Programmatic buying essential guide

Programmatic buying has showed up more brightly on marketers’ radars over the past 18 months. But now it has reached a tipping point, with marketers realising that rather than leaving everything to their media agency they need to take a hands-on approach to understanding how their ads are being bought.

Increasingly, this is through automated bidding across many types of ad space on many websites simultaneously.

Programmatic trading enables brands to buy media owners’ inventory at short notice via technology that target ads depending on the audience the advertiser wants to reach or the environment in which it wants to be seen. Messages can be tailored in real time to take advantage of events, behaviour or specific times of the day.

Cadbury owner Mondelez has said it intends to buy all online video inventory programmatically through a partnership with ad tech firm Tubemogul. Meanwhile, Procter & Gamble plans to buy 70 per cent of its digital display ads using programmatic methods by the end of 2014.

Evidently, it is a growth area. According to the Internet Advertising Bureau (IAB), of the £1.86bn spent on display ads across the internet and mobile platforms in 2013, 28 per cent – around £500m – was traded programmatically.



The IAB predicts that the share of ads bought through programmatic technologies could rise to 47 per cent in 2014 and reach up to 60 to 75 per cent of total digital display advertising by 2017.

For online printers Moo.com, programmatic is an acquisition tool that is an efficient and effective way to utilise a small marketing spend, according to head of digital Rob Young. The brand “doesn’t have the budgets to compete with agencies [in traditional media buying], so programmatic buying is the way forward for us,” he says.



The brand uses a ‘lookalike’ model developed with Quantcast to serve adverts to people who match the browsing habits of those that convert on the Moo.com website.

Heineken USA senior media director Ron Amram told Marketing Week at Cannes Lions last month that while programmatic still represents less than 20 per cent of its marketing, it is a way of connecting the brand’s portfolio in terms of media planning rather than looking at each channel separately. 



It is also an area whose value will extend beyond ads on websites and mobile platforms. He says: “Programmatic is not just digital anymore, it’s going to be traditional as well. The wall between the different video screens is coming down and you will be able to measure them both the same.”



According to eBay UK director of advertising Phuong Nguyen: “Programmatic provides brands and advertisers unrivalled access to data and audiences in a way that they could never execute at scale before, with the most sophisticated programmatic clients making decisions hourly.”



He gives the example of how marketers reacted when England was knocked out of the World Cup. Marketers can make decisions to alter campaigns in real time by thinking about how it changes their strategy, where they would now want to buy inventory, what audience they want to buy and how much they want to pay. “It’s real-time marketing trading in a way,” Nguyen says. 



While it is a positive sign for the industry that the statistics on media spend are increasing and that some brands are realising the data opportunities in programmatic buying, there is uncertainty around the technology with marketers facing a vast skills and knowledge gap. 



Research shows that marketers are still uncertain about real-time advertising and programmatic trading. An ISBA study, in conjunction with Infectious Media, finds that over a third of advertisers who responded are unaware of the proportion of their online campaigns that involve real-time advertising, while over a third say they have a positive perception of real-time advertising and programmatic trading.

However, 96 per cent of respondents intend to learn more about it. Last month, ISBA published a best practice guide to programmatic to ease marketers’ confusion.

Nick Hugh, EMEA vice-president of display solutions at Yahoo says: “Historically, marketers have been a bit too hands-off but that is changing because the percentage of budgets being traded programmatically is so high.”

He believes that marketers are beginning to ask the right questions, for example how data is being used, and demanding cost transparency. 


The skills gap is also being addressed. Ad tech company AppNexus teamed up with IAB Europe and insight body WARC in a study of 600 respondents from agencies, publishers and marketing departments across Europe, which identifies key challenges.

More than half of marketers say they have a weak grasp of programmatic with a quarter having never heard of it. A third of agencies and publishers identify skills shortages as a constraint, and despite the growth in digital advertising budgets, one-third of respondents say that budget challenges are preventing a larger shift to programmatic.



Richard Dunmall, managing director of advertising at Bauer Media, says: “We are investing in commercial staff [for programmatic sales] because even though it’s machine talking to machine, you still need sales people to talk to buyers about what that means. You also need people of highly technical and operational expertise to deliver and optimise. We are investing in both of those areas within a broader restructure.”



EBay’s Nguyen says change will only happen if publishers make the best inventory available to programmatic trading. “It’s one of the fastest-growing parts of the business. It’s driven by publishers deciding that programmatic is not just for remnant inventory [unsold space that has little value]. The more publishers that make their best inventory and audiences available, the more we will see brand spend move to programmatic.” 

IAB Europe’s study suggests that it is media agencies leading the programmatic revolution, with 79 per cent using programmatic advertising, compared to 48 per cent of publishers, 46 per cent of general advertising agencies and 22 per cent of marketers.

Meanwhile, in a round table discussion hosted by video advertising company Coull last month, Google head of publisher partnerships Toby Dawson claimed that the biggest issue is the technology. To back this up, the IAB study finds that although programmatic accounts for 28 per cent of all digital display ads and 37 per cent on mobile, only 16 per cent of non-mobile video ads are traded programmatically. 



“Video across many publishers is difficult because of the technical challenges: different ad servers, different SDKs [software development kits], but the industry is doing good work with standardising video trading using the VPAID and VAST formats,” says Dawson.

Another report from market research company IDC and ad platform PubMatic suggests that because a lot of mobile inventory is already sold through exchanges and therefore has real-time capabilities, programmatic buying will continue to penetrate the mobile ad market more rapidly than the wider internet. It predicts spending on mobile real-time bidding will almost quadruple in 2014.



