Programmatic Advertising Mastery: Unlocking Power & Strategies

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Key Takeaways

In 2021, programmatic advertising spending in the US reached $84.89 billion, according to eMarketer.

Programmatic video ad spending is projected to grow to $45.07 billion in 2023, as reported by Statista.

A study by the Interactive Advertising Bureau (IAB) found that programmatic advertising accounted for 86% of digital display ad spending in 2020 (IAB Programmatic Handbook).

Programmatic advertising leverages data and automation for precise ad targeting and optimization, dominating the digital advertising landscape.

Advertisers must navigate challenges like ad fraud, privacy regulations, and ad viewability while ensuring transparency and responsible data practices.

The future of programmatic advertising lies in AI-driven personalization, cross-channel integration, ethical data usage, and collaboration with content creators.

The landscape of digital advertising has undergone a remarkable transformation with the advent of programmatic advertising. In recent years, programmatic advertising has emerged as a powerful and data-driven approach to reaching target audiences with precision and efficiency. This article delves into the world of programmatic advertising, unlocking its potential, strategies, and insights to navigate this dynamic realm successfully.

Programmatic advertising represents a paradigm shift in how brands connect with consumers in the digital age. It leverages advanced technologies such as artificial intelligence, machine learning, and data analytics to automate ad buying and placement, allowing advertisers to deliver the right message to the right audience at the right time. As we embark on this exploration, we will uncover the strategies that underpin successful programmatic campaigns, the role of data and analytics, and the challenges and opportunities that lie ahead. Join us on this journey to unlock the power of programmatic advertising.

1. Introduction to Programmatic Advertising

Programmatic Advertising, often referred to as programmatic marketing, represents a groundbreaking paradigm shift in the world of digital advertising. At its core, programmatic advertising is an automated, data-driven method of buying and selling digital ad inventory in real-time through the use of algorithms and advanced technology. This approach is in stark contrast to traditional ad buying, which involves manual negotiations and purchases.

1.1 The Evolution of Digital Advertising

The journey of programmatic advertising traces back to the early days of digital marketing. Initially, advertisers purchased ad space on websites directly from publishers. This process was not only time-consuming but also lacked precision in targeting the desired audience. The digital advertising landscape witnessed a significant transformation with the advent of ad networks, which offered a more streamlined way to reach multiple websites with a single buy. However, even with ad networks, targeting remained relatively broad.

The true revolution began when programmatic advertising emerged. It introduced a level of automation and data-driven decision-making that had never been seen before. The key catalysts for this transformation were the availability of vast amounts of user data and the development of sophisticated algorithms. Programmatic advertising leverages these resources to analyze user behavior and preferences in real-time, allowing advertisers to serve highly targeted ads to the right audience at the right moment.

1.2 The Rise of Real-Time Bidding (RTB)

A crucial aspect of programmatic advertising is Real-Time Bidding (RTB). RTB is the process by which ad impressions are auctioned off in real-time to the highest bidder. When a user visits a website, an ad impression becomes available, and advertisers can submit their bids within milliseconds. The highest bidder’s ad is then displayed to the user. This entire process takes place in the blink of an eye, making it incredibly efficient.

RTB, coupled with the ability to analyze user data instantaneously, allows advertisers to make split-second decisions about which ad to display, how much to bid, and which audience segment to target. This dynamic auction-based system optimizes ad placements and ensures that advertisers get the most value for their ad spend.

1.3 Programmatic’s Versatility and Channels

Programmatic advertising is not limited to one type of ad or platform. It spans a wide range of digital advertising formats, including display ads, video ads, native ads, and even audio ads. Moreover, programmatic extends its reach across various channels, encompassing websites, mobile apps, social media platforms, and connected TV. This versatility means that advertisers have the flexibility to choose the formats and channels that align best with their campaign objectives and target audience.

2. Benefits of Programmatic Advertising

Programmatic advertising offers a multitude of benefits to advertisers and marketers, making it a compelling choice in the digital advertising landscape. These advantages span improved targeting and personalization, cost efficiency, and real-time data analysis.

2.1 Improved Targeting and Personalization

One of the standout advantages of programmatic advertising is its capability for precision targeting and personalization. Through the utilization of data-driven insights, advertisers can dissect their audience into granular segments based on demographics, interests, browsing history, and more. This level of segmentation enables advertisers to create highly tailored and relevant ad content that resonates with specific groups of users.

