Digital advertising offers tremendous benefits over traditional advertising. The very definitive, clear values include:

• The ability to use interactive ads
• Can adjust ads in near-real-time
• More flexible budgets and spending options
• More accurate tracking
• Better targeting

Some companies in recent years ended all their traditional spends and shifted their dollars to digital-only. Depending on your industry and your brand’s goals, this could make a lot of sense. With consumers spending so much time on the web and on their phones, it’s possible to reach nearly all members of your audience through digital channels.

The Many Ad Options Available Today

There are a lot of digital advertising options these days. It’s important to recognize what the right channels are for you and your business. Here’s how we might break down the options:

Search:

• Google Search
• Bing Search
• Amazon

Display:

• Google Display
• In-App (AdMob and inMobi)
• Programmatic Display
• Native (Outbrain, Taboola)

Video/Audio:

• OTT (Sling, Vudu, Twitch, Roku)
• YouTube
• Programmatic Audio (Google Music, Tune In, Soundcloud)
• Spotify
• Pandora

Social:

• Instagram
• Snapchat
• TikTok
• Facebook
• LinkedIn
• Yelp
• Reddit
• Pinterest
• Twitter

In general, Google Search is great for driving clicks and conversions (can come at a cost, depending on industry and competition). Social ads are fantastic for stimulating engagement and conversation. Native ads can be useful for garnering reads on articles or blog posts. And Amazon – for B2C companies – is ideal for driving online purchases.

Programmatic ads (both display and OTT video) are a bit different.

These ads are intended to be seen by audiences – the right audiences – at lower costs than traditional advertising. They shouldn’t be viewed as a magic bullet for driving sales and, therefore, shouldn’t necessarily replace other digital ads within your mix.

Keeping your sales funnel in mind, and knowing that top-of-funnel (TOF) exposure is important at the very start of the sales process, it makes sense for most companies to invest in some form of display and/or OTT advertising.

The Details Around Programmatic Ads

Programmatic ads are image-based display ads or video ads that exist on third party websites and within mobile apps. These can be image-based, gifs or animation-based, videos, or even interactive with annotation or game-like capabilities.

Here’s what you need to know about programmatic advertising and how it works.

It would be next to impossible for an advertiser to efficiently select each and every website, channel or app to place his/her media. So instead, advertisers buy media space through DSPs (Demand Side Platforms) who have partnerships and placement abilities with many, many websites and apps across the map. Through artificial intelligence and automation, these tools are able to bid, buy, and place media in an efficient manner.

Advertisers set their budget, establish their targeting and provide their creative/media, then DSPs place those ads on the sites/apps that make the most sense to reach those audience(s) and target numbers.

So, if you see an ad from a local business on, let’s say foxnews.com, it’s much more likely that that business is pushing that ad out through a DSP rather than working with a member of the Fox News sales team.

Google display (image) ads work in a similar fashion. You buy through Google, but Google places the ads on its partner website (millions of sites) based on the targeting and locations that you’ve identified. According to research out there, Google can reach upwards of 70% of sites out there through its network.

The differences between programmatic and Google Display ads are:

Google Display

Pros:

• Cheaper. Often you can see CPM costs under $1
• No minimum spending requirements

Cons:

Can only place across Google and its partner sites

Uses remarketing and affinity audiences based on Google profile data, but can be limiting

Programmatic Ads

Pros:

• Reach is far and wide and diverse
• More targeting capabilities, including hyper-local, device ID targeting

Cons:

• More expensive CPM rates
• Minimum spending requirements. Can be as much as $10,000/mo to start for some DSPs

Let’s Talk Further About Targeting

Targeting is one of the key benefits of digital advertising over traditional advertising, and one of the key selling points for programmatic ads.

Let’s break programmatic ad targeting into two high-level categories.

Location (often dubbed “geofencing”)

With geographical targeting, advertisers set a certain fence around locations where they believe consumers or buyers go. These can be retail stores, conference centers, gyms, government buildings, etc. It can be extremely narrow, if needed, and there can be as many fences as you want. As buyers/consumers enter the geofence, their IPs are saved and can then be served ads right then and there, or can be saved and served later.

Likeness

Targeting abilities in programmatic are superb since the DSPs often pair first-party and third-party data together to build out rich profiles of web users. For instance, Hulu may have profile info on its users like age, gender, name, email, etc. But DSPs acquire third-party data from popular warehouses, like Experian, and join that data together to give a much more comprehensive look at web users and allow advertisers to target in a much more niche, granular manner.

OTT and CTV Ads

As cord-cutting continues to grow, so does the amount of people and time invested in OTT activity. OTT, or over-the-top, is made up of streaming video content that requires an internet connection to view. This includes channels like Netflix, YouTube, and Hulu.

Each channel, however, has its own revenue model.

