What exactly is programmatic?

Like all words that are introduced to an industry, the phrase “programmatic” is banded about the advertising world with gay abandon. A large proportion of the time incorrectly. So what exactly is programmatic?

Well first lets start by saying what it isn’t:

Programmatic is not….

  • A media channel. Most people working in the digital advertising space will have heard somebody say, “we are doing programmatic”, “we need to plan some programmatic”, or even “we are a programmatic provider”.  Programmatic in itself is not a media channel. It is a means of buying media via technology. Right now that is predominantly programmatic display, but we can also buy online video programmatically, elements of outdoor programmatically, and audio advertising programmatically. So using the phrase programmatic alone to describe a media channel is inaccurate.
  • The same as real time bidding (RTB). Programmatic technology often goes hand in hand with exchanges and auctions, but the two are not to be confused with each other. Buying media programmatically (using technology and data) does not always mean an auction model. Programmatic technology can be used for fixed price buying, for tenancy activation, for auction buying an any other model you may be using for your advertising. The technology just activates the buy, and ideally overlays the data. It doesn’t have to involve a real time bid.
  • A way of paying less for media. Programmatic technology can put the power back into the hands of advertisers, and enable them to reduce the wastage they may have previously been unable to with direct publisher buys. But that doesn’t always mean media will cost less. In many ways it should justifiably cost more if you are confident in your targeting and you are sure you are reaching your target audience.  Cost should be directly related to delivery against the campaign success metrics, not based on some predetermined belief about how a channel should be priced.
  • A way for publishers to fill unsold inventory. In its early days, exchange bought display inventory was used by publishers to back-fill unsold inventory via their direct sales channels. Now you see far less direct selling and far more premium inventory made available programmatically. Driven by advertiser and agency demand, more publishers are taking a programmatic first approach and beefing up their data capabilities to provide more accurate targeting. There are very few display advertising buys you will find are unavailable to buy programmatically.

Definitions of what programmatic actually is vary depending on where you read. Invariably each definition will involve some combination of:

  • technology
  • data
  • automation
  • media buying

Some will also involve real time, however as mentioned above that is not always specifically true, and will become less true as other channels expand their programmatic capabilities. True TV advertising is a long way from being bought programmatically. Logistics and the risk of something going wrong mean that even if it moves to an auction, that auction will take place in advance so ads can be scheduled and tested to avoid issues.

I wrote a definition as part of a programmatic training session recently, which came out as:

The harnessing of technology to make advertising decisions in real time (or near to) based on pre-defined criteria

And even I immediately questioned myself. I had included real time even though I made the point it wasnt always the case. I used pre-defined criteria in replacement of data as I think this is more accurate. Pre-defined could be user data, but it could also be web page content, or it could be site specific.

Whatever the definition, programmatic technology is affecting every advertising channel available and will continue to do so for some time.  But greater understanding is needed as to what it actually is if marketers and advertisers are to fully harness its capabilities.

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