What Is Programmatic Advertising?

Group of young people sitting at a cafe, talking and enjoying, top viewProgrammatic advertising refers to a data-oriented, technology-driven, automated method of buying and selling advertising. Originally focused on digital display advertising, the ability to transact programmatically has expanded past digital display advertising to mobile, video, social, native, and even linear television. Programmatic advertising was initially created as a tool for efficiency. However, as programmatic expands into TV and other traditional mediums, the ability to precisely target audiences is gaining more importance. Programmatic is sometimes mistaken as a way to buy/sell low-quality, remnant inventory that publishers could not sell directly. This is a misconception, as programmatic is the preferred form of transacting within the advertising ecosystem. According to eMarketer, 2015 marked the first year where more US display dollars were transacted programmatically than through traditional direct sales. While most people think RTB when they hear programmatic advertising, the marketplace is shifting to programmatic direct. According to eMarketer, in 2016 programmatic direct will account for 53% of all US programmatic ad spending. Although programmatic layers data-driven decision making and automation into the advertising space, this does not replace the need for human decision makers in order to run a successful campaign. In truth, the need for human insights is only increased by programmatic capabilities.

types of program inventory

Newer Forms of Programmatic—Native and TV

Programmatic buying is leading the charge across digital display, mobile, social, and video. Data-driven audience targeting and automation are making inroads into native and television; however, the spending is still limited. Native programmatic advertising has become much easier than before, after the IAB updated OpenRTB protocols in 2015. Publishers and technology providers are moving quickly to meet a high demand for automation in the native space. Programmatic TV advertising has a larger hurdle to clear, with only 1% of TV ad spending forecasted to be transacted programmatically in 2016, rising to only 6% in 2018, as reported by eMarketer. The industry must adapt to shift away from panel-based demographically transacted inventory to audience transacted inventory.