Some are subscription-only – like Netflix – which charges a monthly fee, and therefore, does not feature ads. This is sometimes called SVOD – or subscription video on demand. Some are hybrid – like Hulu – which has both, ads for basic users, no ads for premium users. And some, that are fully free – are ad-only. These include channels like Vudu or Crackle. These are sometimes called AVOD or advertising-based video on demand.

Consumers are viewing this content in a variety of ways. This can come directly from small screens like phones and tablets. Others are streaming through game consoles like PS4 or Xbox. Still others are viewing through HDMI sticks like Amazon Fire Stick, Roku or Google Chromecast. And finally, the majority of this type of content is streamed through built-in apps via Smart TVs.

CTV (Connected TV ads) is often used interchangeably with OTT, but CTV is limited to just content streamed to TV, therefore excluding that of smartphones, tablets, laptops and other small-screen devices.

Prior to digital, if one wanted to advertise on TV, it didn’t leave many options:

• :30 or :60 commercial only
• A broad range of viewers (even if you could choose day, time, and show)
• Relatively loose geographical targets (DMA)
• Large budget required
• Can’t account for someone walking away during a commercial break

Today, with OTT, there is still a little bit of risk in hitting your exact viewer (for example, you could have a 7-year-old boy and his 45-year-old mother watching at the same time) but you can get much tighter than before with your targeting, you have more flexibility with budgets, and you can monitor view-throughs and appreciate more accurate stats.

There are two high-level categories when it comes to ad types within streaming video. 1) Pre-roll, or the short videos that play before short bits of online content. Think about the :30 ads you see before watching a music video on YouTube. These are skippable after a certain amount of time (about :05 seconds). 2) Then, there are in-stream ads. These are ads (various lengths) that appear during longer types of content like live sports, TV shows or movies. And these are typically non-skippable. Since these have better view-throughs, they come at a higher cost.

CTV ads work in the same manner as programmatic display ads (which is why it’s part of the same family). Advertisers select targeting and budget parameters, and the DSPs do the heavy lifting to make placements. The reach is amazing. There are thousands of streaming channels available now, and the DSPs will decide and place based on what makes the most sense, based on the users and the type of content being shown.

Here’s just a small slice of the pie.

What’s the Drawback to Programmatic?

Okay. Let’s talk about it. Why isn’t everyone taking advantage of these still up-and-coming ad opportunities? Why are so many marketers still devoting most digital ad dollars to just search and social…

I believe there are two reasons.

First, it doesn’t generate the same results that we’ve grown used to on PPC-based advertising channels like Google search.

Think about the user’s intent when they enter a keyword. They are in pursuit of something – an answer or a product. In presenting a relevant listing at that moment of intent, it makes for a much better experience for the user, isn’t disruptive, and can lead to higher clicks and conversions.

Programmatic or OTT ads are, instead, more intrusive. You’re taking a user who is on a journey of some sort – watching a video, reading an article, scrolling their news feed, and you’re forcing an ad upon them. They may see the ad, watch the ad, consume the ad, but it’s not the perfect moment. This is why clicks and conversions tend to be lower with this ad type.

Secondly, it’s more complicated.

You can’t just create an account and start advertising within the hour (like you, quite literally, can do on Google). It requires an understanding of geofencing, identifying your targeting areas and parameters, designing or creating your media (remember, it’s images, video, or rich media, not just plain text ads), and establishing a partnership with a direct DSP provider or ad agency to place your ads. There’s still a lot of mystery and misunderstanding around the technology and methodology, too.

Billing is not as straightforward either.

Instead of pay-per-click or pay-per-action models, which we’ve all grown used to with Google Ads and Facebook Ads, it’s a traditional CPM model (cost per thousand impressions) that not everyone is accustomed to (unless you’ve done media buying in the past).

You are buying impressions. The DSPs or partner agencies sell the impressions at a CPM rate and you are, therefore, guaranteed results. As long as the targeting is accurate and your goals are awareness-focus, you shouldn’t have any surprises when your reports and invoices appear.

But what’s the CPM rate?

That will vary a bit based on your targeting and your DSP of choice, but it may range anywhere between $10 to $15 for programmatic display and could float upwards of $40 to $60 for OTT and CTV ads.

For social ads, we typically see rates from $7 to $15 on some networks. LinkedIn is a bit pricier and can hit as high as $60. Google Display tends to be the lowest and can be less than a $1 CPM. YouTube, on the other hand, is closer to $10.

Programmatic and CTV, therefore, aren’t necessarily the most competitively priced, but offer benefits that the others can’t provide.

Not all advertising types or channels are right for all businesses and brands. It’s important to develop a strategy and map out the channels that work best for you, based on your goals. Programmatic and CTV ads are trendy right now as more consumers spend time on their mobile devices and cut the cord, and as more video streaming platforms are released. Look at programmatic ads and CTV ads as a replacement for traditional broadcast and radio ads. Do your consumers or buyers require a level of awareness before adopting? Consider your goals and costs and select the right ad mix to drive results.