Note: This article is the next in AI-Driven Marketing- 101 Series on HumansForAI, a non-profit, where our goal is to make the workforce AI-Savvy.

A few years ago when it all started, buying advertising space on the internet was simple. There was the website and the advertiser, just the two parties trying to buy and sell. Then we slowly moved to a time when paid advertising had numerous other options — Google Adwords, Bing, Social, Sponsored Content and so on. A marketer used his judgment on how to use his advertising budget. However the rules of the game changed big time as advertising evolved, automation and “machine intelligence” came into play and the arena of Programmatic Advertising was opened to the advertising world.

What is Programmatic Advertising?

Definition:

“Programmatic Advertising is the automated buying and selling of digital advertising through centralized computer-driven ad exchanges and related databases and management platforms.”

At the crux of programmatic advertising is the concept of a real-time-bid to grab the advertising space for the preferred target customer profile.

The “bid” and the “target profile” are the two areas where machine intelligence comes into play.

Using the computer platform, multiple advertisers bid based on real-time data of user’s interests, behavior, location, intent to buy etc and the best bid gets the ad placement.

A typical process is as follows — once a user visits a website, the profile data of the user is sent across by the website (ad publisher) and a bid is then matched. The advertiser with the best bid gets the ad space. This is done in a matter of milliseconds.

Where is the bid settled? New entities come into action — one of the main one being the Ad Exchange. The other important entity is the Traders Desk — The advertisers/advertising agency have a team defining their campaign KPIs and who is responsible for sending across bids. The bids need to be sent by the Ad Exchange via a platform, i.e the DSP — Demand Side Platform ( ex. DoubleClick ). On the other side of the Ad exchange are the websites, social and other publishers who send in the user profile via the SSP — Supply Side Platform ( ex. Facebook).

Here is a diagrammatic representation of the same.

For more details, you can go on to this excellent article on the Basics of Programmatic Advertising

The other important entity is the “Ad Network” which constitutes of the advertisers involved in the bidding process.

Ad Network vs. Ad Exchange

Much of the ad tech industry uses a set of confusing terms stepping on each other’s toes. Ad network and Ad exchange are two of them. Here is an attempt to differentiate them.

Ad networks aggregate inventory from publishers, filter or segment it based on different targeting options and sell it to advertisers. Ad exchanges are digital marketplaces where ad networks, along with advertisers, publishers, and others can buy and sell inventory by auctioning impressions to the highest bidder. So summarizing, Ad Exchange can be looked upon as an extension to the Ad Network.

For more details please read on to this excellent article on Ad Network vs Ad Exchange

Google AdWords vs. Programmatic Advertising

The next question that typically comes up is if I am already using Google Adwords, do I still benefit from using Programmatic? The short answer is ‘yes’, as the DSP allows you to have much wider access than Google Adwords would. Here is an excellent article which gives more comparison on this aspect Google Display Network and Programmatic Display

Using AI in Programmatic Advertising

Using AI predictive intelligence in the media buying process is evolving rapidly. Products like AlbertMediaMath OmnichannelAdgoIBM Bid Optimizer, and PredictiveBid are providing options which use the latest advancement in machine learning to optimize impressions in the real-time bidding process. Brands can use artificial intelligence to serve more relevant, targeted messages in the right places, at the right times by providing data-driven insights. AI advertising has been on the increase due to the ability to tailor interest-based ads for each individual customer. Predictive analytics enable companies to better target and efficiently use their ad campaigns for their brands on potential consumers.

Conclusion

According to Gartner, your mantra for the 21st century

“Make it Digital, Make it Programmable, Make it Smart”.

As machines enter the arena among the human sales teams in the buy and selling ad inventory, it is time for us to jump to the next level of the pyramid and learn in the new rules of the game to get a better ROI from your marketing effort.

About the Author:

Deepa is a co-founder at Cogitari, a Research, Advisory and Technology Consulting firm and a founding member of Humans For AI, a non-profit focused on building a more diverse workforce for the future leveraging AI technologies. Learn more about Humans For AI and join us, as we embark on this journey to make a difference!