers relegated these units to the bottom of the page, or hid them deep in the content well. With programmatic channels, publishers are now able to access, aggregate, and control the quality of display and video ads that appear on their sites coming from the various demand-side platforms (DSPs). This improves the diversity of advertising and increases the competition for audiences, which improves the yield on the inventory.

An ad like Jamie’s raises the question: If he is willing to outbid Pepsi for a video spot on FOXSports.com, does the publisher care? The publisher theoretically makes more money from the video being viewed and the creative is of a high enough quality that the audience will not see a major difference, especially considering many of Pepsi’s commercials are now crowdsourced. However, there are a few considerations that the publisher should keep in mind, such as how much total budget does a local advertiser have to spend? Is there enough advertiser demand to equal the spending power of a brand like Pepsi? How much more work is involved in ensuring local buyers comply with creative policies, managing quality expectations, and providing a consistent user experience?

The good news is that programmatic marketplaces are creating more competition for inventory, allowing publishers to begin seeing the true value of the audiences they have worked hard to build. This enables publishers to make decisions that benefit, and ultimately grow their businesses.