How Programmatic Ad Buying Is Changing Mobile Advertising

By Dennis Mink | February 12, 2015

If you haven’t heard of programmatic ad buying before, then now is the time to listen up. More than anything else, programmatic ad buying has completely altered the way that advertisement is bought and sold, both online and on mobile. There are a lot of reasons that the changes have been so dramatic, some of which I will outline here.

The Old Online Advertising Landscape

Before the advent of programmatic buying, buying and managing media used to be a lot different. In order to place ads, businesses would work with publishers directly, or they would place ads through exchanges. Both of these methods came with drawbacks. If placing ads with a publisher directly, both the publisher and the advertiser would spend valuable time working out the terms of the deal, handing off creative, setting up and so on. If ads were placed through an exchange, the ads were marked-up (so the exchange could make a profit). In the first case, things were more inefficient than they needed to be, and in the latter case things were more expensive than they needed to be.

What Is Programmatic Ad Buying?

Programmatic ad buying works off of the back of something called real-time bidding. Instead of advertising relationships behind handled directly, there are now exchanges that buy and sell ad space that publishers are offering, which are then bid upon in real-time. Programmatic buying relieves someone of the job of having to bid on that advertising space themselves, and instead places that responsibility in the hands of an algorithm. This algorithm is then fed information from the ad buyer about where the ads should be placed, for how much, at what times, and even at what frequency, in addition to other considerations.

Programmatic Ad Buying is More Effective

More than this though, programmatic ad buying combined with real-time bidding is capable of targeting individual users. You can deliberately target certain kinds of users based upon different characteristics. If you know who your customers are (or who the customers you want are), then programmatic ad buying + real-time bidding makes it possible to reach them directly in a highly efficient manner. This puts a tremendous amount of power into the hands of advertisers. And with minimal human intervention, the entire process of buying and serving mobile ads on a per user basis is simply more efficient.

Programmatic Ad Buying Is Cheaper

The time saved in leaving the placement of advertising up to an algorithm has obvious cost of labor benefits, but that’s not the only thing that makes it cheaper. Because advertising space is auctioned off in an open market, with buying done per impression, supply and demand are allowed to dictate the price of the ad. In addition, demand-side platforms allow businesses to place ads that adhere to strict budgets with specific goals. When enough effort is put into actually crafting the parameters of the advertising campaign, a much greater benefit can be realized with a much smaller investment.

Programmatic Ad Buying Is Better for Publishers

Initially, publishers were slow to adopt programmatic ad buying. They feared that the open market approach weakened the value of the advertising space that they had to offer. However, as programmatic mobile advertising has continued to grow in popularity, publishers have begun to come around. For one, it’s saving them the time of having to fill their ad space for themselves. Also, they’ve discovered that they are capable of controlling the price of their advertising space and of fetching the dollar value they want for those spaces.

Programmatic ad buying offers a tremendous number of benefits and continues to transform the mobile advertising landscape.

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