Programmatic Advertising Pros and Cons

Categories: Programmatic Advertising|By Justin Mosgrober|9.9 min read|

Programmatic Advertising Pros and Cons

Advertisers hear about programmatic advertising and all the benefits it can offer a lot these days. But is it really all that it’s cracked up to be?

In this article, we’ll address the rising popularity of programmatic advertising and explain the pros and cons of implementing it into your marketing strategy.

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Defining Programmatic Advertising

Although you probably already know what it is by now, it would be helpful to assign a firm definition to what we’re talking about before getting into it any further. Programmatic advertising refers to the use of automation-based technology in the media buying process. It encompasses several pillars that each serve a function in facilitating ad purchase, sale and placement, including Demand Side Platforms (DSPs), Supply Side Platforms (SSPs), Data Management Platforms (DMPs) and Ad Exchanges.

Programmatic Advertising vs Traditional Advertising

Intro to programmatic advertising shows us that this advertising strategy is different from traditional advertising techniques. Programmatic advertising differs from traditional methods of ad buying in that it relies solely on technology to do so. Other forms of the process require some or complete manual intervention in order to work. This is not the case with programmatic advertising, as it can all be done automatically through software. Programmatic advertising and managed services campaigns both offer contextual advertising.

While originally limited to simple auction based bidding systems, programmatic advertising has quickly evolved into a comprehensive solution for both buyers and sellers of digital media, offering advertisers advanced DSPs, SSPs and DMPs to take advantage of. It’s now possible to sell ads and purchase placements programmatically on just about any type of digital media, including display ads, video ads, mobile ads and even audio ads.

The Rise Of Programmatic Advertising

Programmatic advertising has had a meteoric rise in the world of marketing since its introduction in the mid-90s. Back then, it was incredibly primitive and limited in ability, only used for simple tasks like ad placement on websites. There also weren’t many providers to choose from; DoubleClick was considered the market leader at the time.

But programmatic advertising has come a long way since then. In the past decade especially, it has exploded in popularity and is now used by the vast majority of digital marketers. In fact, data released in 2020 showed that 83% of marketers use their ad spend on programmatic ads, a number which has likely only grown since then.

Why is that?

Well, like every other form of technology, programmatic advertising has evolved with the times. As new innovations, ideas and inventions have emerged, it has adopted and integrated them into its systems at the same pace. While programmatic advertising may have been initially characterized by the simplicity of the early internet, it’s now defined by the AI, automation, and deep learning of 2022. It is equally beneficial for marketing and advertising. Brands intended to use this strategy should not delve into marketing vs advertising because this technology has proven effective for both of them.

This has made it an incredibly powerful tool that can be used for a wide variety of applications, and is likewise the reason why programmatic advertising is considered to be the future of marketing, with spending expected to surpass $493 billion by the end of 2022.

But what about alternatives? While programmatic advertising has proven to be popular among many marketers, there remain alternate options and not everyone ends up using it. Why? What are some of the reasons why you might not want to use programmatic advertising, and what are the benefits that have allowed it to achieve such popularity? We’ll take a look at that and more in the following section.

Programmatic vs Display Advertising

Digital marketing has two distinct facets: programmatic and display advertising. Display advertisements are all about certain ad formats, whereas programmatic advertising relates to a particular approach for publishing ads. Display advertisements can sometimes be a part of programmatic advertising, and programmatic ads can sometimes be display ads. Display advertising vs programmatic is confusing topic for many advertisers because there are certain similarities and differences.

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Programmatic Advertising Pros And Cons

There are several advantages and disadvantages to consider before implementing programmatic advertising into your marketing strategy. While all noteworthy, you’ll notice that some hold more relevance and importance to you than others. By reviewing the list below, you can get a sense of whether or not programmatic ads are right for your business.

Programmatic Advertising Advantages

Programmatic advertising hasn’t achieved the popularity it has in digital advertising without some serious advantages to offer. And there are many – the following is a list of some of the most impactful.

High Efficiency

As was already mentioned earlier, programmatic advertising is considered an alternative to manually-performed media buying processes. In the past, this meant selling ad space by working with individual publishers to identify and buy placements one at a time. This was an incredibly inefficient process that often resulted in overspending, as well as ads being placed on low-quality websites.

With programmatic advertising, all of these problems are solved through technology. Ad space placements are bought and sold in real-time through automated systems, with the help of algorithms that take into account a variety of factors (like the user’s location, interests, browsing history, etc.) to make sure that ads are placed in front of the right person, at the right time.

This system is not only much more efficient than manual media buying in digital advertising, but also ensures that ad spend is always optimized for maximum ROI.

Amazing Ad Revenue and ROI

Continuing from our last point, programmatic advertising’s high efficiency results in much better ROI when compared to traditional digital advertising methods.