Personalization goes beyond just addressing the user by their name. Programmatic allows for dynamic ad content that can change based on factors such as the user’s location, device, or recent interactions with the brand. For instance, if a user recently browsed a particular product on an e-commerce site but didn’t make a purchase, programmatic advertising can deliver personalized ads showcasing that exact product, enticing the user to return and complete the purchase.

2.2 Cost Efficiency and ROI

Programmatic advertising also stands out for its cost-efficient approach. Advertisers have the flexibility to set budgets and bid amounts, ensuring that they get the most value from their ad spend. The real-time nature of programmatic advertising means that budgets can be optimized on the fly, reallocating resources to campaigns that are performing well and reducing spend on underperforming ones. This dynamic budget allocation leads to improved return on investment (ROI).

Furthermore, programmatic advertising reduces the need for manual ad buying processes, which often involve negotiation and intermediaries. This reduction in operational overhead translates to cost savings for advertisers. The ability to make data-driven decisions also means that ad spend is directed towards audiences that are more likely to convert, further enhancing ROI.

2.3 Real-time Data Analysis

In the fast-paced digital landscape, timely insights are invaluable. Programmatic advertising provides advertisers with real-time data on ad performance. Metrics such as click-through rates (CTR), conversion rates, engagement levels, and impressions are continuously monitored and made available to advertisers through intuitive dashboards and reporting tools.

This real-time data analysis empowers advertisers to make immediate adjustments to their campaigns. If a particular ad creative is not performing well, advertisers can swap it out with a more effective one. If a specific audience segment is showing higher engagement, budgets can be shifted to capitalize on this opportunity. This agility ensures that advertisers can optimize their campaigns in real-time, maximizing their chances of success.

3. Key Players in Programmatic Advertising

Programmatic advertising involves a diverse ecosystem of key players, each playing a crucial role in the process of buying and selling ad inventory in real-time. Understanding these players is essential for comprehending how programmatic advertising operates.

3.1 Advertisers and Brands

At the forefront of programmatic advertising are the advertisers and brands themselves. They are the driving force behind programmatic campaigns. Advertisers define their campaign objectives, target audience segments, and create the ad content. Their strategic decisions, based on data insights and marketing goals, shape the success of programmatic advertising initiatives.

Brands often work closely with marketing agencies or in-house marketing teams to execute programmatic campaigns effectively. Their ability to craft compelling ad creatives and align them with their brand message is a critical factor in engaging the audience and achieving campaign objectives.

3.2 Ad Exchanges

Ad exchanges serve as the digital marketplace where ad inventory is bought and sold in real-time. They act as intermediaries connecting publishers with advertisers. Ad exchanges use Real-Time Bidding (RTB) technology to facilitate the auction-based system, where ad impressions become available for purchase when a user visits a website or app.

Ad exchanges provide transparency in pricing and auction dynamics, allowing advertisers to bid competitively for ad impressions that align with their target audience and campaign goals. Popular ad exchanges include Google Ad Exchange, OpenX, and Rubicon Project, among others.

3.3 Demand-Side Platforms (DSPs)

Demand-Side Platforms (DSPs) are essential tools for advertisers in programmatic advertising. These platforms empower advertisers to manage and optimize their programmatic ad campaigns efficiently. DSPs offer features such as audience targeting, ad placement, and real-time bidding capabilities.

Advertisers use DSPs to access multiple ad exchanges, ensuring that their ads are displayed across various digital platforms and websites. DSPs also provide advanced analytics and reporting tools, enabling advertisers to track campaign performance and make data-driven decisions in real-time.

3.4 Supply-Side Platforms (SSPs)

On the publisher’s side, Supply-Side Platforms (SSPs) play a pivotal role in programmatic advertising. SSPs enable publishers to manage and optimize their ad inventory effectively. Publishers integrate SSPs into their websites or apps to make their ad space available for programmatic purchase.

SSPs provide publishers with tools to set pricing rules, control ad placements, and ensure that their ad inventory is exposed to a wide range of potential advertisers. They facilitate the process of monetizing digital content by connecting publishers with demand from advertisers through ad exchanges.