Heineken’s Amram adds that marketers will also be able to optimise programmatic advertising across different screens. “If you are spending 50 per cent of your budget on TV, you can see how much can go to digital and which is working harder for the brand. A lot of media is bought and planned in silos but now, as programmatic adds technology, learning and insight into what you are buying, you can optimise across your entire media portfolio.”

Yahoo is developing a new platform designed to be an alternative to existing ’demand-side platforms’, which allow advertisers to manage their online ads. One of the key differentiators will be to allow advertisers access to multiple forms of online advertising on one platform, which means one media plan will cover display, video and native advertising across all devices. 



The predicted growth of programmatic shows a real need for brands to gain better understanding and insight. This is starting to happen with organisations such as the IAB and ISBA aiming to set guidelines for publishers and advertisers as the programmatic industry develops. 



At the Coull round table event, Steve Chester, director of data and industry programmes at the IAB, highlighted that programmatic has come a long way in the UK. “Programmatic has only been around in the UK for four years,” he says.

“We are solving the problems, but we are very self-critical. You cannot mitigate for every scenario. Fraud and misplacement cannot be stamped out 100 per cent. People have to understand that risk before engaging with the medium. Our role is to educate people as to what that risk is.” 


As more brands commit digital spend to programmatic buying, more learning and insights will come from that commitment. 



Nguyen says: “If the past two years have been about understanding and building the trust between the relationships in the programmatic eco-system to get brands more comfortable, the next two years will be about taking that to the next level and seeing the benefits.”

Sponsored viewpoint: Martin Kelly

Co-founder and chief executive officer at Infectious Media

We have seen a lot of research showing that the biggest hindrance for the uptake of programmatic advertising is the understanding and knowledge of the marketer. This is a damning indictment on the programmatic industry as we have made things too removed from the marketer’s day job. 

Having created a uniquely powerful way of finding the right person at the right moment in the right way, we have then disguised the benefits with talk about the technology. 

For many marketers, programmatic advertising is a way to buy leftover, or ‘remnant’, inventory. But this misses the strategic opportunity of using data to fulfil a wider marketing objective.

One of the biggest shifts in programmatic advertising over the past 18 months has been the uptake from brand advertisers. This has been driven by factors including the increased availability of video and large formats, and new measurement tools using recognised metrics such as GRP (gross rating points) and OCR (online campaign ratings). The opportunity to combine smart buying technology with the guarantee that ads will appear on premium publisher sites in high-impact formats excites brand marketers. But even with this growth, programmatic is only taking a minority piece of the digital pie.  

Education is the key challenge and has to be tackled in an open and honest way. Success will hinge on clients having a clear idea of what to expect from programmatic to enable them to determine the best technology partner for their business. Only in this way will long-term relationships be forged and great work achieved. 

If you are client side, you may be exhausted by the requirements put upon you. However, there is another. Unfortunately, it’s not enough to improve your own understanding as you will need the support of internal stakeholders for whom programmatic is likely to be new. This is most apparent with IT and those responsible for the company’s data assets. We often find a marketer’s appetite for programmatic dampened when they turn to the logistics of making it happen internally. In these cases, we become part of the marketer’s arsenal, offering technical advice and, importantly, talking the same language as the IT and data teams.  

Programmatic advertising straddles two worlds that have historically maintained a safe distance but are now colliding. As an industry we need to be multilingual, talking technology only when appropriate and increasingly talking to the marketer in their own language, offering strategic programmatic solutions that meet their business objectives.

Econsultancy best practice: Monica Savut

Confusion reigns in the programmatic landscape, but there are encouraging signs that savvy marketers are starting to use the technology to their advantage, sometimes beyond the realms of traditional display advertising.

With the initial iterations of programmatic technology, including real-time bidding, marketers have experienced the benefits of data-driven media buying, pricing control and availability of real-time analytics, which in turn has fuelled adoption of programmatic more broadly. 

They are increasingly eager to explore its potential to drive efficiency at scale, but are they fully equipped to embrace it?

Real-time bidding and programmatic buying are often used interchangeably, loosely describing the automation of the processes involved in media buying, selling, negotiating, optimising and billing.

According to the IAB, the share of ads bought through programmatic technologies in the UK is estimated to increase from 28 per cent in 2013 to almost half in 2014 and could be up to three-quarters of total digital display advertising by 2017.

However, programmatic marketing lies at the intersection of data and technology and was born out of the need to deliver highly targeted, relevant marketing across multiple channels. 

Marketers can apply first- or third-party data to identify their highest-value customer segments, personalise the creative message and learn what works in (almost) real time. However, the opportunities from programmatic might remain out of reach for marketers who fail to focus on three key elements: data, people and culture.

Data

Few marketers are layering data on top of media buys, which helps remove the guesswork from their campaigns. Data should be used at all levels of the value chain, as the biggest growth opportunities will come for those who augment media buys with data.

People

Marketers sometimes ignore the human side of programmatic marketing. A layer of business intelligence is essential; you need to make sure your business goals are in line with what the platform is automating.

What technology vendors promote as ‘intelligent’ automation and optimisation is not enough. Experienced ‘human interfaces’ should complement the use of these platforms in order to stay competitive.

Culture

Programmatic technologies will have a major effect on the way marketing is performed, moving from a narrow focus on channels or audience segments towards a customer-centric view. The marketer’s role will shift, leading to the need for skills that are more closely aligned with data, analytics and creative.