Numbers, Equations and Ads. Part 1: The Power of Mathematics in Digital Advertising Explained.

The expanding of the digital space brought the rise of programmatic advertising technologies. For some advertisers it still takes few double takes to make sure they are not reading a scientific journal, when checking the ad industry news. Data mining, algorithmic models, machine learning, these are all few examples of the modern ad vocabulary. With the increasing interest in the programmatic media buying process comes the curiosity how the magic actually works. Want to understand the role of Applied Mathematics in digital advertising? Here is what you need to know:

 

Once upon time, when?

It largely started being used few years back, when the automated media buying systems found their place in the advertising market. The introduction of the automated trading platforms and exchanges like Demand-Side-Platforms (DSPs) was only the beginning. The fast expansion of the market created new opportunities for technology vendors, and so just for less than 5 years the advertising industry saw influx of computer scientists and applied mathematicians joining the market. Some advertisers and general observers are still surprised to find the pragmatic approach of Mathematics being increasingly used in one of the most creative fields - advertising. After all, Mad Men wasn’t about algorithms, was it? The answer to the paradigm lies in the actual approach of mathematics - it is not about cold numbers, it’s about finding answers.

The digital space was increasing, and still is - IBM found that as much as 90 percent of the world’s global data had been created in the last two years (you can read more about it here). Advertisers have immense in size opportunity just waiting for them at their doorstep. What they need is the solution to open the door. This is where Mathematics comes in use - building the solutions.

 

The known and unknown:

Not long ago we started hearing about “the right message at the right moment to the right person” promise of the programmatic advertising. Marketers were introduced to a new world of Big Data, where with the right tools in hand they were able to channel their efforts with greater precision and better results. The new terms of multi-touch environment, cross-channel attribution measurement, actionable insights, became integral part of the marketing planning mix.

Audience Understanding

Going back to the exchange-traded media and Demand-Side Platforms (DSPs), the general perception states that they are means for direct-response efforts. In truth, this is only part of their functions. Through their systems a wider reach on the market is available for marketers. This includes market flow measurement, audience segmentation and consumer behavioural patterns understanding. Applied Mathematics is the ingredient to make it possible. The algorithmic models used by automated systems explore the Big Data realm and are able to identify what types, what segments of audiences are showing particular interest in a particular moment. They are also able to find what similarities in behaviour those segments share and what is their most likely path to conversion. Normally it is Data Management Platforms and DSPs that are particularly focused on the audience intelligence gathering. The next step is to understand what the bulk of information you have in hands actually means for your strategies. In simple words - you know you have the audience in those places and you know the time best to connect with them. What happens next?

Determine and place the bid

Algorithms calculate the optimal time and price to reach the target audiences. In the automated functionalities of programmatic media buying this takes milliseconds in real-time simultaneously across different platforms. For this action the Artificial Intelligence Engine comes in play. Thanks to their ability to explore the market with constant presence 24/7, the automated advertising campaigns reach higher efficiency and better accuracy in their budget allocation. Further more, their capabilities include beyond human manual reach analysing, understanding, predicting, and adapting to the market. AI engines are able to notice when something makes the market take a different path, and to understand they need to investigate the reason behind the shift of change. We’ll be talking more about the particular use of Applied Mathematics in campaign management and optimization tomorrow in Part 2 of this series.

 

The Thinkers

In his article “The Future of Digital Advertising: Math + Magic”, Adam Cahill describes the nature of the thinkers behind the connection of Mathematics and Digital Marketing: "people who are immersed in digital culture, and who see connections between trends and technologies that others don't, and then fuse those things together to create programs that otherwise wouldn't have existed".

Applied Mathematics is the work of visionaries, seeking to find answers where others can’t. Their particular sense of originality brings new perspective into the creative approach of the advertising process.