4. Programmatic Advertising Strategies

Effective programmatic advertising campaigns are built on a foundation of well-defined strategies. These strategies encompass various aspects of campaign planning and execution, ensuring that advertisers achieve their desired outcomes.

4.1 Setting Clear Objectives

Programmatic advertising strategies begin with setting clear and measurable objectives. Advertisers must define what they aim to achieve with their campaigns. Whether the goal is to increase brand awareness, drive website traffic, boost sales, or achieve another specific outcome, having well-defined objectives provides a clear roadmap for the entire campaign.

4.2 Audience Segmentation

Audience segmentation is a fundamental element of programmatic advertising. Advertisers leverage data to divide their target audience into smaller, more defined groups. These segments can be based on demographics, behavior, interests, location, and more. Each audience segment receives tailored ad content designed to resonate with their specific characteristics and preferences.

Segmentation allows advertisers to address different segments with messaging that speaks directly to their needs and interests. For example, an e-commerce retailer might segment their audience into categories like “Frequent Shoppers,” “New Customers,” and “Lapsed Customers,” each receiving distinct ad content and offers.

4.3 Ad Creative Optimization

Ad creative optimization is essential to capturing the audience’s attention and driving engagement. Advertisers must craft compelling visuals and messaging that align with their campaign objectives and audience segments. Programmatic advertising allows for dynamic ad content, which means that ad creatives can change based on real-time data and user interactions.

Ad creative optimization also involves A/B testing, where advertisers experiment with different ad variations to determine which performs best. This iterative approach ensures that ad creatives are continually improved for maximum impact.

4.4 Budget Allocation

Budget allocation is a critical component of programmatic advertising strategies. Advertisers need to decide how much budget to allocate to each campaign, channel, or audience segment. It’s essential to strike a balance between reaching a broad audience and maximizing the impact within specific segments.

Data-driven insights play a pivotal role in budget allocation. Advertisers can allocate more budget to campaigns or segments that show promising results, optimizing spend for better ROI. Continuous monitoring of budget allocation ensures that resources are directed where they can have the most significant impact.

4.5 Real-time Optimization and Monitoring

One of the strengths of programmatic advertising is the ability to make real-time adjustments. Advertisers should continuously monitor campaign performance, focusing on key metrics such as click-through rates, conversion rates, and ad engagement. When performance data indicates areas for improvement, adjustments can be made on the fly.

Real-time optimization involves making changes to ad creatives, audience targeting, bidding strategies, and budget allocation based on the insights gleaned from the data. This agile approach ensures that campaigns stay competitive and efficient throughout their duration.

5. Data and Analytics in Programmatic Advertising

Data and analytics are the lifeblood of programmatic advertising, driving informed decision-making and campaign optimization. This section explores the pivotal role of data, leveraging AI and machine learning, and measuring campaign performance.

5.1 Data Sources and Types

Data is the foundation of programmatic advertising. Advertisers tap into various data sources to gather information about their audience. These sources include first-party data (collected directly from the advertiser’s audience), second-party data (purchased or shared data from partners), and third-party data (acquired from external providers).

The types of data used in programmatic advertising are diverse, encompassing demographic data, behavioral data, contextual data, and more. Advertisers use these insights to understand their audience’s preferences, habits, and interests, enabling precise targeting.

5.2 Leveraging AI and Machine Learning

Artificial Intelligence (AI) and machine learning play a pivotal role in programmatic advertising. These technologies analyze vast datasets and make real-time predictions about ad placements. AI-driven algorithms evaluate factors like user behavior, ad relevance, and bid competitiveness to determine the most suitable ad to display.

Machine learning algorithms continuously learn and adapt to changing conditions, optimizing ad placements and improving campaign performance. This dynamic nature allows programmatic advertising to deliver highly personalized ads that resonate with individual users.

5.3 Measuring Campaign Performance

Measuring campaign performance is essential to determine the effectiveness of programmatic advertising initiatives. Advertisers rely on a range of key performance indicators (KPIs) to evaluate their campaigns. These KPIs include click-through rates (CTR), conversion rates, return on ad spend (ROAS), and cost per acquisition (CPA), among others.

