what is programmatic advertising?

73 views

Today I received an email from a *website* we all use, stating: *We removed reference to Programmatic Advertising in our Privacy Policy as we no longer support it on our site.*

What is **programmatic** advertising?

In: Technology

Ever go on Amazon or Best Buy and click on anything, then go to another site and suddenly see that item as an advertisement?

This means that software has put that ad there for you based on your personal behavior. If someone else visits the same exact page, they’ll a different ad that’s based on their own preferences.

This is as opposed to a generic ad that is seen by everyone no matter who you are.

This type of advertising is possible through third-party cookies. Basically, you go to website A and it sets a cookie on website B so when you go to website C, website B’s cookies are referenced to display the relevant ad since website B followed you from website A to website C. A lot of these cookies are now being blocked by browsers or other extensions since it’s a significant privacy problem. So some sites no longer support these as a result to improve privacy in general.

Programmatic advertising is the next level above targeted advertisement.

With targeted ads online, your online profile gets associated with certain traits, and advertisers limit their ads to only show to certain traits (i.e., show luxury car ads to users who likely make more than $80,000/yr).

Programmatic advertising takes that one further. When a user is in a state where an ad is requested, the advertising server polls a bunch of bots for each advertising company with your traits and asks them how much they want to pay for an ad spot on you. The bots have to take the input and calculate how much they think you’re worth for an ad, and then respond. Whoever wants to pay the most gets to advertise to you, and their bill gets incremented.

Essentially, there’s a real time auction for the advertisement to you every single time one loads.

Programmatic advertising is when a company uses the information it knows about you to target you with ads it thinks you’ll want.

For example, companies are able to gather and analyze the tons of data you produce every day. Without knowing specifically *who you are* (that data is largely protected) they can infer that you are X years old, male, work in Y industry, have such and such education background, living in this town, make Z dollars per year etc.

They can take this data and compare it to their predictions that people that match your profile frequently buy burritos, they can sell this analysis to Fuzzy Nuggets brand Burritos (which you haven’t heard of yet) and suddenly you get a coupon in your inbox for a Fuzzy Nugget Nuggetler X-treme Meat Bomb, and statistically you’re very likely to go out and X-perience the BOMB^(tm)

There are obvious privacy concerns with this type of targeting marketing. A famous case was nearly 15 years ago when two Target employees got to talking around a water cooler. One of the most profitable categories of sales are first time mothers. A first time mother will typically drop thousands of dollars on baby stuff and be extremely brand loyal, no one suddenly changes formula or diaper brands mid-stream. If you ever have a child you’ll notice the hospital sends you home with a box of “free samples” and suddenly your mailbox gets blown up with coupons and free offers. This is because there is a very small window for companies to capture First Time Mother brand loyalty. So there is a HUGE incentive for companies to be first-to-reach first time mothers, even just being an hour quicker with your coupons could be the different between nothing and thousands of dollars in sales.

Anywho, these two Target employees were at the water cooler and one dared the other to see if it was possible to cull the through the frequent-shopper card data to determine if they could predict if a woman is pregnant *before she knew it.* Turns out it worked. They started sending out diapers and formula coupons and they got a nasty-gram from a father who’s 13 year old child received discounted pampers. Oh how dare you, my daughter is angel, I’m getting lawyers etc. Of course, she misses her next period and programmatic advertising is enshrined as the gold standard moving forward.

Keep in mind, this was 15 years ago, before the unimaginable proliferation of cell phone and social network data we have today.