What is Programmatic Advertising? How to Explain Programmatic To Your Family at Thanksgiving (Over Zoom)

You might hear the term “programmatic advertising” and your mind may turn to ‘computer programmers’ or some kind of ‘coders’ replacing ad agencies, or robots taking over for sales guys. 

That’s not exactly what this very broad macro concept is all about. 

Here we answer the question, 'What is Programmatic Advertising?'.

To help drill down into what programmatic advertising really means in the context of the ad business, it may be helpful to break it into two parts.

Overall, programmatic advertising is about using technology and data to make advertising easier and smarter. First, there’s the make life easier part.

1) Programmatic advertising aspires to make running an ad campaign as easy and efficient as possible. Stuff like:

- finding out what ad space is available on what websites and apps

-find out what it costs

-buying that ad space

-getting the ads where they need to go

-etc.

This is what nerdy ad people call “workflow” - all the sometimes cumbersome steps that need to be taken just to make sure an ad campaign happens.

Just like people don’t have to go to a teller to get money out of the bank, or don’t have to run to a department store to do their holiday shopping, brands can now use digital products to eliminate - or automate - many of these steps.

It’s worth remembering, not so long ago, the media universe was smaller. There were three big TV networks, a few major magazine companies and a handful of national radio and billboard companies.

So getting an ad campaign off the ground was relatively simple. Yes, there were phone calls and faxes and emailed pricing proposals, but choosing where to run a brand’s ads, and getting them placed wasn’t so challenging.

Today, advertisers have so many more options at their disposal - podcasts, connected TV, streaming audio, etc. Think of the internet alone - there are millions of sites and apps where the average advertiser could run ads and reach its desired audience. 

The sheer amount of phone calls and voicemails and contracts and one-on-one negotiations that could occur is staggering - and really doesn’t make any sense in a digital world. It would be like calling up every single vendor on Amazon while you're trying to buy a new lamp. Machines - really software - are just better at this sort of thing.

So that’s one half of the big programmatic advertising mission - to let machines do all the logistical stuff so brands and agencies can spend their time doing really smart stuff like coming up with cool creative ideas. 

Ok, now here’s the more complicated part.

2) Programmatic advertising also aspires to make advertising far more scientific

Unlike traditional media where brands have historically employed broad targets, on the internet, marketers can use all sorts of data to target consumers based on what they do online, what they buy, what they reveal on social media, what they search for, etc.

Now instead of targeting ‘men’ or ‘women 18 to 49’ like on TV, brands can target ‘people who are searching for a new car in Cleveland” or ‘people who have just purchased my product in the past six months.’

That’s the data part. Here’s where the programmatic advertising tech part comes in. Think again about how complicated it would be to negotiate contracts with dozens of websites. Then throw in all this big data work and it’s a mess.

So programmatic advertising technology lets computers do what they do best -- big data math-y stuff. This software can take whatever data a brand has on a potential set of customers, attempt to find ad space that will reach these people, and buy it immediately if that’s what a marketer wants to do. And this can be done at a massive scale - thousands of sites - in an instant.

Some brands even use highly sophisticated software designed to help computers figure out who is most likely to buy something based off an ad. It’s almost like having a script or a set of instructions to follow when running these monster digital ad buys: if this person is available to reach now, send them an ad. If they don't respond, send someone else an ad until you find someone who does, then find more people like that in real time.

This is an algorithm.

And you probably encounter some of the most powerful algorithms on the planet regularly. It’s how Google figures out what the best ads and listings to show you when you search for ‘cute shoes’ while showing someone else different listings for the same search. It’s how Facebook figures out what post to show you next while your neighbor sees something else entirely that they are likely to respond to.

Programmatic advertising aspires to be this powerful. The dream is to show people the right ad at the right time. Of course, for much of the ad industry, that dream is still a work in progress. The one thing we can all count on is that programmatic technology will keep advancing - and nothing will stay the same.

For more on some of the programmatic advertising terms referenced in this article and other programmatic advertising, bookmark our glossary of programmatic advertising terms here!