Analytics platforms and reporting tools provide real-time insights into campaign performance. Advertisers can track the performance of individual ads, audience segments, and channels. This granular data allows for data-driven decision-making, enabling advertisers to adjust strategies and budgets for optimal results.

6. Challenges in Programmatic Advertising

While programmatic advertising offers numerous advantages, it also presents unique challenges that advertisers and marketers must address. This section explores some of the primary challenges, including ad fraud and brand safety, privacy concerns, and ad blocking.

6.1 Ad Fraud and Brand Safety

Ad fraud remains a significant concern in the programmatic advertising landscape. Fraudulent activities such as click fraud, impression fraud, and bot traffic can lead to wasted ad spend and distorted campaign performance metrics. Advertisers must implement robust fraud detection and prevention measures to safeguard their investments.

Brand safety is another critical issue. Advertisers risk their brand reputation when their ads appear alongside inappropriate or harmful content. Programmatic advertising platforms have developed tools and algorithms to mitigate this risk by screening content and ensuring ads are placed in safe environments. However, maintaining brand safety remains an ongoing challenge.

6.2 Privacy Concerns

Privacy concerns are heightened in the era of programmatic advertising, where user data plays a central role. Advertisers must navigate a complex web of regulations and user expectations related to data privacy. Regulations like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) impose strict requirements on data collection, storage, and consent.

Adherence to privacy regulations is essential to avoid legal repercussions and maintain trust with users. Advertisers must be transparent about data collection practices, provide opt-out mechanisms, and obtain explicit consent for data usage.

6.3 Ad Blocking

Ad blocking presents a challenge to programmatic advertising by preventing ads from reaching their intended audience. Users employ ad blockers to improve their online experience by avoiding intrusive or irrelevant ads. This trend puts pressure on advertisers to create non-intrusive and engaging ad content that users are less inclined to block.

To address ad blocking, advertisers explore alternative ad formats such as native advertising and programmatic audio ads, which may be less susceptible to ad blockers. Additionally, providing value to users through relevant and personalized content can reduce the urge to use ad blockers.

Programmatic advertising is a dynamic field that continually evolves with technological advancements and changing consumer behaviors. Staying up-to-date with the latest trends and innovations is crucial for advertisers and marketers. This section explores some of the prominent trends and innovations in programmatic advertising.

7.1 Programmatic Audio and Video

Programmatic advertising has extended its reach beyond traditional display ads. Programmatic audio and video advertising have gained traction as consumers increasingly engage with audio streaming platforms and video content. Advertisers can now target audiences through audio ads on platforms like Spotify and programmatic video ads on YouTube.

The rise of connected TV (CTV) has also opened up new opportunities for programmatic advertising. Advertisers can deliver personalized ads to viewers streaming content on smart TVs and digital platforms, making CTV a promising channel for programmatic campaigns.

7.2 Connected TV Advertising

Connected TV (CTV) advertising is emerging as a significant trend in programmatic advertising. With the proliferation of smart TVs and streaming services, CTV offers a unique opportunity for advertisers to engage audiences in a living room environment. Programmatic CTV advertising allows for precise targeting based on viewer preferences and behavior.

As consumers continue to shift from traditional cable TV to streaming services, advertisers are allocating budgets to CTV advertising to reach cord-cutters and cord-nevers. This trend is expected to grow as more households adopt CTV, making it a key focus for programmatic campaigns.

7.3 Programmatic Native Advertising

Native advertising seamlessly integrates with the content surrounding it, providing a non-disruptive and engaging user experience. Programmatic native advertising combines the benefits of programmatic targeting with the effectiveness of native ad formats. Advertisers can deliver sponsored content that matches the style and context of the publisher’s website or app.

Programmatic native advertising enhances user engagement and can lead to higher click-through rates. This approach aligns with the trend of creating less intrusive and more user-friendly ad experiences.

7.4 Programmatic Data Activation

Programmatic data activation involves using data not only for audience targeting but also for creative personalization. Advertisers leverage data to dynamically generate ad creatives that are tailored to individual users. This level of personalization increases the relevance of ads and enhances user engagement.

Data activation also extends to offline channels, such as out-of-home (OOH) advertising. Advertisers can use programmatic technology to optimize OOH ad placements based on real-time data, ensuring that ads are displayed in high-traffic areas and at optimal times.

