Realizing the vision for one-to-one engagement
We’ve all heard it before: Marketing is most effective when you’ve achieved the three R’s—the right message, to the right person, at the right time. The challenge is doing that accurately, in real time, at scale. Traditionally, brands have had to make do with generic audience segments that blunt targeting and relevance, operational inefficiencies that slow fulfillment and strain resources, and disconnected systems that make it difficult to deliver insight-driven campaigns across channels. Today, that’s changing with programmatic buying technologies that leverage data to automate marketing across channels, achieving higher levels of targeting, relevance, efficiency and impact.
It’s not news that the channels and touchpoints consumers have with brands today are rapidly proliferating. Marketers need to maintain a consistent view of how people interact with their messages across these devices and platforms. Programmatic buying is a critical step enabling them to do this by bringing together disparate data points and providing a holistic view of the consumer across various channels in the sales and loyalty life cycle. This drives better campaign performance as well as media buying efficiencies that free marketers to focus on more strategic and creative initiatives.
But programmatic buying does not benefit marketers alone. Media companies, with inventory to sell, can unlock the value of underutilized inventory by optimizing CPMs and building deeper relationships with marketers. As a result, the customer’s journey becomes more relevant, interesting and seamless across every type of media, from desktop to mobile to TV and offline display. It may be a few years before such real-time, cross-channel targeting and optimization become the norm, but forward-thinking brands and media companies are already making rapid progress in this direction and seeing real benefits.
Programmatic buying isn’t for everyone, however; as some entities are waiting for the market to evolve and mature before investing in it heavily. These marketers and publishers cite concerns around technical complexity, quality, transparency, data security and fraud. Addressing these issues will be crucial to continuing the growing trend toward programmatic buying.
Across the programmatic landscape, one theme emerges clearly: the need for education. The technologies and models
for highly effective programmatic buying are already at hand. The sooner marketers and media companies throughout the advertising industry learn to put them to use, the sooner the full promise of programmatic will come to fruition.
What we mean by programmatic
In a survey conducted earlier this year by the Association of National Advertisers, only 26.0% of respondents said they knew what programmatic buying is and have actually used it.
As investment in advertising technology has increased over the past few years, the marketplace has become crowded with companies eager to differentiate themselves, defining programmatic in terms of their own strengths. This has led to considerable confusion.
In Advertising Age’s 2014 Programmatic Buying & Selling Survey, conducted for DoubleClick, 307 respondents
from marketers, agencies and media companies cited
“audience targeting” (40.1%), “real-time bidding”
(36.5%) and “automation” (30.0%) as the phrases they
most associate with programmatic buying. Beneath the associated acronyms and buzzwords, the fundamentals of programmatic buying are straightforward: It is the practice of using technology and audience insights to automatically buy and run an ad campaign in real time to reach the right consumer with the right message in the right context. Regardless of the goal, programmatic buying means simple, efficient, effective transactions.
There’s no question that programmatic buying is growing quickly. Magna Global, the buying arm of Interpublic Group of Companies, projects that programmatic spending will reach $9.8 billion in the U.S. in 2014, or about 20% of the overall digital ad market. More than half of the media respondents (56.3%) in the Ad Age survey reported that agencies and marketers are requesting a programmatic approach to media buying.
Making good marketing better
For marketers and agencies, programmatic buying provides a way to make campaigns more effective at a greater scale by harnessing data for real-time targeting and optimization. It maximizes the impact of each impression within existing budgets while driving campaign and operational efficiencies. “Programmatic buying reduces our reliance on human-to-human interaction and gets us out of Excel and faxes so we can become more efficient, freeing mind share to focus on creativity and business performance,” says David Cohen, chief investment officer of UM. “It’s already a meaningful part of our business today, especially in digital—and, increasingly, in television in the months to come. We have a goal to automate 50% of our overall media buy by the end of next year—not just digital, but every format.”While click-through rate is only one measure of effectiveness, the Ad Age survey shows a trend to greater consumer engagement through ads served programmatically (Figure 1). Almost half of the respondents (44.3%) believe that click-through rates have been positively affected by programmatic, and slightly more than half think this rise will continue in the future (51.5%).
Helping publishers unlock new revenue
The promise of programmatic buying isn’t just for advertisers. Programmatic selling helps media companies increase profitability both by increasing margins on current sales through operational efficiencies and by better leveraging the data and insights they have about their audiences to meet advertiser goals.Publishers can now shift attention to meeting marketers’ needs in new ways, often using a “barbell strategy,” with resources focused on programmatic sales on one end to automate selling and fulfillment of IAB standard units, and high-value custom deals on the other. “Buyers are getting more sophisticated. So the most evolved publishers are focusing direct sales teams on highly customizable, large-scale sponsorships, high-CPM placements and cross-channel delivery to differentiate and build bigger relationships,” says Shane Peros, managing director of U.S. Sales: Entertainment & Consumer Services at Google. With better targeting backed by robust data, publishers can now also magnify the value and impact they deliver to advertisers.
