Programmatic Advertising and Non-Programmatic Advertising (Traditional Advertising)

Chapter 1

Introduction

In this paper we will discuss Programmatic Advertising (PA) and why programmatic ads are more widely used today than Non-Programmatic Advertising or Traditional Advertising.

Key words : Programmatic Advertising, Non-Programmatic Advertising

Chapter 2

Programmatic Advertising

Programmatic advertising or what we often mention Programmatic Ads (PA) is a term to describe the process of utilization of various technologies in digital marketing practices that automate the purchase, positioning, and optimization of ads, which are done in real-time or almost real, with varying degrees of control and automation. Programmatic Ads (PA) as is a new marketing technique applied to the Internet and emerging technologies (Palos, 2019). In the process programmatic ads replace human activities with the digital technology in making the digital advertising plan that is on target as well as efficient in digital platform. Specifically, in the context of ad purchases, it will reduce the cost and time in the process of determining (selecting and evaluating) the means for proper ad placement and the process of negotiating the placement of an ad in a digital platform.

The term "programmatic" means the use of metadata to target an audience, based on different variables such as: geographic data, behavior patterns, demographics, interests, etc. This gives advertisers the ability to know exactly what media should be, the right ads to show, at any given time for the right audience. (Palos, 2019) stated from many researchers, that PA is a novel technique which has been developed in recent years, and uses large amounts of data, or big data and has stimulated growth and investment in graphic advertising on the Internet. PA, when compared to traditional models of buying and selling advertising space on the Internet, has led to models which use the number of user impressions, the cost of banner clicks and creative advertising (Aslam & Karjaluoto.H, 2017) (Miralles-Pechuán, Ponce, & Martínez-Villaseñor, 2018)

Programmatic advertising is used to by company to consolidate their efforts into one platform. It can be used to access virtually any channel, including mobile platforms, desktop platforms, audio and connected TV. “Through programmatic advertising, audiences are segmented using targeting practices that ensure the ads go to the right audiences at the right time. This method is much more tailored, so it gets your ad to customers quickly and easily thanks to advanced algorithms. Programmatic can expand reach, increase types of ads, refine targeting options, and achieve speed and cost-efficiency (Hears Communications Inc., 2022)”

How a programmatic does Programmatic Ads work can be explained in the following image below:

Picture 2.1

Source: Digital Market Asia

Currently, spending on programmatic advertising is increasing when compared to non-programmatic advertising.  That's because Programmatic advertising has many advantages. over non-programmatic advertising. The advance of the Programmatic advertising ecosystem is also driven by advances in artificial intelligence technology (AI). AI can assist in better identifying customer patterns, enhancing ad efficiency, and lowering acquisition costs (Sramek, 2021). The figure below showed the difference among them and the advantage of Programmatic Advertising compared to non-Programmatic Advertising.

Picture 2.2

Traditional vs Programmatic

 

      

Source: https://www.match2one.com/blog/traditional-vs-programmatic

By looking at the differences in some of the above aspects (buying process, pricing, reporting, optimization, and efficiency), programmatic advertising becomes the company's choice for its display advertising strategy. This is reflected in the use of advertising budgets for Programmatic Advertising is increasing from year to year compared to non-programmatic advertising. Programmatic advertising is expanding like never before. According to eMarketer, more than 88.2% of display ads in the United States will be purchased programmatically by 2022 (Sramek, 2021). “In Indonesia, the total expenditure for Programmatic Advertising is expected to grow by up to 54 percent. And the value can reach more than $ 500 million or around Rp. 6.8 trillion (Global Advertising Trends). Indonesia is also the fastest growing programmatic ads market in 2020 along with India and Brazil (`Lintas Mediatama, 2022).” Below figure is the global programmatic advertising spending from 2017 to 2021.

