Advertising, News, Reporting

The Programmatic Revolution

Written by Tim Edmundson

Aug 9, 2016

There’s little doubt about the massive impact programmatic advertising has brought to the digital industry. The ability for marketers to buy and sell inventory in real time has positively affected both sides of the industry. It gives them the ability to utilize big data so they can more effectively optimize, personalize, and drive consumers in ways that were unthinkable 10 years ago. So it’s no surprise 98.3% of American publisher’s polled by IAB were currently engaged in programmatic for audience development.

Yet, it’s important to remember that programmatic is an inherently complex organism––a depth of knowledge is required if you want to be able to take full advantage of its expansive capabilities. Programmatic is worth the investment; US programmatic ad spend is expected to double from last year to $20.41 billion, and is expected to take 63% of the digital ad space market by EOY. With the majority of marketers rating their programmatic knowledge quite poorly, we thought it would be important to outline why everyone in your office should be fluent (or at least familiar) with the most important piece of technology in digital advertising.

WHAT IS PROGRAMMATIC?

You may be fairly familiar with the term “programmatic,” you may even be an expert on the topic, or you may be pulling your hair our trying to figure out what the hell this means for your company and your marketing budget. But, it’s important to outline what programmatic actually is––a process. It is a method of buying and selling media in real-time. Essentially, it creates a marketplace for both buyers and sellers to come together, fostering new relationships previously inhibited by the direct, slow, and often inefficient process of traditional transactions.

By utilizing first and third party data (demographics, geography, interests, behavior, time of day, type of device), anyone from B2B to B2C marketers can buy digital ad inventory in real time, allowing you to truly live up to the overused promise of finding “the right person, at the right time, with the right ad.” Programmatic’s ability to target based on device is also incredibly valuable––in 2015, mobile web accounted for 44.1% of all programmatic display ad spend, and is set to surpass desktop by the end of 2016. With the importance of targeting mobile users becoming more and more obvious every day, it would be foolish to ignore the growing importance of programmatic in the digital sphere.

TRANSPARENCY IS EVERYONE’S FRIEND

Many pricing models today are still restricting advertisers’ budgets––often what is portrayed as your standard CPM includes hidden fees, resulting in both sides of the spectrum working without full information as to where all the dollars are really going. But it doesn’t – and shouldn’t – have to be that way. With the progression of programmatic, a fully transparent ecosystem would allow buyers and sellers to efficiently and effectively drive ads to consumers.

Since programmatic technology offers what is effectively a marketplace, more transparency will lead to more clear, efficient pricing for ad buys. As big data becomes ever more inherent in the digital ad sphere, it is important to educate your company and employees on the different pricing models, where budget is actually spent,  and knowing where that money goes gives a better understanding of a campaign’s true performance.

If you want to learn more about transparency within the digital ad space, and what SteelHouse is doing to help provide full information to all parties, check out our blog post on the topic.

LAST CLICK ATTRIBUTION IS A DYING BREED

We touched a bit on this last week, but it’s important to get the message out––the traditional last click attribution model is no longer a relevant resource in light of the massive amount of data, channels, and campaigns that have continued to flourish in the ad tech industry. Credit for that final conversion is more wide-spread than meets the eye––think the basketball analogy in See Beyond the Click. Marketers will need to focus on what is called the “marketing mix,” essentially the amalgamation of your entire marketing campaign, from video ads to social posts. Before programmatic, it was virtually impossible to measure all aspects of your campaign, so naturally last-click attribution was the go-to model. However, with the progression of the technology, programmatic is giving marketers the most immersive, accurate data available through multiple digital channels. Not only is programmatic allowing you to serve your ads effectively, it’s giving you the knowledge of how they’re performing, even in the most minuscule details.

Programmatic allows you to serve highly personalized ads across multiple channels; mobile, desktop, social, with extreme efficiency. As the industry starts to move towards looking at attribution through multiple touch points, it will allow marketers to gather more data on what works and what doesn’t when it comes to their campaigns. This data will then in turn allow marketers to effectively utilize their budget on their highest performing channels, and optimize to target those audiences effectively in real time. Coupled with knowledge about industry transparency and proper attribution, a familiarity with programmatic will give marketers the power to understand their consumers better, helping build relationships, and bringing brands closer to their clients.

EFFICIENCY IS KEY

Advertising used to be an entirely human experience on both sides, bought and sold. With programmatic, it has transitioned to algorithms and machines to do the dirty work. This may seem scary, but it actually is incredibly effective. Demand-Side Platforms (DSPs) are now relied upon by advertisers to target and purchase key impressions across the digital ecosystem. Combining data from first and third party Data Management Platforms, DSPs are becoming more and more adept at serving that perfect ad. On the other side of the spectrum, Supply-Side Platforms (SSPs) help publishers find the right advertiser for their site.

There are so many different ways to buy programmatically, but the main takeaway is that understanding the programmatic process will help you find the audience you have been looking for. Your usual STP (Segmenting, Targeting, Positioning) approach can be integral in maximizing programmatic efficiency.

CREATIVITY WINS BIG WITH PROGRAMMATIC

We’ve spent most of the time talking about how understanding the programmatic environment will help you serve better ads, but we haven’t talked about arguably the most important part: the content of your ad. Although we are treating advertisements a bit differently with the influx of big data, it’s important to not lose your focus on the creative side.

Programmatic helps answer the question of capturing budgets effectively, but it also is intertwined with helping foster creative storytelling for better engagement with segmented audiences. Creatives with programmatic knowledge will be able to understand their audiences even more, paving the road for ultra-personalized, highly engaging content that actually resonates with their audiences. It also fosters a conversation between all departments, creative included––hashing out the details and creating a plan for how exactly to synthesize the best looking ad, the best placement, and most cost-efficient budget will help your brand immensely.

CONCLUSION

The central role of programmatic makes it essential for all cogs in the machine to understand the fundamentals that make programmatic so essential in the digital marketplace. Anyone from clients, R&D, analysts, media strategists, buyers and sellers, brands, agencies, ad exchanges (and the list goes on) can benefit from more exposure to the most integral part of the advertising process. Only by opening up can both businesses and consumers start to truly reap the benefits of programmatic advertising.

And if you’re still feeling confused (don’t worry!), here’s an infographic breaking down the programmatic ecosystem.