This increased ROI is due to a number of factors, chief among them being the increased efficiency of ad buying and placement. But it’s also worth noting that programmatic advertising allows you to target your ads much more effectively, therefore ensuring that your ad spend is always going towards people who are actually interested in your product or service.

Moreover, programmatic advertising provides you with a wealth of data that can be used to fine-tune your campaigns for even better results. By constantly monitoring and analyzing your campaign’s performance, you can make small tweaks that have a big impact on your bottom line.

Increased Flexibility

Programmatic advertising also offers increased flexibility when compared to other digital advertising channels. For one, it allows you to change your ad campaigns on the fly, in response to changes in your target audience or the overall market. Additionally, programmatic ad placements can be customized to a much greater extent than other placements, giving you more control over where your ads appear.

This increased level of flexibility allows you to experiment with different strategies and tactics, and quickly change course if something isn’t working out – giving you a significant advantage in today’s rapidly-changing marketplace.

Greater Reach

Another advantage of programmatic advertising is that it can help you reach a wider audience than most other digital advertising and marketing channels. Thanks to the real time bidding process, your ad can be placed on any website or app that falls within your targeting criteria, no matter how big or small. It uses contextual targeting strategy which increases the reach of the audience.

This is in contrast to more traditional methods of display advertising, where you’re limited to placing ads on the websites of individual publishers that you’ve negotiated with.

Programmatic advertising reaches further beyond these boundaries, allowing you to cast a wider net and reach more potential customers, both domestically and internationally. This strategy uses behavioural targeting which utilizes customer behavior to send the appropriate message. You can also choose to target specific user segments across different devices (computers, smartphones, tablets, etc.), which gives you an unprecedented degree of precision over who sees your ad.

Behavioral targeting pros and cons

The process through which businesses provide customised ads and marketing communications to audiences based on their digital footprints is known as behavioral marketing, often referred to as behavioural targeting. This comprises the search habits, geographic location, preferences, purpose, demographics, cookies, IDs, site analytics, and other information about the users. Behavioral data can be used by advertising professionals to target the appropriate audience. Your advertising campaigns becomes meaningful due to the behavioral data.

You may fill in any holes in your ad plan that may exist with the use of behavioural targeting. Behavioral targeting might be useful if you’re getting a great return on investment from brand awareness advertisements but would like to increase conversions from content offer ads.

Pay-per-click advertising is not the most cost-effective approach. That category includes behavioural targeting, which may be pricey. To ensure you have the financial flexibility to create advertisements for the whole campaign, examine your advertising budget and set budget limitations.

Programmatic Advertising Disadvantages

While programmatic advertising does have a number of advantages, it’s not without its disadvantages. Let’s take a look at some of the potential reasons why someone might choose to go with an alternative ad buying solution.

Lack Of Human Control

One of programmatic advertising’s biggest assets can also be one of its biggest caveats, depending on what your ad buying preferences are. Because programmatic ad buying is mostly automated, it can lack the human touch that some advertisers want.

For example, if you’re running a brand awareness campaign, you might want your ads to be placed on certain websites because of the look and feel of those sites, or because they attract a similar audience to your own.

With programmatic ad buying, you won’t have as much control over targeted ads and where your ads are placed, which could limit the effectiveness of your brand awareness campaign.

Potential For Inappropriate Ad Matching

In the same vein as the last point, the lack of human oversight in programmatic advertising systems can sometimes mean inappropriate results. While the technology it uses is extremely advanced, no system is 100% accurate or effective, leaving room for error.

For example, your ad might end up being placed on a website that is known for offensive or harmful content. While this isn’t necessarily the fault of the programmatic ad buying system, it’s something to be aware of, and something that you might want to avoid if you’re particularly worried about your brand’s image.

Ad Fraud

Ad fraud is another common concern for digital advertising firms considering programmatic tech; ad fraud is a type of cybercrime that uses malicious code to generate fake traffic or clicks on online advertisements. Ad fraud is a multi-million dollar problem for businesses and can have a significant impact on an organization’s bottom line.

Requires A Good Understanding Of Technology

Programmatic ad buying systems are built on cutting-edge technology, and as such, they can be difficult to understand and use effectively if you’re not tech-savvy.

If you’re not comfortable with using complex technology, or if you don’t have someone on your team who is, programmatic advertising might not be the best solution for you.

Can Be Expensive

Programmatic ad buying can be a very effective way to reach your target audience, but it doesn’t come without a cost. Because of the complex technology involved, programmatic ad buying can be more expensive than other types of ad buying methods.

If you’re working with a limited budget, this might not be the best solution for you.

The Bottom Line

Programmatic advertising has a lot to offer advertisers who are looking for a more efficient and effective way to reach their target audience. However, it’s not without its disadvantages, and it might not be the right solution for everyone.

If you’re considering using programmatic ad buying for your next digital advertising campaign, make sure to weigh the pros and cons carefully to decide if it’s the right solution for you. By taking the time to do your research, you can ensure that you make the best possible decision for your business.

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