Programmatic advertising shows real potential for the beverage industry

A man who is working with his iPad and a coffee next to him
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Advertising tailored to specific target groups holds the key to unlocking huge marketing potential for the beverage industry. Programmatic advertising is proving to be the tool around the world for effectively reducing the significant amounts of waste coverage seen in internet advertising. It does this by targeting specific audiences.

Sugary soft drinks loaded with additives don’t get the time of day from health-conscious consumers who would be far more interested in a new organic smoothie. And wine lovers just switch off when they see an ad for beer. The beverage industry, along with many others, is being confronted with the issue of increasingly divergent consumer lifestyle choices. One doesn’t have to ponder very long before the megatrend of customization pops into mind here. This also applies to media usage: The diversity of devices and media channels available are more complex than ever before. The B2B sector, which mainly has very narrow target audiences, faces a similar challenge. Programmatic advertising meets these requirements head on by specifically directing ads to particular target groups.

An algorithm identifies the target group

Programmatic advertising is a dream come true for marketing execs: They now have an automated option aiming to achieve maximum efficiency for booking and running tailored online ads on the basis of user data. Such tracking methods as cookie placement usually yields the needed data. The large amount of resulting data then requires analysis to filter for relevant information and patterns and ensure proper usage. In this process, humans no longer have to select the advertisers and digital advertising slots and instead algorithms, which recognize patters in internet users’ behavior, assume the task along with deciding who belongs in the target group the advertising message best fits. The key players involved include the

  • advertisers who provide the budget and are known as the “demand side” or “buy side” and
  • suppliers on the “sell side”—i.e., the platforms that host the advertising slots.

An auction process has been established throughout the global advertising industry to assign advertising slots in programmatic advertising to the highest bidder. The platforms carry out automated processing and direct tailored advertising to appropriate user profiles. Given the extremely short timeframes involved (it’s only a matter of milliseconds from the ad request to the auction to ad’s display), the process goes unnoticed by users.

Expenditure on programmatic advertising is booming across the globe

A forecast from the media agency MAGNA Global clearly illustrates the huge importance of programmatic advertising: Global expenditure on programmatic digital advertising is expected to increase from approximately $25 billion in 2017 to $43 billion in 2020.

Market of opportunities: addressable TV, radio, and digital out-of-home media

Other media channels are now available, including the classic mass medium of TV. Such digital providers as Netflix and YouTube are already using programmatic advertising. Thanks to the increasing number of smart TVs in households, broadcasters have the necessary technology at their disposal to implement programmatic advertising campaigns—even for airing classic TV ads. In contrast, radio remains quite a niche. Only internet radio or services such as Spotify can implement programmatic advertising without encountering technical problems.

Providers of digital out-of-home (DOOH) advertising, which involves displaying ads on screens in public places, are ready to go with their marketing option. This means programmatic advertising also works in nonclassic digital media. Ströer, Germany’s largest DOOH media provider, for example, has already executed its first campaigns. Tailored advertising here is naturally less focused on individual users and more on location and circumstances such as the time of day and the weather. The broad range of different channels available and the opportunity to effectively get advertising messages across to both end consumers and business customers on the basis of users’ interests mean that programmatic advertising holds immense potential. To some degree, the advertising industry views it as a future dream that has already started to become reality. By the next drinktec we should be able to say whether or not programmatic advertising has been a trend or if it has really constituted a mini revolution as its true relevance for marketing in the beverage industry will have become clear by then.

Andra Gerhards

Andra Gerhards is a freelance journalist and copywriter. She focuses on topics such as marketing for town councils and local companies, (sustainable) consumption and retail.