This week, V9 Digital had a discussion with Megan Sullivan-Jenks, Director of Marketing & Communications at Choozle, to talk about programmatic advertising and how businesses can make more of an impact with their marketing spend. Below are her answers to our questions, where she provides helpful insights into trends as well as general metrics that can help your business launch or improve its own programmatic advertising campaigns.
1. What is programmatic advertising?
Simply put, programmatic advertising is the automated process of buying and selling ad inventory through an exchange, connecting advertisers to publishers. This process uses real-time bidding for inventory across mobile, display, video and social channels – even making its way into television. Tactics offered in programmatic advertising can help complement any marketing strategy with a more holistic targeting approach across multiple channels.
2. How does programmatic advertising work?
Programmatic media buying includes the use of demand-side platforms (DSPs), supply-side platforms (SSPs), and data management platforms (DMPs). DSPs facilitate the process of buying ad inventory on the open market, providing the ability to reach your target audience with the help of DMPs. DMPs collect and analyze a substantial amount of cookie data to allow the marketer to make more informed decisions about who they’re targeting
On the publisher’s side, they manage unsold ad inventory through an SSP. An SSP reports attention data, i.e., how long a visitor was on a specific site or how many pages were viewed per visit. SSPs are ultimately in charge of picking the winning bid and serve the winning banner ad on the publisher’s site.
3. Why is programmatic advertising a big deal?
Before programmatic advertising, ad space was bought and sold by humans. The process was slow and inefficient, taking requests for proposals (RFPs), meetings, and negotiations before an advertisement could be manually published. Publishers could promise advertisers a set number of impressions for a target audience and advertisers would purchase that ad space if the target audience was one of their buyer personas.
And it worked—until the number of publishers began to grow at a pace that advertisers couldn’t keep up with. Today, programmatic media buying via an ad exchange allows marketers to cut out the middleman to streamline the ad buying process, serve more relevant ads, and better measure their return on investment.
4. How can I fine-tune my target audience using programmatic advertising?
Programmatic advertising offers a wide range of targeting options. I’ve found that almost any programmatic advertising campaign we run tends to involve a combination of first and third-party data.
The more first-party data, the better, but many businesses can’t rely on this alone because there might be holes in the information they collected. Third-party data is a must for most campaigns. There’s a hell of a lot of it available, but at the moment it’s impossible to be sure about its value before you use it.
A valuable data source is something you have to work out through trial and error. Having a robust process of testing and learning in place is the key. In the early stages of a campaign, you need to evaluate the audience of third-party data you are using to determine if it’s the most effective audience for your campaign objectives.
5. What are common goals and metrics for programmatic advertising campaigns?
Defining your goals for any programmatic advertising campaign is vital. Your goals will define what metrics you’ll watch during a campaign. These metrics help determine the progress of your advertising campaigns, what’s working well, and what needs to change. But without an established plan to monitor ad campaign results, you can’t realistically prove your ads are performing well.
Ultimately, the end game of every business is growth; you want to increase your bottom line. For digital marketers, this means their advertising ROI must generate positive results month-over-month.
The most common industry metrics include:
- Cost-per-thousand impressions (CPM): This metric is the way to bid where you pay per one thousand views (impressions) within programmatic advertising. Selecting viewable CPM bidding ensures that you only pay when your ads are seen.
- Impressions: This metric is the number of times an ad has appeared to people. Impressions can help you calculate brand awareness. Based on how many people you are trying to reach, the number of impressions will inform if you’ve been successful.
- Conversions: A conversion is a completed activity and they can be either macro or micro. A macro conversion is, for example, a completed purchase transaction, while a micro conversion is a completed activity, such as an email signup. This action indicates the user is progressing toward the macro conversion.
- Return on advertising spend (ROAS): ROAS helps you understand the return on ad spend from specific ad campaigns, instead of the whole marketing picture which is what return on investment (ROI) does.
6. What is a good media spend budget to get started?
Budgeting for programmatic advertising can be difficult because it varies so much. Factors like industry, cost of products, and the number of potential customers should influence your budgeting decisions. Typically, I suggest marketers work within their business to decide the amount they will be investing in marketing as a whole and then determine how much of that budget is going to be devoted to digital advertising. For a reference point, most companies spend about 5 to 15 percent of annual revenue on marketing.
Of the total marketing budget, approximately 35 to 45 percent should be spent on digital advertising activities. Of the digital marketing budget, about 15 to 25 percent usually gets spent on display advertising. Your overall digital marketing goals should also factor into how much budget gets allocated to social media spending. Also note that it’s important to not cannibalize the budget for content marketing, SEO budget, paid search advertising, display advertising, and other high priority digital marketing activities.
7. Do I need to be worried about where my advertising ends up being spent?
Programmatic advertising has gotten a bad reputation with marketers who are worried about where their money is going. But fraud, which is the crux of a lot of this worry, can be controlled. Fraud is widespread because it’s easy for bad actors to “game” the programmatic advertising system, but there has been an industry-wide push for more transparency and better fraud controls. Working with the right programmatic advertising partner can help connect you with reputable publishers and build a blacklist of fraudulent ones. In addition, marketers can use fraud detection technologies to have more control over where their money is being spent. For example, fraudulent click publishers tend to spike in their click activities over short bursts of time, which would be added to a block list.
8. Is setting up and running programmatic advertising hard? Can I do this myself?
Marketers can use their knowledge of other marketing strategies and apply it to their programmatic advertising. This includes target audiences, targeting strategies, and much more. Best yet, most programmatic advertising partners have built out training and educational tools so you and your team can get up to speed and manage the campaigns yourself.
Megan Sullivan-Jenks is Director of Marketing & Communications at Choozle – Easy Digital Advertising®. A self-proclaimed tinkerer, Megan’s a problem-solver for marketing and advertising strategies and execution. From nonprofits, consumer goods, and software, Megan has helped brands create online and offline marketing and communications strategies that are engaging and results driven. Outside of the office, Megan enjoys all things DIY like sewing, woodworking, and rolling up her sleeves to figure how things work.