Within the advertising sector, the digitization of processes and automation has become a trend that is omnipresent. A particular form of digital marketing that is advancing fast is that of programmatic advertising. It entails automated bidding for digital campaigns or website display, and is established to replace extensive human negotiations with real-time online auctions (Rask, 2021).
It has been estimated that by this year, the US digital display spending via automated transactions will be approximately $81 billion (Fisher, 2019). Programmatic advertising thus enhances the efficiency, costs and transparency for both parties (advertisers and publishers) on the advertising platform, also called Ad Exchange. The described automated or real-time bidding process is a form of programmatic advertising that uses the technologies of Artificial Intelligence and Machine Learning to optimize the advertising process.
Where before it was needed to go through negotiations and pre-set prices to buy an advertising spot on a website, it now takes milliseconds to find the optimal price and target group for both the supplier, the website owner, and the demand, the advertisers, through ad exchange (Rask, 2021). This ad exchange is similar to a platform where you can buy online ad space from different ad networks or groups of websites that offer advertising space. The real-time bidding process will be explained in more detail below, to illustrate the efficiency of it compared to traditional human price bargaining;
When a website visitor clicks an URL, a request is sent to the ad exchange with their information such as related interests, if the individual visited the website before, etc. This visitor is then matched against the available advertisers and the system evaluates which advertisers’ willingness to pay (WTP) is the highest for this particular website visitor. A real-time auction takes place and the highest WTP or bid will be the advertisement that the website visitor sees when the webpage is loaded. The advertiser with the highest bid can hence show you their ad via the webpage, of which the corresponding webspace is supplied by a publisher on this ad exchange platform. This whole process happens in a few milliseconds and is based on data analysis and available information about each individual website visitor, whereas before advertisers would show their ads to all website visitors of a particular page, solely based on the fact that they thought these visitors would be interested in their respective product or service. Due to the implementation of real-time bidding, it is possible for your ad to show up on multiple different webpages of a particular ad network via the connection through ad exchange (Rask, 2021). If interested, the process of real-time bidding is described in more technical detail in the following picture.
The usage of real-time bidding in the advertising sector shows the impact of automation for digital marketing, given the usage of technologies as AI and algorithms to find the optimal advertising spot for advertisers. It can have a disruptive impact on this industry, since advertising is made more accessible for companies with a smaller budget, while the targeting is way more precise given the granular data that is included in the decision-making process during real-time bidding.
References
Rask, O. (2021, September 22). What is Programmatic Advertising? The Ultimate 2020 Guide. Match2One. Retrieved on 24-09-2021 at https://www.match2one.com/blog/what-is-programmatic-advertising/.
Fisher, L. (2019, April 25). US Programmatic Ad Spending Forecast 2019. Insider Intelligence eMarketeer. Retrieved on 25-09-2021 at https://www.emarketer.com/content/us-programmatic-ad-spending-forecast-2019.
Reagan, R. (2013, November 11). Turn Infographic: The Life of an Ad. ExchangeWire. Retrieved on 28-09-2021 at https://www.exchangewire.com/blog/2013/11/11/turn-infographic-the-life-of-an-ad/.
Photo Credits: https://www.hetdeventernieuws.nl/2018/09/21/online-marketing-van-ondernemingen-in-deventer-is-ondermaats/
