Programmatic (noun)
also referred to as: programmatic buying, programmatic advertising, programmatic media
What It Means
Programmatic is the use of computer algorithms to buy media placements for advertising. Programmatic can refer to several methods of algorithm-based buying, but it’s most often used as a catch-all for any buying method that involves automation at some level.
What It Means To You
Just as media agencies buy TV placements based on what that they think their target audience is watching, programmatic algorithms seek out digital media that a target audience is engaging with – except that machines are a lot faster than humans at making decisions and communicating with each other. That means that algorithms can select individual ad placements based on who they think is looking at a website, rather than buying large clusters of placements weeks or months in advance.
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Buyers typically use programmatic because it’s more efficient in terms of how much media has to be bought to reach a target audience. Think of buying a car ad in a newspaper. Many readers that will see the ad aren’t interested in buying cars; but advertisers spend a lot of money based on the probability that some of those readers will be interested in buying a car. In that sense, a lot of the ads printed in the thousands of individual newspapers that get printed are going to waste. If you could print ads only in newspapers that car intenders were reading, you could be sure that your ads were reaching the right audience, and you could buy fewer ads and save money. On a website, advertisers can do just that, by using algorithms and data to figure out which visitors are car intenders, and selectively serving ads to them. That way the advertiser can be sure that every individual ad they buy is a lot more valuable, and they get a lot more bang for their buck.
That’s how it’s supposed to work in theory. In reality, there are reasonable doubts about whether algorithms can really figure out whether someone is a car intender (or soccer mom, lawyer, etc). Programmatic also means that media buyers have to take their hands off the wheel — they don’t always know exactly where and when the algorithms are sending their ads, which poses real risks to the brand when ads end up somewhere they shouldn’t.
Examples in the market
Programmatic has come to be the catch-all moniker for a wide range of companies, which provide services like putting up publisher inventory for sale, executing buys for advertisers, finding specific audiences to target, and actually delivering ads to users’ computers. These companies together form the “programmatic industry,” a subsector of the ad industry focused on buying and selling media programmatically. It includes major enterprise technology companies like Google, Yahoo and AOL; specialized tech providers like The Exchange Lab, Acuity Ads and Turn; digital publishers and publisher groups like Olive Media and the Canadian Premium Advertising Exchange (CPAX); and digital media agencies like Xaxis, Accuen and Mindshare.