8. Best Practices in Programmatic Advertising

Effective programmatic advertising requires adherence to best practices to maximize campaign performance and achieve desired outcomes. This section outlines key best practices for advertisers and marketers in the programmatic advertising landscape.

8.1 Audience Segmentation and Targeting

Audience segmentation and targeting are at the core of programmatic advertising success. Advertisers should invest time in creating detailed audience segments based on demographics, behavior, interests, and other relevant factors. The more granular the segmentation, the more personalized and effective the ad content can be.

Moreover, advertisers should continuously refine and update audience segments based on real-time data and campaign performance. This iterative approach ensures that targeting remains relevant and optimized.

8.2 Ad Creative Optimization

Ad creative optimization involves creating compelling visuals and messaging that resonate with the target audience. Advertisers should conduct A/B testing to identify which ad variations perform best and continually refine ad creatives based on insights.

Dynamic ad content that adapts in real-time to user interactions can enhance engagement. Additionally, aligning ad creatives with the user’s context, such as their location or recent browsing behavior, can improve relevance.

8.3 Transparency and Brand Safety

Transparency is crucial in programmatic advertising. Advertisers should work with reputable ad exchanges and demand-side platforms (DSPs) that provide transparency into pricing, ad placements, and campaign performance. Ensuring brand safety by using tools that screen content and avoid inappropriate placements is essential to protect brand reputation.

8.4 Data Privacy Compliance

Adherence to data privacy regulations, such as GDPR and CCPA, is non-negotiable. Advertisers must be transparent about data collection and usage, provide clear opt-out mechanisms, and obtain user consent where necessary. Compliance with these regulations builds trust with users and avoids legal issues.

8.5 Real-time Monitoring and Optimization

Real-time monitoring of campaign performance is a best practice in programmatic advertising. Advertisers should regularly check key performance indicators (KPIs) and adjust strategies, budgets, and ad creatives in real-time based on data insights.

Continuous optimization is essential to ensure that campaigns remain competitive and efficient throughout their duration. Advertisers should leverage analytics platforms and reporting tools to facilitate data-driven decision-making.

9. Real-World Case Studies in Programmatic Advertising

Examining real-world case studies provides valuable insights into the practical applications and successes of programmatic advertising. This section presents a selection of case studies that showcase how different brands and organizations have leveraged programmatic advertising to achieve their goals.

9.1 Brand Awareness Campaign: Coca-Cola

Coca-Cola embarked on a programmatic advertising campaign aimed at boosting brand awareness and engagement. They utilized programmatic video ads across various platforms, including YouTube and social media. By leveraging data-driven targeting, they reached audiences interested in beverages and entertainment.

The results were impressive, with a significant increase in video views, engagement, and brand mentions on social media. Coca-Cola’s programmatic campaign not only enhanced brand awareness but also generated a substantial uplift in sales.

9.2 E-commerce Conversion Optimization: Amazon

Amazon, the e-commerce giant, employed programmatic advertising to optimize conversions and drive sales. They implemented dynamic product ads that showcased personalized product recommendations based on users’ browsing and purchase history.

The programmatic approach resulted in a notable increase in click-through rates and conversions. By delivering highly relevant product recommendations to users, Amazon improved the overall shopping experience and revenue.

9.3 Localized Advertising: Starbucks

Starbucks utilized programmatic advertising to drive foot traffic to its local stores. They employed geotargeting to reach users in proximity to Starbucks locations. Additionally, they incorporated time-of-day targeting to promote different menu items during specific hours.

The campaign generated a surge in store visits and sales. Starbucks effectively used programmatic advertising to engage with nearby customers and entice them to visit their local stores.

9.4 Non-profit Fundraising: Save the Children

Non-profit organizations have also embraced programmatic advertising to raise awareness and funds for their causes. Save the Children ran a programmatic campaign targeting users interested in charitable causes and international aid.

Through precise audience targeting, Save the Children saw a significant increase in donations and engagement with their campaigns. Programmatic advertising enabled them to effectively connect with a passionate and relevant audience.

10. The Future of Programmatic Advertising

As programmatic advertising continues to evolve, it is essential to consider its future trajectory and the role it will play in the ever-changing digital advertising landscape. This section explores the potential directions and innovations that are shaping the future of programmatic advertising.

