AI-Based Bidding: – Future of Programmatic

As digital media landscape evolving, led by the dominance of platform world & increasing preference of programmatic, brands are looking for opportunity to get more out of their digital ad investments. In programmatic buying pivotal challenge lies in determining the optimal bid for a desired outcome. Winning bid that drives the outcome at optimal cost is the balancing act that requires speed, intelligence, advance optimization & automation. However, the sheer volume & complexity of campaign data & multiple platforms present significant constraint, limiting the extent to which a programmatic traders can independently navigate these intricacies.

Custom or AI-Based bidding

Initially walled garden platforms were limited to manual or automated bidding strategies; however, landscape has changed by opening to offer third party AI based intelligence for optimization & automation. This transformation gave brands an opportunity to shift towards “Custom bidding or AI-Based bidding” function.  AI based bidding allow brands to dynamically adjust the bids for ad impression in real-time, optimizing their chance of winning auction that drives business specific KPI. AI Based bidding do provide forecasting capabilities to illustrate how many conversions are expected & can integrating third party & first party data signals like location, device, site behavior, demographics & so on.

While walled garden platforms offer automated bidding that may seem akin to AI- based bidding, there exists a distinction in their modus operandi.  Automated bidding uses algorithms & pre-defined rules to automatically adjust bids based on specific criteria. AI- based bidding goes a step further by incorporating machine learning & predictive modeling. it allows bidding algorithm to learn & use broader range of data, identify patterns that may not be explicitly defined by rules. Automated bidding often adopts one size fit all approach to purchasing impression, whereas AI based bidding takes a bespoke & tailored approach, designed to deliver outcome to specific business goal.

AI-based bidding empowers brands to transcend a singular & devise multi layered bidding strategies. Brands can go beyond a single action and create a multi-layered bid. Let’s understand this with an example of a D2C Brand and the users who land on website/app can complete one of the following key actions.

• Sign in with already a customer or single sign on with google/FB account.
• Add to cart.
• Contact Us

Weighted conversion in AI-based bidding

A compelling feature of custom bidding known as weighted conversion is particularly impactful. The provided example outlines distinct stages of the customer journey, such as a user clicking “Add to cart” indicating proximity to a purchase or completing a “single sign-on with Google/FB” signifying a new customer & contact us means seller or buyer inquiries. In the AI-based bidding, this approach allows for the optimization of a combination of goals, assigning varying weights to each action. For instance, a click on “Add to cart” may carry a higher weight due to its proximity to a purchase, while a “single sign-on with Google/FB” may be weighted differently to signify the acquisition of a new customer. Leveraging weighted conversion, AI based bidding will craft unique scripts and tailor bids & optimization for each specific action to maximize desired outcome.

The Future of Programmatic with AI-based bidding

The future of AI- based bidding in programmatic advertising holds promising development. As Artificial technology continues to advance, custom bidding is likely to become more sophisticated & tailored to specific brand needs. In cookies-less world, AI can delve into intricacies of user data to create more refined audience segment & bid them basis their chance of driving higher ROI. Cutting-edge AI integration may enable advertisers to optimize bidding strategies seamlessly across multiple channels, providing synchronized approach to reaching audiences across diverse platforms such as display, DOOH, video, audio, and social media. By integrating first-party data brands can strategically adjust bids based on where a user is in the marketing funnel, whether they are exploring products, adding items to the cart, or completing a purchase.

AI will play a pivotal role in shaping more intelligent, adaptable & effective programmatic advertising strategies.

This article is written by Prashant Nandan, Senior Vice President – APEX (Digital & Traditional Media)