Over the past couple of years, “programmatic advertising” has wormed its way into the media buying lexicon. So what is it, and is it the right choice for your brand?

Programmatic ad buying typically refers to the software-based, real-time buying and selling of digital inventory based on user data; when you implement a real-time bidding, programmatic advertising strategy, you’re buying the profile of a user who visits a site—not the content on that site.

Using a traditional approach, you might purchase ad space on House Beautiful in order to reach female homeowners. But through programmatic advertising, you can prioritize the user profile – the full picture of the person – over the site content. For example, a brand in the home category may target female homeowners while they’re shopping for shoes or male homeowners while they’re catching up on sports news.

How is it used?

Because programmatic advertising is a sales driver focused on cost-driven measurement and optimization, many key players fall in the retail and direct sales category, such as Nike, Kellogg and Procter and Gamble. Most programmatic efforts are flexible, fast-moving creative executions—“template creative” that results in more cost efficiencies for these data-driven buys than traditional banners.

What are the pros?

• Low-cost inventory
• High click-through rates
• Strong conversion rates
• Opportunity to maximize digital spend
• Valuable customer data and insights; for example, you may learn that women exposed to your brand on travel websites are more likely to buy your product than women exposed to it on food websites; these lessons can be applied to print marketing and other channels

What are the cons?

• Limited or no editorial control
• No native placements or bold takeovers
• Potential lack of inventory and inventory guarantees

How can you make it work for your brand?

Success in programmatic advertising is founded upon capitalizing on the philosophy that the user profile matters more than the accompanying editorial content. To make programmatic work for your brand, you have to take a broad view of your audience and all of their likes, dislikes, behaviors and desires; you have to think about how your brand or product relates to other brands and products and use that information to help shape your marketing strategy. If you’re advertising tools using a real-time bidding strategy, you might find your audience on sites about topics ranging from stock car racing to vacation home rentals. If you make kitchen appliances, a fashion site might be the perfect place to tell your story in six words or less.

The brands that are successful at programmatic will:

• Continue to employ a media strategist. Don’t eliminate the human element; make sure you have a skilled media buyer reviewing your data, reacting to it and making informed determinations regarding creative tweaks.
• Be prepared to adapt creative as quickly as the media plan. Are you ready to go in with 20 creative executions and throw 15 out the window by the end of the day? The differences are usually minor—e.g. colors and headlines—but you need a fast, nimble creative team to maximize performance.

Meanwhile, it’s important to maintain the cornerstones of your comprehensive marketing strategy. When brands first began dabbling in social media, some made the cardinal error of neglecting their website. But just as you can’t abandon your website because you have a great Facebook page, you shouldn’t halt other components of your media plan to jump on the programmatic bandwagon. All brands need to be in multiple places.

Where is it going?

Programmatic advertising is still developing. The players will change as it grows and matures; more full-service providers will enter the picture, and provider selection will be streamlined. We’ll see a shift toward more premium inventory, which will make it more appealing to brands. Transparency will improve, too, and we may even see an increase in private (one-to-one) or premium programmatic offerings.

Long-term, programmatic strategies will be adopted by most brands, representing as much as 15 to 20 percent of their digital schedules. With the exception of companies like Amazon, it’s unlikely we’ll see larger percentages. Brick-and-mortar businesses must maintain a balanced media buy strategy. But as the benefits of programmatic are realized by more advertisers, it will only continue to grow.