Programmatic advertising has taken the digital marketing world by storm. And for good reason! It's flexibility, automation capabilities, and increased ROI potential put better control of ad spending and campaign design into the hands of businesses - where it belongs! As a result, programmatic advertising accounts for over 90% of all display advertising transactions on the web today.
However, programmatic advertising is currently at risk due to tightening data privacy restrictions and legislation restricting the sharing of user data - specifically 3rd party cookies (3PCs), 3rd-party IDs (3PIDs), and Device IDs. For many businesses, losing these data points spells complete disaster for their programmatic advertising capabilities, as this data drives their ad campaign triggering and strategy. In fact, 82% of C-level marketers are experiencing decreased scale in campaigns and audiences as a result of ID loss.
But all's not lost. Adding a first-party data and customer context solution to your MarTech stack can help reduce the negative impacts of data deprecation. Live-time, first-party data delivers three major benefits to businesses using programmatic advertising:
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It gives businesses first-party data equivalents to many lost data points
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Its data-crunching and analysis capabilities connect the dots on who your visitors are so you can use this insight to inform your campaigns
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The live-time insight provided on ad effectiveness enables instant optimization
Let's unpack this.
How does digital advertising work?
Before diving too deep, it's important to understand how digital advertising works. It's a complex process, but if we generalize, it's six distinct steps:
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A seller wants to sell ad space on a website.
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An ad network or exchange posts the ad space for sale or auction.
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A buyer bids for and buys the ad space.
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The buyer creates an ad campaign for a targeted audience.
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The campaign runs and displays ads to qualified visitors.
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A visitor sees the ad (an impression) and ideally clicks through to the advertised website and converts (either by taking a specified action or making a purchase).
What is programmatic advertising?
Programmatic advertising uses various technologies to automate the advertising process - buying, selling, and placing digital ads and media. Previously, advertisers had to purchase thousands of impressions upfront, but programmatic advertising enables dynamic purchase of ad space in real-time when campaign criteria trigger.
For example, a qualified visitor is browsing a particular website and triggers the criteria an advertiser sets. AI and machine learning instantly determine the right audience, the best placement of the ad, and the best possible price on the ad networks and exchanges. The programmatic algorithms then complete steps 1 through 6 of the digital advertising process in a fraction of a second.
The beauty of programmatic is that you only spend when you need to. This factor alone increases ROAS, but since the targeting capabilities are typically based on cookies the whole process is at risk. Because third-party cookies rely on information from multiple sources and aren't first-hand, they're an unreliable way to track visitor behavior, causing problems for programmatic advertisers who rely on third-party data to target their ads.
Forward-thinking programmatic ad platforms leverage AI-based audiences to better hone their targeting, but they still require accurate, live-time data to be effective.
Why do you need a CDP to power your programmatic advertising?
Programmatic advertising is only as good as the data feeding it. Losing access to device IDs and third-party data will limit many existing campaigns' effectiveness, as these values drive an understanding of who's who on the web. And without a concept of customer identity, campaign algorithms won't know which visitors to target.
The most forward-thinking advertisers recognize this and leverage an AI-based approach to fill the gaps in their data. In fact, 88% of marketers struggling to scale due to lost identifiers are exploring AI to resolve data deprecation issues. Since the marketer (advertiser) is responsible for defining their target audience, the better the data they have, the better they’re able to define their parameters for the campaign, enabling better targeting of programmatic ads. This results in higher campaign ROI. or ROAS. The same goes for setting triggers, understanding which criteria make a consumer a prime prospect, and analyzing which ads are converting.
A CDP that builds and delivers a than a device ID because it connects all data points - across devices, domains, channels, and time. It can also deliver contextualized data using AI and machine learning to enhance the insight derived.
The value of having the right tools in your MarTech stack to capture robust first-party data, combine data across technologies, and guarantee a complete understanding of customer identity and interactions is infinite. Following a customer journey across multiple mobile sessions, desktop interactions, and in-store purchases provides a marketer true insight into customer intent – an understanding that’s only possible when customer data is persisted across device and over time. First-party ID graph technology connects customer interactions, known and unknown, by connecting all data points across device, domain, channel, and time to provide a complete, 360-degree view of the customer. With this level of customer insight maturity, marketers eliminate their reliance on third-party cookies and are no longer affected by data deprecation.
