A Beginner’s Guide to Programmatic Media

Why It Is Important

We all need to get our heads around programmatic media, and fast. It is a term we are going to hear more and more over the coming months and years, and is forecast to be a big part of the future of our industry. A recent Pulsepoint survey found that 61 percent of buyers will purchase digital media programmatically in the next 12 months, while eMarketer predicts U.S. programmatic digital display ad spending will reach $10.06 billion in 2014, and then double again by 2016. Alister Adams, vice president of content and innovation at Publicis, has been quoted as saying, “I can’t imagine a world where we aren’t buying almost everything programmatically in the next two to three years, including video, radio and television.”

How to Define It

There is no clear single definition of programmatic media. The term is often flung around in the same way people misuse “big data.” Programmatic is a capability not a channel, and so as a concept it can be applied to much more than just display ads. Programmatic technology will soon be applied to most touch points where brands interact with their consumers. John Nardone, chief executive (CEO) of [x+1] has described programmatic marketing to adexchanger as “real-time systems, rules, and algorithms to automate the delivery of data-driven, targeted, and relevant experiences to consumers.” This broad definition starts to describe what a truly programmatic approach to media is. It is where there is a triangle of technology, agency, and client working together with one data solution to power every channel.

What this means practically is that we need to start thinking about how we can underpin everything we do with technology and data. True programmatic buying is when a brand has full access to their data and can repurpose it across multiple channels, from bought to owned and earned. We need to think about how to harness this audience data across different channels and buys, and think about serving relevant content in those places, not just ads.

How It Is Changing

In the near term, one of the biggest shifts we are going to see is programmatic media advancing from being considered suitable only for lower-funnel or acquisition marketing to being applied more to brand and awareness-driving marketing efforts.

Currently, most programmatic media is bought and sold on open exchanges with RTB (real-time bidding). This often means that there is a lack of transparency and therefore control in the buy. RTB has historically been associated with remnant inventory, as the IAB noted in its recent programmatic perspective. Lack of transparency and questionable inventory is an acceptable risk if your focus is on maximizing conversion efficiency at the expense of creativity and control, but less so if you are trying to build a brand. A big change is coming though. eMarketer predicts that by 2016 what they are calling “programmatic direct” will have almost equal market share to RTB, and that private exchanges will grow to be more than one- third of the RTB transaction method with open exchanges making up the remaining two-thirds.

The automation mechanisms that have so far been used by RTB will now be applied to the typical ad buying process. Direct or guaranteed buys, which involve no real-time bidding or auction, will give ad buyers greater control while retaining the intelligence of the algorithmic and event driven approach. The same will be true of private marketplaces, which will enable buyers to choose their inventory unlike in open ones.

These changes will create more opportunities for brand and awareness-driving marketing efforts, as well as allowing for greater creativity as programmatically enabled custom placements and units become more common in programmatic direct and private marketplaces. Video and mobile will become increasingly important in this new more creative landscape, with mobile overtaking desktop in U.S. programmatic digital display ad spending by 2015, also according to eMarketer.

What the Obstacles Are

There are some major barriers to overcome before this predicted bright future becomes a reality. Lack of transparency and ad viewability are small issues when compared to fraud. Reports claim that up to 50 percent of digital ad impressions could be bot fraud, with a higher than average incidence in programmatic RTB buys. Advice from the ANA is to only advertise during waking hours in each time zone because bot fraud is higher between midnight and 8 a.m., and to exclude IE6 and IE7 impressions from your buys as these also over index on bots.

Another big hurdle the industry must overcome to achieve predicted growth is how to programmatically deliver high-impact custom creative relevant to different audiences in multiple places at a scale that still produces strong return on investment (ROI). It is unclear whether it will be publishers, agencies, or trading desks that solve this, but the answer will most likely be a mixture of all three. The companies who collaborate best between creative, media, and technology will see the strongest results.

How to Prepare for a Programmatic Future

Clients and agencies need to think long-term over the coming years. Avoid taking short cuts for quick wins and invest in technology. Ensure full access to your own data and ask for increased transparency in programmatic buys. Create a triangle model of client, agency, and technology to increase impartiality and have the ability to harness data across multiple channels including offline ones.

Media agencies should have the skillsets in-house to advise clients on different programmatic approaches from direct to private and open marketplace and when and how to use each. Creative agencies should train staff on programmatic media to encourage creativity and new ideas that leverage the technology.

Everyone should think about what the rise in mobile and video means for the brands they work on, and whether their business is well placed to adapt to these seismic changes that are on the horizon.

Image via Shutterstock. 

Related reading

Vector graphic of a megaphone spewing out business themed items, such as a laptop, tablet, pen, @ symbol and smartphone