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The digital advertising industry is predicted to grow at lightning speed.

As online advertising technology improves, new methods are constantly being tested to create efficiencies around the buying of ad space. Recently, media buyers are moving to add programmatic buying to their online advertising tool belt.  Many agencies are leveraging tech partners with access to ad exchanges, while others have chosen to develop their own trading desks to allow them to buy media themselves.

What is “programmatic”? … For a fact, it has as many meanings, but at heart it is the new paradigm of digital media buying and selling, a marketplace for ads that moves more like Sensex than the elaborate lunches and cocktails that still run channels like television and print. Programmatic markets have three key characteristics. They are:

  1. Automated— Machines make decisions on what ads will run where, based on rules (which are often set by humans, so relax).
  2. Auction-driven— Although this is changing as more so-called private exchanges and “premium” inventory appears, marketers generally have to bid on impressions against other marketers (this is where the “non-guaranteed” point comes in — no one is ever guaranteed to win an auction).
  3. Information-heavy— The promise of programmatic marketplaces is that they value data over deal making, providing marketers an opportunity to bid (and pay) only what they think an ad is worth in a particular time and place.

Fundamentally, programmatic buying allows the inclusion of many data sources to inform targeting and optimization decisions in an automated, real time context. Buyers can layer both third-party data, as well as advertiser first-party data, onto campaigns. It suggests that there’s little or no human intervention in the buying process.

The main advantage of programmatic buying is that it uses near-real time systems and algorithms to automate the delivery of data-driven solutions and advertising to consumers i.e. creating targeted offers and ads per individual consumer – there’s no “one ad fits all” any more.  This then has the exciting potential for marketers to, for the first time, evaluate campaign performance and make in-flight modifications to get maximum bang for the buck.

Programmatic buying is huge in the US, a $7.4-billion annual business. In India, its already worth around Rs.2,000 crores, about two-thirds of the annual Rs.3,500-crores digital advertising spend.

The benefits of Programmatic buying are not limited to the buyer. The improved effectiveness it delivers for the advertiser also translates into increased relevance for the consumer and greater revenue for the publisher. And in a world where consumers want high quality news, professional content and open forums for social interaction to be subsidized by advertising, that’s a very good thing.

While five years ago, marketing and advertising would have never been associated with technology, today technology is indispensable to any media company. To remain competitive in this day and age, successful advertising firms will need to ensure data and decisions are processed and exchanged in milliseconds. Technology is at the core of their success.

Abhishek Mehrotra

iMET Global