And because you own first-party data, you can combine and cross-reference it with other data sets across your organization (such as historical sales data), instantly supplying advanced insight to your programmatic advertising campaigns.
Benefits of programmatic advertising using first-party data
Advanced data technologies (sometimes referred to as Customer Data Platforms or CDPs) deliver massive benefits across marketing and the entire organization, but here are a few that we've seen in programmatic advertising specifically.
More cost-efficient ad placement
Don't pay for what you don't need. It's a great mantra for individuals and businesses alike. Programmatic advertising means you don’t have to buy thousands of ad impressions with terrible conversion rates and just hope for the best. With the help of live-time data from a first-party data technology, businesses can purchase fewer, higher-quality ad spots with the potential for higher conversion rates. By using insight from customer identity, behaviors, and interactions to identify the best placements, advertisers can save time and money while still reaching their target audiences across all channels.
Deciding which ads to buy is ultimately a data question. Garbage in, garbage out. Comprehensive first-party data empowers advertisers to capture, curate, and act on great data to take advantage of the benefits of programmatic advertising. Understanding the entire data story enables marketers to accurately automate segmentation and ad placement. Reliable, live-time data enable businesses to accurately track performance metrics in real-time and quickly make necessary changes to optimize campaigns.
Increase conversions by identifying relevant audiences
Click-through rate (CTR) is a metric of the past - it doesn’t matter if someone clicks your ad if they’re not the right target. Instead, businesses should care about conversions, which comes down to delivering relevant customer experiences to the right audience. The right first-party data technology will capture and identify behaviors that characterize your highest-converting web traffic while resolving identity to gather insight at a granular level. Modern identity graph and journey builder technology provides immeasurable insight into customer behavior which can be used to refine ad targeting criteria or adjust bids for maximum efficiency – just make sure you’re using a true first-party data technology.
AI-powered intelligence allows you to gather accurate, live-time data and build out a better understanding of your audiences and customer segments. The better the data you have about your audiences, the more effective you’ll be when targeting them with your programmatic ads.
With comprehensive data capture, advertisers also gain a better understanding of the customer journey based on interests, preferences, and interactions that lead to conversions. This allows for targeted campaign optimization.
Adapt in real-time
When you have accurate, live-time access to identity graphs, sessions, and journeys, you can quickly identify whether a campaign is working and take action to adjust automatically. By feeding better data to your campaigns and connecting data across channels, domains, and devices in live-time, you can measure how many sales each ad campaign generates to identify the most effective ad campaigns, targets, and sources. Feeding this back to the Demand Side Platform (DSP) instantly is key to adjusting campaigns and targets on the fly to maximize your programmatic advertising ROI!
Data-driven insight into who to target and what messaging to deliver is the only the first step. You must also measure the results to accurately determine which ads work best for which segments. A comprehensive, live-time, first-party data solution can bridge that gap.
Increase efficiency
When discussing the value of programmatic advertising, it's easy to focus on cost savings and miss the secondary benefits. Humans can't easily analyze thousands of obscure data points and make an instantaneous decision – but AI-powered programmatic ad platforms and live-time data capture engines can. Leveraging a modern customer data solution to take care of the data side allows marketers to rely on accurate data-driven automation and focus on creating compelling, inspired messages that speak to consumers.
Embrace the future of digital advertising
Third-party data is in turmoil. A live-time, first-party data capture and contextualization solution is key to navigating the future of advertising. Businesses that develop robust data strategies will create a competitive advantage. With first-party data advertisers can target ads more accurately, ensuring they’re reaching the right people, with the right message, at the right time. By combining accurate and complete live-time, first-party customer data with the exposure and scale of ad platforms and DSPs, marketers can maximize the ROI of their programmatic ads with audience-focused campaigns that deliver outstanding results. Having complete data empowers advertisers to make more accurate, data-driven decisions and get the best return on investment for their programmatic advertising campaigns.
The moral of the story? The better the data, the better the programmatic ad ROI.
