Programmatic Advertising – What you need to know in 2020

There is hardly any way around Programmatic Advertising. In Online Marketing, programmatically purchased and displayed advertisements are currently becoming the industry standard. 2020 will be the year when this vision becomes reality.

It is therefore essential to stay on track. Whether you are already familiar with this advertising jungle or have not yet started using Programmatic Ads: we will show you the most important findings for 2020.


The basis: What is Programmatic Advertising?

What is the idea behind it? An automated process in which digital advertising spaces are sold using software.

This allows advertisers to bid in real time on these spaces for their advertising banners – and to place their advertising in a targeted manner.

Programmatic Advertising includes all steps from planning, to setting up and running a campaign. For advertisers, this works with the help of a DSP (Demand Side Platform). Here they select audiences and characteristics, set campaign parameters (e.g. duration and budget) and check results.

An auction procedure, known as Real Time Bidding, enables online ads to be displayed individually, in real time and efficiently.

This is no ordinary auction: the highest bidder does not necessarily win an advertising space.

Rather, the underlying 2nd Price Auction principle achieves that, in addition to the price, the relevance of an advertisement is also of importance. The winner of this combination pays only one cent more than the second placed bidder. Regardless of whether the own bid was significantly higher.

Thanks to algorithm-based automation, this auction takes less than a tenth of a second. So users don’t notice it when loading a website.


Programmatic provides marketers with numerous advantages

However, Online Marketers not only benefit from optimized prices.

The individual placement of advertisements in real time is also relevant. In this way, your message always reaches an interested user. Better user acceptance for advertising banners and higher added value are the logical consequence of this.

Another efficiency factor: The DSP system continuously learns from ongoing campaigns and existing data. Costly campaign optimizations are reduced significantly. Scattering losses decrease while the results of a measure improve.


Programmatic Advertising 2020: The latest developments

We already mentioned it in the introduction: Programmatic Advertising is firmly anchored in online marketing. According to a forecast by Zenith, 69% of all ads in Display Marketing are currently programmatic. And the trend is increasing.

In addition, there are new channels on which Programmatic Advertising can be delivered. With radio spots and Programmatic Voice Marketing, two language-focused channels are establishing themselves.

However, the development is most advanced in another area: Addressable TV is already available in about 60 % of all US households this year. (Source) The growing distribution of smart TVs suggests that this potential is also increasing.


Reliably reach your audiences

The more channels are available, the more important the cross-identifiers become.

Today these are mainly anonymous cookies. They are stored on the respective devices and allow users to be targeted across the entire web.

In view of the latest judgements on the General Data Protection Regulation (GDPR) and the upcoming e-Privacy regulation, the advertising industry is currently experimenting with other options.

Since cookies can only be set with the explicit consent of the user, the associated data pools are shrinking. If users do not allow cookies in their browsers, this does not necessarily mean a lack of interest in a particular topic or contribution.

Creative Audience Targeting reacts to this. If you limit your target group imaginatively and intelligently, you will still reach the right people.

At the same time, the value of First-Party Data increases. These often come from highly specialised publishers. Their websites and online magazines often provide exactly the right target audience for your campaign.

Aggregating the First-Party Data of numerous publishers results in highly relevant new data sets. These can be found in DMPs (Data Management Platforms), but are usually integrated in DSPs. There you simply select suitable target group segments for your Programmatic campaign.

Digital privacy and data self-determination in an increasingly digital living environment thus play a role in Programmatic Advertising. In this way, the challenges in the Programmatic area are aligned with the overall market. This illustrates its market maturity. As an Online Marketer in 2020, pay special attention to these developments!

Author: Mareike Schindler

8 Jan 2020

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