Programmatic Buying: Welcome to a new era of advertising

Ben Johnson on 7 October 2014

Programmatic buying, or real-time ad bidding, is rapidly changing the way advertising spend is parcelled out online, with the share of programmatic spend in US digital media transactions expected to rise to over 80% by 2017. Western Europe will not be far behind. Programmatic buying represented $12 billion across major global markets in 2013 and will reach $33 billion by 2017. And with 87% of brands planning to spend at least 50% more on programmatic buys of desktop display, mobile and video advertising over the next six months, there is no argument over the direction the industry is headed.

How does programmatic buying work? When a user visits a website, information about the user is sent to an ad exchange where their profile is matched to the requirements of potential advertisers. These advertisers then bid in real-time for the right to get their ad in front of the user; the highest bidder wins and their ad is displayed on the website for that particular user. This entire progress is an automated system involving computer algorithms and takes less than 150 milliseconds.

Advertisers get their ads directly in front of their target audience, and this audience gets ads more in line with their interests, increasing the ad’s effectiveness and the likelihood of user interaction. The days of marketers hoping for the best and shouting their messages into the abyss are over. Brands and marketers can now talk directly to the people who are most interested in what they have to say. This is not just good for sales and a company’s bottom line; this revolution in advertising lets brands craft meaningful messages and opens up a whole new world of possibilities for building relationships with audiences.

With the advancement of complementing web technologies, marketers are moving beyond impersonal and uninspiring GIF banner ads to ads featuring rich-media, such as video and other key content, and genuinely engaging call-to-actions. More advanced, interesting and engaging advertisements, coupled with the rise of programmatic buying, is resulting in marketers seeing a much improved ROI over the previous era of online advertising.

We at Gruvi are well aware of these exciting developments and the rapidly changing market place, and we’re certainly playing our part in the revolution. Users of Wave, our cloud-based social marketing platform, can expect to see some fantastic new features over the coming months that aim to make your life easier in the world of programmatic buying. Our exploits so far in this space have been incredibly exciting – a recent campaign involving rich media banner advertisements utilising our Showtimes API saw a conversion rate of 44% among users who hovered over and interacted with the banner ad.

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