Digital advertising has exploded in recent years. In fact, a 2021 report projected that total digital display ad spending in the US would reach $96.6 billion this year. While digital mediums host just about every kind of advertising imaginable, programmatic video advertising has quickly emerged as one of the most common and powerful forms. The same report forecasts that programmatic digital display ad spending would account for 88.2% of total digital display ad spending in the US, continuing a pattern of consistent growth.

Just what is programmatic video advertising, exactly? How does it work, and what are some ways you can put it to work for your business? Let’s start with the basics.

In this post, we’ll cover the following:

What is programmatic video advertising?

How does programmatic video advertising work and what are its benefits?

What are some practical uses of programmatic video advertising?

Make programmatic video advertising work for you

What is programmatic video advertising?

Programmatic video advertising is a method of media buying that uses real-time bidding to ensure advertisers reach relevant audiences for the best possible price. That’s where the “programmatic” part of programmatic video advertising comes in, but we’ll explain more about the specifics in a little bit. Suffice it to say for now that programmatic ads account for roughly 54% of US brand and agency budgets.

This new way of buying video ad inventory stands in contrast to direct media buying. As the name implies, direct media buying requires advertisers to make direct deals with publishers and platforms on which the advertisement will run. Advertisers who use direct media buying will likely consider the overall reach and demographics of the channel when selecting a partner. Certain channels also offer persona-based targeting, but that’s the extent of an advertiser’s control over their audience.

Both methods have their own advantages for advertisers. The programmatic method is particularly powerful for identifying target audiences across multiple supply sources, then allowing for efficient bidding between suppliers.

How does programmatic video advertising work and what are its benefits?

Let’s start with a hypothetical example. Say you’re playing the hottest new idle game, and you’ve just emerged victorious from a battle. You unlock your completion rewards, and the game offers you even more if you watch a quick video advertisement. As soon as you tap that button, the app registers your request for an in-app ad, and multiple ad networks then bid for that ad impression, taking into account factors such as its placement and what the app’s publisher knows about the user.

A third-party mediation solution like LevelPlay by ironSource acts as a go-between for the demand-side platforms and supply-side platforms, increasing the pool of available ads and impartially choosing the highest bidder. Then another third-party attribution platform (also called a mobile measurement partner or MMP) monitors for verified results, such as a completed viewing of the video or attributed install of another app, and ensures the network which ran the ad gets credit.

Here are some of the benefits of buying video ads to viewers in this way over traditional alternatives.

  • Real-time bidding allows this entire process to play out within the space of a second, rather than the timeline of weeks or months for more traditional advertising deals.
  • Third-party mediators allow market forces, rather than pre-existing arrangements and relationships, to be the deciding factor in placements.
  • Those same tools allow advertisers to target consumers based on audience data, making it more likely to be effective.
  • Key results of ad campaigns, such as video completion and conversion rates, can be monitored in real time.
  • Adding new supply sources is as easy as checking a box in your DSP’s dashboard.
  • Programmatic video advertising is flexible and easy to implement via solutions such as the ironSource Exchange.

That’s a broad sampling of the overall benefits of programmatic video advertising. Based on how and where they’re specifically implemented, you could see even more.

Where do programmatic video ads appear?

As we mentioned in the bulleted list above, programmatic video advertising is inherently flexible. It can provide a consistently valuable experience for users and advertisers alike even as it shifts to meet the needs of different audiences and use cases. Here are just a few ways video ads can be integrated into different mediums.

In-app advertising

As we mentioned above, mobile apps, especially mobile games, are an ideal home for programmatic video advertising. Building in a mix of rewarded video ads, which let users opt to watch ads in exchange for a bonus, and video interstitials, which always play at set times, promotes steady revenue without overwhelming players.

Connected TV advertising

Connected TV ad spending is slated to account for 7.6% of total media ad spending by 2024 according to eMarketer, and it’s closing the gap with the massive industry of linear TV advertising. Ads served via connected TV experiences such as Roku, YouTube, and Hulu go to more viewers who are actually watching, simply by the nature of the medium. They can even build in engaging interactive elements.

Social media advertising

Facebook, Instagram, Twitter, TikTok, and more social networks build in means to serve video ads to their audiences, using common methods such as pre-roll ads served before videos or interstitial experiences. Their vast stores of user information make them particularly effective for targeting ads.

Make programmatic video advertising work for you

Serving just the right ads to just the right users through an impartial bidding process that takes a fraction of a second to complete is technologically challenging - but that doesn’t mean it’s difficult to get started. The ironSource Exchange, for example, helps you reach your ideal mobile user and makes sure you only pay for results that matter.

Learn more about the ironSource Exchange.

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