Bottom line: Publishers care about revenue and access to buyer demand. Efficient and transparent automated marketplaces connect publishers with a broader universe
of potential ad buyers, such as smaller agencies beyond the reach of a publisher’s sales team. Increased competition for inventory coupled with a smart segmentation strategy increases yield. “The ultimate benefit that we’re working toward is to address the totality of demand in the market—something we could never do without programmatic,” says Michael Zimbalist, senior VP- new business opportunities at The New York Times. “This is becoming an important part of an integrated yield optimization strategy for any publisher.”
Beyond automation: Making every audience count
Beyond the benefits of automation, both marketers and media companies value the segmentation and targeting programmatic buying makes possible. Marketers participating in the Ad Age survey emphasized the importance of the fine-grained segmentation and targeting programmatic buying enables, along with the improved relevance and performance it makes possible (Figure 2). These are the capabilities that most often draw marketers to use programmatic; according to the survey, the most important factors when choosing to buy online media through programmatic technology are targeting options
(76.5%), reporting/insights (73.3%) and performance/ROI
(71.9%). The perceived benefits of programmatic reflect the impact marketers expect to realize through these tools. Half of the respondents (50.0%) believe that the biggest benefit of programmatic buying is being able to more effectively target consumers across digital media platforms; many
also cited improving the relevance of marketing messaging (30.1%).
With data and audience insights that enable better targeting, publishers can not only create custom packages at premium rates but also unlock the value of narrowly defined but previously overlooked segments. “Automation is a nice benefit, but the real value of programmatic is using our data on intent-based traffic to allow [ad buyers] to access inventory against groups, particularly in areas that we haven’t been able to monetize effectively before,” says Neil Vogel, CEO of About.com. “By placing our inventory in a real-time marketplace with parameters, we can often uncover more value than we anticipated.”
Barriers to realizing the value of programmatic buying
Some marketers and media companies see areas that need improvement. Across both groups, the top factors mentioned as preventing them from using a programmatic approach to all their buying/selling of digital advertising are:}
Budget/cost/price. One respondent commented that programmatic is “too new of a solution—would like to see more results before allocating more budget to programmatic buying.” Others cited the cost of applications and training. Strategic factors also come into play, such as a focus on retention rather than acquisition, or sheer confusion on the part of an agency’s clients, making it difficult to justify the required spend.
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Complexity/newness/insufficient education. The desire for more information ranges from the data used to make decisions to what’s involved in building and maintaining the underlying technology infrastructure. Unfamiliarity and inexperience contribute to a lack of trust and confidence among many respondents, especially as they contemplate the training of both staff and clients that would be required for programmatic success.
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Inventory. One respondent summed up the concerns expressed by many about the ability to buy premium inventory and to be assured of the quality of the inventory bought through programmatic: “I believe ‘Programmatic’ is a black box. Where exactly is the inventory coming from? Who is viewing? Is this the remnant inventory? How is it targeted?Seems like a race to the bottom for impressions, which is not sustainable year over year.” This is why some buyers and media publishers prefer to work directly with each other. There are also priorities specific to each side of the market:
Agencies and marketers agree that they would buy more programmatically if there were greater emphasis on the quality of viewable impressions (79.7%); if it were easier todetermine the value proposition of different supply sources and what sets them apart (75.4%); and if there were greater transparency in the programmatic buying process (72.4%).Media respondents agree that they would sell more programmatically if there were stronger support for cross-platform monetization (71.8%); if they had more visibility into who’s buying (70.4%); and if they could be assured that their data was secure (67.6%).A common thread running through many responses is the desire for greater visibility and control over the buying process and its participants. As they increase their use of automation, media companies must remain vigilant about the quality of ads that run on their sites. The solution set for programmatic includes tools to monitor and block advertisers, but these require ongoing human attention to be effective.
Perhaps more serious is the problem of some companies misleading sales business practices. “There are companies with programmatic technology capabilities who have a reputation for not serving ads in the manner in which you’re buying them. There’s a big problem with ad fraud
in the digital industry as a whole,” says Zach Friedman,
VP-digital ad sales at FOX News Channel and FOX Business Network. This includes networks of shell websites flooded with traffic generated by bots—automated software—instead of human consumers.
Media buyers evaluated by their ability to fulfill campaigns according to optimization algorithms may not be inclined to investigate the quality of the traffic they find. “Both buyers and sellers can make money even if it’s a fake ad, so the industry and IAB need to step in and get it under control,” Friedman says. The recently released IAB viewability standard will likely help improve accountability both within programmatic and across the larger digital ecosystem by helping marketers validate the quality of the impressions they buy.
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“Programmatic buying … [frees] mind share to focus on creativity and business perfor-mance. It’s already a meaningful part of our business today, especially in digital.”
—David Cohen, chief investment officer, UM |
