Programmatic advertising reached a value of about 788 million euros in our country, up 10 percent from the previous year.
This was made known by data from theInternet Media Observatory of the Milan Polytechnic, confirmed also in this early 2023 by a more than rosy trend of the sector that is likely to close with a variation of 8%-10% more than the same 2022.
Percentages, values and investment volumes: let us start from here to understand the scope of that strand of digital advertising, considered, until a few years ago, only a gamble.
But what is programmatic advertising? Can we consider it a resource for medium-sized companies to invest in as well?
Let’s have some clarity.
- Programmatic advertising: what it is and how it works
- From audience segmentation to buying space: how programmatic advertising works
- Programmatic: evolution and growth, including in Italy
- Programmatic advertising in the post-cookie era: from objective limitations to surprising opportunities
- Connected TV: the future of programmatic advertising also passes through here
Programmatic advertising: what it is
The right message to the right person, at the right time: if we wanted to sum up the essence of programmatic advertising in one sentence, this would probably be the most appropriate one.
In fact, the expression “programmatic advertising” defines a type of digital advertising that is based on the automated buying and selling of advertising space through the use of platforms dedicated precisely to the purchase of impressions and space.
Advanced audience profiling and segmentation, buying of advertising space by auction, real-time bidding, and more: programmatic advertising is, by its very nature, one of the most advanced, innovative and effective ways to do advertising today.
The reason is easy to understand and can be traced back to one of its peculiarities, namelyautomation. From defining target audiences, to paying for impressions: everything is done through platforms where artificial intelligence algorithms and machine learning are the central engine.
Efficiency and effectiveness of campaigns, ROI optimization, analytics and detailed reports are just some of the aspects that distinguish a programmatic advertising campaign: what makes it most attractive in the eyes of brands and advertisers is its degree of viewability and reach, especially with the advent of new digital technologies.
Programmatic advertising how it works
So many players at play but, at the core, essentially the meeting of supply and demand. In programmatic advertising as well as in any advertising model we have two key players:
- publisher or publisher that makes its network and space available;
- advertiser or advertiser who decides to invest in buying such space for their campaigns.
However, the picture is not so simple: other platforms are also needed for a programmatic advertising campaign to be implemented
Let us analyze them in detail.
Platforms for programmatic advertising
DMP (Data Management Platform) profiled, high-performing audiences are the first step to winning ADS campaigns. It is at this stage that DMPs, or platforms that collect, normalize, analyze and manage a substantial amount of both first-party and third-party data, come into play. The goal is to enable the creation of qualified audiences and detailed profiles of potential customers through the use of artificial intelligence algorithms. A DMP makes these anonymous customer profiles available for other tools, especially in media buying activities.
DSP Among the tools with which a DMP dialogues we find the DSP, or Demand Side Platform. As the name itself reminds us, a DSP makes it possible to automate the purchase of advertising space, allowing, in parallel, the advertiser an optimization of resources. It collects, in fact, in a single environment the rates of different networks and allows brands to refine their target selection as well.
SSP It is what we can call the corresponding of a publisher-side DSP. In fact, the Suppy Side Platform allows publishers to make their advertising space available for purchase, maximizing the cost per impression.
AD Exchange In short, we could define Ad Exchange as the technology that enables dialogue between SSPs and DSPs. Ad Exchange, in fact, enables the automated and real-time buying and selling of advertising space, the full-fledged matching of supply and demand.
Programmatic advertising: evolution and growth, also in Italy
New models, even more effective technological solutions for ever-increasing optimization of investment and performance: the programmatic market is confirmed as one of the most solid and promising markets in the entire digital advertising sector, despite the uncertain macroeconomic environment.
Greater control over placements, targets and automated supply and demand management make this advertising model certainly more efficient and scalable, but, not without its pitfalls.
Chief among these certainly are frauds that hide behind fake clicks and impressions generated by bots.
But while risk may always be around the corner, the goal is to make this model increasingly safe for advertisers and publishers.
In addition to greater control over formats, targets, and investments, what seems to be driving programmatic the most are the multiple reachable devices that span the world of smart TV and mobile devices.
Video and native advertising are the formats experiencing the most consistent growth, and although the value of the market is growing steadily, we should also not forget the growing challenges that lie ahead in terms of addressability in the age of the third-party cookie apocalypse.
Programmatic advertising in the post-cookie era: what to do ?
The much heralded deprecation of third-party cookies, already implemented by Safari and Firefox, and for the time being only announced but already extended by Big G, has and will also have a significant impact on the performance of programmatic advertising campaigns.
But as is often the case, stimulating opportunities lie behind threats: just as we have often observed in the broader context of marketing, user and customer data are becoming increasingly central and represent a real asset for successful data-driven strategies that focus on personalization, including in advertising.
While publishers are moving in the collection and exploitation of first-party data, that is, all data released by users and customers in their properties, more or less explicitly, advertisers are also moving in this direction.
More and more first-party data, then, and where this will not be sufficient contextual advertising may come into play, that is, the delivery of contextually targeted campaigns, relevant to the context in which they are delivered, through the use of Artificial Intelligence and Machine Learning algorithms.
In this regard, we report below some aspects that the Internet Media Observatory of Politecnico di Milano considers crucial to the success of programmatic advertising campaigns in the post cookie era:
- centrality of first-party data;
- Use of data management platform for aggregated, transparent and effective management of user data, processed anonymously;
- awareness on the part of all stakeholders of the need to further improve the transparency of the entire supply chain through the adoption of an ethical approach to the processing of data itself;
- Increase in the use of video and native formats;
- integration of new platforms and channels such as smart TVs, smart speakers, and digital radios that will allow target audiences to be reached in increasingly innovative and effective ways;
- timely and clear measurement of campaign goals by identifying the correct KPIs including omnichannel and cross-channel.
Privacy, contextualization, transparency, ethical approach to data management: in the post-cookie era, programmatic advertising has interesting challenges ahead but will manage to evolve while still ensuring high levels of personalization.
Programmatic advertising and connected TV
New technologies and channels are gradually expanding the potential of programmatic advertising especially in terms of viewability and performance optimization.
In this context, smart TVs have represented and represent one of the privileged channels. Increasingly present in our homes as of 2019, smart TVs allow advertisers to reach users who are difficult to reach through linear TV and in extremely immersive contexts offered precisely by streaming content.
But the innovation does not stop there: the growing popularity of televisions with Hybrid Broadcast Broadband TV ( HBBTV) standards will enable the delivery of even more personalized campaigns.
What if programmatic advertising campaigns could also reach target audiences outside the home environment? This is the new frontier: Digital Out-of-Home Advertising (DOOH), or multimedia content distributed via the Web and visible in publicly accessible areas such as bars, shopping malls, stations or airports.
While traditional signage offers the same image for days, in DOOHs the contents are dynamic and change according to the context as well showing particularly effective also thanks to the use of advanced technological solutions such as QR code, augmented reality.
Opportunities for advertisers and publishers are increasingly unlimited to create effective, high-performing campaigns. Programmatic advertising offers many advantages in terms of targeted targeting, flexibility and scalability, but privacy and security remain key aspects to be protected.
