I have written quite extensively on how programmatic in China is different from the West, but that was on a conceptual level.
Since then, quite a few people have asked me how does it actually work in a planning situation down to the nitty-gritty of a tech stack setup as well as vendor evaluation.
In this four-part series, I will focus on:
1. Planning Principles
2. Reducing Conflict of Interest
3. Buying Platform Evaluation
4. Data Platform Evaluation
Programmatic Planning Principles
Whether you are on the client or agency side, it is important to understand the basic benefits of programmatic before jumping on the ad tech bandwagon.
As an agency, it can be quite difficult to explain the ad tech ecosystem with buzzwords like demand side platforms (DSP), data management platforms (DMP) and other industry jargon, instead of focusing on the bottom technology layer.
It is important to explain to the client the actual business problem that programmatic aims to solve, which is to increase media on-target efficiency by utilizing real-time data. But at the same time, ensuring the increased precision does not decrease media share of voice (SOV).
This is a very important point for many large brands, because SOV and share of market (SOM) usually have a very high correlation. Hence what marketers need is a balance between precision and SOV.
Which Type of Programmatic Trading Models Should I Choose?
After there is buy-in on the benefits of programmatic, we should match the client objectives with the four different programmatic trading models. For the sake of simplicity, I’d like to separate clients into two different buckets: performance and branding.
Performance oriented clients usually are very results driven, KPIs quantifiable by outcomes such as actions, sales, and leads.
These types of clients are largely pure online businesses, such as e-commerce sites, game apps, or small to medium-sized businesses (SMB).
Since they are outcome focused, they care less about where their ads are being shown as long as it generates a result.
For performance clients, we should follow a bottom-up programmatic trading approach, meaning we should purchase the cheapest inventory possible to reach the set KPI, so the bottom two programmatic models which are most suitable are the private marketplace and open exchange.
However, for branding clients it is the exact opposite.
Since many of the branding clients – such as FMCG, food and beverage – business outcomes happen offline, their digital campaigns cannot be very outcomes driven. Instead, they will focus on reaching as many target audiences as possible in the hope of an offline sales conversion.
In this case, it is important to keep a guaranteed SOV on high quality media channels, so programmatic premium is the most suitable trading model.
Overall Planning Principles
Due to my own client composition, the programmatic strategy that I recommend will be focused on branding clients. Prior to beginning the programmatic tech stack strategy and vendor selection, I’d like to set a few basic principles for the client, they are like house rules that should be kept in the back of our minds at all times.
1. Programmatic absolutely must be focused on premium/private inventory: There are many quality issues with open exchange inventory in China, and these issues are further amplified by the immaturity of viewability, brand safety and fraud detection features.
Hence, it is important for large advertisers to understand that the risks associated with exchange inventory will be far greater than the inventory’s cost advantage.
2. Programmatic should not change the brand’s current channel composition: I think programmatic is a trading innovation, not a new media channel. Hence all forms of digital media can be bought in a programmatic way. So brand advertisers should first and foremost think about how to integrate programmatic on top of existing channels, instead of merely dedicating 10 percent of the budget to buy through a DSP as a new media channel.
3. Reduce programmatic vendor conflict interest by separating key tech stack components: As explained in my previous articles, conflict interest is a huge issue in the Chinese programmatic ecosystem because of the many hybrid business models, such as DSP + ad network, DSP and DMP, DSP and supply-side platform (SSP) and ad exchange.
If a single one company controls the entire programmatic stack, from the buy side to the sell side, then advertisers in turn lose transparency in the programmatic process.
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