Online publishers once sold advertising slots directly to brands on their web pages. But now programmatic trading brings data about audiences into play and uses software so brands can target potential customers on any site they visit across the web.
So if a trainer brand wants to reach fashionable 18 to 25-year-old men, programmatic uses data gathered from cookies to find people in that group, then targets ads at them whatever website they visit. The advantage of this is the brand can make sure they reach the audience wherever they are rather than waiting for them to arrive at a specific web page.
At the heart of programmatic is the automated auction system which ensures brands and publishers strike the best market price for each impression. The auction occurs while a user’s web page loads, so in the blink of an eye it uses automated systems to match the user’s interests with the brand’s message.
It is all about using data to link brand and audience. When successful, this offers brands less wastage as they don’t have to pay to reach people who are not in their target market, a common criticism of traditional media buying. This will help marketing budgets go further. But crucially, programmatic also helps brands to learn more about their customers through data and build stronger links with them.
The right place at the right time
Rupert Staines, European managing director for programmatic trading agency RadiumOne, says: “Programmatic has been hugely beneficial for the vast majority of brands using it. The best campaigns can deliver new customers, deeper engagement, bigger sales returns and higher media performance.”
Mr Staines says brands which use programmatic to buy ad slots online are more efficient at reaching the right customer at the right place at the right time. He quotes figures from eMarketer that £1.8 billion of UK brand spend was conducted through programmatic trading in 2015 and that programmatic will account for 70 per cent of digital display advertising in 2016.
This offers brands less wastage as they don’t have to pay to reach people who are not in their target market, a common criticism of traditional media buying
Programmatic can benefit brands in various ways, such as finding people that “look like” their current customers, for instance those of similar age or interests, then serving ads to them on the sites they commonly visit at times they are most likely to be receptive to the message. A brand selling cold drinks can use programmatic to find likely buyers and give them the message when the temperature soars.
Scepticism from CMOs
But some chief marketing officers (CMOs) struggle to see the value that programmatic trading offers and are sceptical about its effectiveness. Programmatic has been plagued by negative stories. There have been examples of the inappropriate placement of ads where brands are paying for ads placed by the software in negative contexts such as next to unpleasant or irrelevant content. Satirical magazine Private Eye has a regular column called Malgorithms devoted to unsuitable ads placed next to news stories because the ad server has failed to understand the context.
Meanwhile, there are questions over whether audiences are even seeing the ads placed by programmatic trading as they may appear on the part of the web page the user has not scrolled down to, the so-called “below the fold” positions. There are also tricksters looking to exploit the system through click fraud, for instance setting up phoney web pages and charging advertisers for non-existent eyeballs.
But while many of these problems can be ironed out, the biggest hurdle for programmatic trading to overcome is the complexity of the system. Many senior marketers struggle to understand how the system works and feel it lacks transparency.
As Ryan Kangisser, managing partner at marketing technology consultancy Stack I/O, says: “We work with a number of brands who remain very hesitant because either they don’t understand it [programmatic trading] enough, or they don’t feel comfortable with the levels of transparency that are afforded to them or they have had a bad experience and it is not working as well as they were led to believe.”
He says tech-savvy, digital-first brands, such as those involved in e-commerce, typically make great use of programmatic trading. But for more traditional brands in fast-moving consumer goods or pharmaceuticals, it is harder to measure the effectiveness of programmatic campaigns. Many of the methods these brands use to measure the success of a campaign, such as brand favorability or brand preference, are difficult to assess with programmatic campaigns.
“Time and time again, examples are surfacing of brands appearing in environments where they shouldn’t – we have had a number of clients who have suffered these,” Mr Kangisser adds.
Struggling to keep up
For Anand Siddiqui, director of audience and product in Europe, the Middle East and Africa at WPP’s programmatic trading agency Xaxis, there has been too much emphasis on the financial efficiency of programmatic and not enough attention paid to the data. “We’ve some clients who are very aggressive on how they want to move forward and we have others who have trepidation. It is a new world in how we talk about planning – it is that change in planning that really is the stumbling block,” says Mr Siddiqui.
He believes the technology is changing so quickly that many are struggling to keep up with it. The way the internet is changing so rapidly has led Brian O’Kelley, chief executive of AppNexus, who was key to developing programmatic trading, to claim that “programmatic is dead” as the internet has become much more fluid and personalised.
The new age will be one of “programmable advertising,” he argues. Rather than a single static ad being delivered to a large segment of consumers, ads will change according to the context of the recipient. So a user opening an app or web page in Boston in January will see an ad with a snow-capped Faneuil Hall. But the same ad seen six months later in Tokyo would be set against a sunny Mount Fuji.
CMOs need to keep abreast of these developments. Even sceptics concede that most digital advertising will eventually be traded programmatically or through personalised programmable methods. No senior marketer can afford to be left behind by this transformation so they need to boost their knowledge and increase their programmatic skills. This will help them make sure their agencies and technology partners are giving their brands the best possible value for money. They should find that programmatic and programmable methods help them to build stronger relationships with their consumers.