Programmatic buying and header bidding: the next step in your online advertising
The importance of online advertising has grown again in 2020 compared to previous years. With the explosion of online transactions that has taken place worldwide this year, it is becoming increasingly urgent to have a sound, effective online marketing strategy. This article explains exactly what programmatic buying is and how it works, and goes directly into the latest trends of desktop or desktop mobile header bidding with which you, as a small advertiser, have just as much chance as large advertisers.
Not every entrepreneur advertises online, for example via banners or other forms of digital advertising. For many entrepreneurs who do not do this, however, this is based on an incorrect assumption. For example, that internet users are blind to advertising forms such as banners and never click on them. Or that buying online advertising space is like firing a shotgun, where it is difficult to target your audience and appeal to a select audience. That is why the focus is often preferable to, for example, newsletters or a social marketing strategy.
That is of course not wrong, but also in terms of digital advertising an incredible amount is possible today. One of the reasons for this is the principle that programmatic buying (or programmatic marketing) hot.
What is programmatic buying?
Programmatic buying means that advertisers – i.e. entrepreneurs who, for example, want to show a banner – offer real-time via a pre-programmed system on the possibility of showing one specific website visitor at one specific moment one specific advertisement. How this somewhat abstract description can turn out in practice can best be explained with an example.
Let's say you want to show your new ad about games for the PlayStation 4 and 5. Of course you want to reach your target group: consumers who own a PlayStation 4 or 5. You are willing to pay twenty cents per ad, because you know from experience that with that amount you still have enough margin to make your campaign profitable. Programmatic buying enables you to use algorithms to ensure that your advertisement for the amount you bid (which is twenty cents each) is shown to visitors and in online places that are relevant in terms of context. In other words: to visitors who most likely own a PS4 or PS5 and who are most likely to be open to looking for new games at that time. In this case, that is probably not at eight o'clock in the morning, but rather, for example, at eight o'clock in the evening. Programmatic buying processes data to add context to advertisements.
How does programmatic buying work? Data provides context
That sounds great, of course, a system that allows you to show ads for a fixed price that convert all kinds of data points into personal relevance. That is not easy, however. Programmatic marketing only works by the grace of big data – a lot of information about website visitors needs to be known (through, for example, cookies, search behavior and browser history), for the system to work properly. The data must therefore be interpreted properly.
Interpreting it is a matter of trial and error and you as an advertiser also respond to this. As soon as you start applying programmatic buying, you will be able to see how your ad campaign is progressing in real time. So how many clicks you get and what the conversion of those clicks is. By continuously adjusting, adjusting parameters and properly analyzing the results, you can target your advertising campaign more and more sharply on the target group that is relevant to you. You can also live scaling up and down and, for example, a few days before Christmas – when everyone goes shopping for gifts, including games – a few extra steps. The future of online advertising lies in stepping up the context.
Pitfalls in programmatic buying
Many entrepreneurs who take a closer look at it, soon see the benefits of programmatic buying. However, there are pitfalls to be aware of.
These pitfalls have to do with one important premise: you probably can't do this yourself. Programmatic buying is a tough subject and is not just for everyone. It can bring you a lot, but if you don't know what you're doing, you're throwing your money away. It is therefore wise to hire a professional. There are plenty of agencies that offer programmatic buying services, but that is where the first pitfall immediately appears: don't just hand over everything. After all, you want to know what data is used for your campaign and how it works. It's still your ad campaign, so you're responsible.
Also, don't forget to be transparent about programmatic buying and how you've set it up. Privacy is a delicate subject, and although programmatic buying fully complies with all rules and guidelines, you do not want to incorrectly inform consumers and relations.
What is also important to realize before you start: you do programmatic buying continuously and deserve your attention on a daily basis. It's not something you put down once and then don't have to worry about it again. So you have to be able and willing to make time for this.
Added value in your marketing mix? Hell yes!
If you can find that time, programmatic buying can be of great added value in your marketing mix. Programmatic buying does come on top of your current content marketing strategy, not 'instead of'. It makes things you already did more measurable. You get more grip on your ads, which – if you do it right – results in a higher ROAS (return on ad spend). The moment when you start with programmatic buying is therefore an exciting moment for, for example, your entire marketing department. After all, it can boost your entire marketing strategy.
The next step: header bidding
A term closely related to programmatic buying is header bidding. This is the latest development in the field of programmatic buying and has to do with the way in which it is determined which advertiser is allowed to show its banner to the website visitor who arrives at that moment.
Traditionally, this is done through a single auction. A distinction is made here between advertisers who have a direct deal with a website (ie for whom it has been determined that an x number of banners must be displayed) and advertisers who participate in a general auction. As soon as a website visitor comes in, it is checked whether there is a direct advertiser who is willing to pay the minimum amount for the ad. Is that the case? Then he can show the ad and the auction closes. Is there no direct advertiser willing to pay the minimum amount? Then the advertising space up for grabs and advertisers can also bid without a direct deal. The highest bidder may show his ad.
This will be the waterfall method mentioned. Advertisers with a direct deal are at the top of the waterfall and therefore have a better chance of being allowed to show an ad. That's good news for them, but bad news for the website because they could potentially have received a higher amount from an advertiser who was lower in the waterfall.
Header bidding is an alternative to the waterfall method, where several auctions take place at the same time and each comes with its own auction winner. The highest bidder can then be chosen from all those winners. It is a kind of tiered auction, where the average revenue per ad goes up.
That seems bad news for advertisers, because the costs are going up. But there is also good news to report about this method: the visibility of smaller advertisers is increasing. This is also best explained with an example.
This short video goes a little deeper into the background of header bidding:
Example: the food truck
Suppose you recently got a food truck and are at festivals every week. You prefer to be close to the entrance, because that's where all the public walks by and that's where you can earn the most. However, those spots are often given over to food truck owners who have been around for a long time or have long-term deals with the festivals. In short: you never intervene here and are always behind to fight the crumbs.
Now there is a new system in which everyone can bid on a stand and the place is given to the food truck owner who comes up with the best proposal. Everyone has an equal chance, as long as a good price is offered.
Header bidding in practice
Header bidding is not applied everywhere, and where it is applied, it is not applied on all devices (there is a distinction between mobile header bidding and desktop header bidding). However, if you decide to apply programmatic buying, you should be aware of the principle of header bidding. You have to join, because more and more websites where you will want to advertise are applying header bidding or are going to apply it.
Ultimately, a principle such as programmatic buying, supplemented by header bidding, also leads to good entrepreneurs who are willing to learn and adapt to new digital possibilities. So it is a new point where you can distinguish yourself from your competition. Smart digital entrepreneurship, knowing your target group well and being able to respond smartly, is becoming more important than buying advertising space at random everywhere. Ultimately, that is of course a very nice development for real entrepreneurs.