Analyzing the Programmatic Phenomenon

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Every industry develops lingo and acronyms that are relatively unknown to anyone outside the industry. That is why people who are not involved in digital advertising have no idea what programmatic advertising is. But, the people who make their living buying and selling advertising space on websites, mobile computing devices, online videos and search engines are extremely familiar with programmatic advertising.

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What Is Programmatic Advertising?

According to CEO of [x+1] John Nardone, programmatic advertising is a system of buying digital properties that not only allows the buyer to bid on premium digital properties, but it also offers a wide array of metrics that can be used to examine the effectiveness of that advertising. Programmatic advertising ties together all of the various fragments of digital advertising into one cohesive platform and allows the buyer to determine which properties they would like based on platform and price.

Is Programmatic Advertising Popular?

Robert Hof of Forbes Magazine says that 86 percent of ad agency executives are using some form of programmatic buying for digital advertising. Companies such as Yahoo!, Google and AOL have been buying application companies associated with programmatic advertising just to improve their platforms and attract more buyers. It is a phenomenon that is racing through the digital advertising world and it does not appear to be stopping any time soon. Business Insider estimates that programmatic buying will increase from $3.1 billion in 2013, up to over $18 billion in digital advertising buys by 2018.

Why Is It So Popular?

Programmatic advertising resides on an advertising executive’s computer as a piece of software that allows the executive to analyze and buy digital advertising space. The sellers like programmatic advertising because it can be contracted through machines, without the need for human interfacing. It is also extremely efficient to use for buyers and sellers. That saves the advertising sellers a great deal of overhead in paying human staff to sell advertising space.

The buyers like programmatic advertising because it is an easier way to see all of the digital properties that are available and make calculated purchases. Advertising properties can be purchased in the immediate future, or they can be reserved in advance to help buyers get the best value for their money.

What Are The Problems With Programmatic Buying?

Despite every attempt by AOL and other companies to make programmatic advertising successful, 60 percent of advertising executives say that programmatic is still difficult to understand. They want to use it, but they are just not sure how.

These same executives also point out that programmatic buying can be influenced by false numbers created by some of the older digital advertising systems that are in place. In other words, buyers are not sure that the numbers they are looking at are completely accurate. Programmatic started off with a reputation for being easily influenced by fake data and it is still trying to shake that reputation.

Even with the challenges that face programmatic buying, the digital advertising industry still sees programmatic buying as the wave of the future. Large advertising companies are investing millions of dollars into the idea of programmatic buying and more ad executives are buying into the concept on a regular basis.

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