Picture 2.3

Source: https://www.smartinsights.com

Chapter 3

The Advantage of Programmatic Advertising

The increasingly used Programmatic Ads today and in the future cannot be separated from the industry's need for the choice of the right strategy in achieving the target market also supports efficiency at the same time in this digital era. Some of the advantages of Programmatic Advertising is described in the figure below:

Picture 3.1

Source: https://www.toolbox.com/marketing/programmatic-advertising

According to (Deshpande, 2020) Programmatic Advertising have the advantages:

1. Real-time Insights

It provides advertisers real-time information of the performance of their ad campaigns. We as advertisers can utilize this campaign data to gather more information about their target audience and campaign.

 

2. Enhanced Targeting Capabilities

We can adopt two methodologies to connect with our target audience. 

• First, we can combine the first- and third-party data to improve the audience profile and reach out to them with accuracy.

• Second, related to contextual advertising. Contextual programmatic advertising derives data from both (the user profiles and the page content) to deliver ads at the most appropriate place. 

Apart from these strategies, advertisers can use remarketing, geo-targeting, data and IP address targeting, and website or app targeting to adopt a more refined approach towards targeting. These improved capabilities provide plenty of room to advertisers to personalize their ads.

 

3. Greater Transparency

We as advertiser can trace the performance of ads, see how the budget is being spent, and optimize the campaigns in real-time to get the results we want because we as advertisers are aware of the ad inventory that we are purchasing and the audience we’re targeting.

 

4. Better Utilization of the Budget

As programmatic advertising provides advertisers with real-time campaign performance, we can invest the budget in avenues that will get us the best results. This efficient investment allows us to spend our campaign budget effectively and yield better ROI.

 

5. Tackle Ad Frauds Effectively

The digital advertising industry is marred by unethical ad practices. Publishers have long been duping advertisers by implementing various fraudulent tactics. The transparency offered by programmatic advertising platforms enables advertisers to evaluate each publisher in real-time based on the performance of their ads and choose those who deliver justifiable results. Major programmatic ad platforms also curb ad frauds by blocking fake bot traffic and pre-rolls ads and offer ad credits in case a fraudulent tactic slips through their system.

Chapter 4

Conclusion

Programmatic Advertising is an automation effort in creating advertisements on digital platforms by utilizing big data supported by artificial intelligence technology. Its ability to reduce time-wasting work, its ability to map the target audience according to needs and reliable effectiveness and efficiency make programmatic advertising a choice of digital marketing strategy that cannot be ignored and will even become the focus of marketing strategies in today's digital world.

References

`Lintas Mediatama. (2022, April 14). PT Lintas Mediatama. Retrieved from lintasmediatama.com: https://lintasmediatama.com/get-to-know-programmatic-advertising-as-one-of-the-2021-digital-marketing-trends/?lang=en

Aslam, B., & Karjaluoto.H. (2017). Digital Advertising around Paid Spaces, E-Advertising Industry's Revenue Engine: A Review and Research Agenda. Telematics and Informatics 34(8), 1650-1662.

Deshpande, I. (2020, 12 10). Toolbox Marketing . Retrieved from www.toolbox.com: https://www.toolbox.com/marketing/programmatic-advertising/articles/what-is-programmatic-advertising/#_004

Hears Communications Inc. (2022). marketing.sfgate.com. Retrieved from Hearst Bay Area: https://marketing.sfgate.com/resources/programmatic-advertising-explained

Miralles-Pechuán, L., Ponce, H., & Martínez-Villaseñor, L. (2018). A Novel Methodology for Optimizing Display Advertising Campaign Using Generatic Algorithms. Electronic Commerce Research and Applications 27, 39-51.

Palos, P. (2019). A Study of The Effects of Programmatic Advertising on User's Concerns about Privacy Overtime . Journal of Business Research 96, 61-72.

Sramek, E. (2021, December 08). Scaleo: Affiliate Marketing Insider. Retrieved from www.scaleo.io: https://www.scaleo.io/blog/top-2022-programmatic-ads-trends-in-advertising-industry/