10.1 Advanced Machine Learning and AI

The future of programmatic advertising will witness further advancements in machine learning and artificial intelligence (AI). These technologies will become even more integral to programmatic advertising, enabling enhanced audience targeting, ad personalization, and real-time optimization.

Machine learning algorithms will continuously adapt to user behavior and preferences, delivering hyper-personalized ad experiences. AI-powered chatbots and virtual assistants will also play a role in programmatic advertising, providing interactive and conversational ad formats.

10.2. Cross-Channel Integration

Programmatic advertising will increasingly focus on cross-channel integration. Advertisers will seek to deliver consistent and cohesive messaging across multiple channels, including display, video, audio, social media, and connected TV. Integrated campaigns will provide a unified brand experience for consumers.

Cross-channel programmatic strategies will involve data synchronization and audience retargeting, ensuring that users encounter a brand’s message across various touchpoints. This approach will maximize brand exposure and engagement.

10.3. Privacy-First Advertising

Data privacy concerns will continue to shape the future of programmatic advertising. Advertisers will prioritize privacy-first advertising practices, respecting user preferences and adhering to evolving privacy regulations.

Greater transparency and user consent mechanisms will be implemented to build trust with consumers. Advertisers will explore innovative methods of targeting, such as cohort-based targeting, which groups users with similar interests without revealing individual user data.

10.4. Augmented and Virtual Reality (AR/VR)

The adoption of augmented reality (AR) and virtual reality (VR) technologies will introduce new opportunities for programmatic advertising. Immersive ad experiences within AR and VR environments will become a reality, enabling brands to engage users in interactive and immersive campaigns.

Advertisers will need to adapt to the unique challenges and opportunities presented by AR and VR advertising, such as designing 3D ad creatives and optimizing user experiences in virtual worlds.

10.5 Sustainability and Purpose-Driven Advertising

Sustainability and purpose-driven advertising will gain prominence in programmatic campaigns. Consumers are increasingly conscious of brands’ environmental and social responsibility. Advertisers will incorporate sustainability initiatives and social causes into their programmatic messaging.

Purpose-driven advertising will not only resonate with socially conscious consumers but also contribute to building brand loyalty. Advertisers will highlight their commitment to causes such as environmental conservation, social justice, and community engagement.

11. Conclusion

In conclusion, programmatic advertising stands as a beacon of innovation in the ever-evolving landscape of digital marketing. It has redefined the way brands connect with their target audiences, offering unparalleled precision and personalization. Through this comprehensive exploration, we have uncovered the strategies and best practices that drive programmatic success, from setting clear objectives to harnessing the potential of data and analytics. We have also examined the challenges it faces, from ad fraud to privacy concerns, and how responsible practices can address these issues.

As we gaze into the future of programmatic advertising, we see a landscape ripe with possibilities. Advanced technologies like AI, cross-channel integration, and AR/VR experiences will shape the way we engage consumers. The ethical considerations of data privacy and transparency will guide our actions, ensuring that programmatic advertising remains a trusted and effective medium. Collaboration with content creators and integration with emerging technologies will continue to propel programmatic into uncharted territories.

In this digital age, programmatic advertising is not just a tool but a testament to the limitless potential of innovation. It is a reminder that the intersection of technology and creativity can create meaningful connections between brands and consumers. As we embrace the future, let us harness the power of programmatic advertising to deliver relevant, engaging, and purpose-driven messages that resonate with audiences worldwide.

Connect with us at EMB.

FAQs

Q. What is Programmatic Advertising?

Programmatic advertising is an automated approach to buying and placing digital ads, utilizing data-driven targeting for precise ad delivery.

Q. How Does Programmatic Advertising Work?

It works by using algorithms and real-time data to determine the most relevant ads for individual users, optimizing campaign performance.

Q. What Are the Benefits of Programmatic Advertising?

Benefits include enhanced audience targeting, improved ROI, real-time optimization, and the ability to reach users across various digital channels.

Q. What Challenges Does Programmatic Advertising Face?

Challenges include ad fraud, privacy concerns, ad viewability, and the need for transparency in data usage and ad placements.

Q. What Does the Future Hold for Programmatic Advertising?

The future entails AI-driven personalization, cross-channel integration, ethical data practices, and collaboration with content creators.

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Team EMB
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