Programmatic Media: The Future of Media Buying

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Compiled by Ken Custer

Back in the day, I was a Media Buyer at a Denver agency and placed a lot of radio and TV dollars. We used Arbitron and Neilson books, crunched the numbers and determined the best cost per point of the target demographic. A cumbersome process to say the least. Then came computers that crunched the numbers for you. Now comes Programmatic Media buying that targets an individual customer through automation and technology and eliminates the human element in buying.

What is Programmatic Media?

According to Wikipedia (1), The term Programmatic media (also known as programmatic marketing or programmatic advertising) encompasses an array of technologies that automate the buying, placement and optimisation of media inventory, in turn replacing human-based methods. In this process, supply and demand partners utilise automated systems and business rules to place advertisements in electronically targeted media inventory.

According to Digidays’ JackMarshell (2) Ogilvy and Mather (now known as Neo@Ogilvy) “Programmatic” ad buying typically refers to the use of software to purchase digital advertising, as opposed to the traditional process that involves RFPs, human negotiations and manual insertion orders. It’s using machines to buy ads, basically.

Inc’s John Boitnott (3), Journalist and Digital Consultant says, “It’s pretty simple: programmatic can provide highly efficient, high quality, and advertising markets that deliver optimal value to both buyers and sellers. Programmatic advertising has been evolving quickly in order to support growth of the digital economy across screens and formats. The advantages that programmatic brings are something that fewer and fewer ad buyers are passing up. When you have the option to decide exactly who is going to see your ad, it’s hard not to switch away from old-style bulk-inventory buying.”

How did it come about?

According to Wikipedia (1): It has been suggested that the interactive media division of WPP Group’s Ogilvy and Mather (now known as Neo@Ogilvy), has the deepest roots in terms of exploring mechanized media. Their 1981 venture, known as Teletext, entailed the broadcast of print material on television sets equipped with a special decoder that utilized binary code Programmatic media has built on this framework with an algorithmic method of transacting cross-media. The evolution from traditional contractual media transactions and proxies of measurement, which had been in existence since 1968 when Dentsu Aegis Network’s Carat established itself as the world’s first independent media agency, can be chronologically attributed to the launch of Google’s Adwords system in 2002. Algorithmically driven search media (AdWords), and display media adserving (DoubleClick), changed the way that the industry transacted on a global scale, which led to a wealth of innovation and the rise of programmatic media. In 2011, WPP Group launched a proprietary platform (Xaxis) that allowed precise algorithmic targeting of specific audiences via an aggregation of audience information across multiple online and offline channels, resulting in another milestone in the evolution of programmatic media

Acording to John Boitnot (3): The tech behind programmatic advertising was born out of inefficiencies in processes and economics– kind of like every other type of new technology. Prior to 2009, virtually all of digital advertising (except search) was available for bulk purchase and only from traditional, manual (ahem, non-automated) methods. Think banner ads, rich media ads, video ads and the like. If you were a buyer, you only had one option to buy advertising space: in bulk. Advertisers had lower ROIs since buyers didn’t have much control over exactly what kind of inventory they were buying.

Then there was the processing side. This is where prices were negotiated, faxes were processed, and a slew of manual transfers took place. A (very!) multi-step process was the way things got done. Consider 2008 Yahoo: There were more than 30 steps just to get ad campaigns to go live. Extra time, extra cost and extra work took place. It was time for a change.

Enter programmatic advertising. In the last six years this ad buying method has grown to become a huge portion of the overall industry. In just the last year, supply was up 26 percent, demand was up 64 percent, and 50 percent of all programmatic ad requests came from outside the US.

Where is Programmatic Media going?

Travis Volk, Regional Sales Manager, ChoiceStream (4) says, “You can see with the digital spending on programmatic, it’s at $10 billion right now and heading towards $20 billion in a few years.”

According to AD WEEK, The fact is, programmatic is a fast-growing part of the buying and selling of media. How fast? This year, eMarketer predicts that advertisers in the U.S. will spend $3.36 billion on a thing called “real-time bidding,” up from just shy of $2 billion in 2012.

A Retargeted Blog states, “Last year, revenues attributed to real-time bidding (the backbone of programmatic buying) reached $1.6 billion and 34% of all display advertising revenues are projected to come from RTB by 2017. In the near future, programmatic buying will be essential to any media buyer’s digital strategy.”

Local thoughts on Programmatic Media

The Review went to InLine Media (5), a leading Denver media-buying agency and asked some questions on about using Programmatic Media. Senior Media Associate Ashleigh Wiemer responded.

Have you used Programmatic Media buying?

Yes, primarily RTB (real-time bidding) through various digital media partners.

If so, did you get the results wanted?

Yes and no, it really depends on a number of factors – including campaign KPI’s, creative, etc.

Was it cost effective?

In my experience, programmatic media buying is one of the more cost effective options when it comes to digital media.

Thoughts in general about Programmatic Media buying:

Programmatic media buying gets at what media buying is truly about, reaching the right audience for our client’s business. There is always potential for waste with more traditional media buying, such as buying a specific site, show or station. Programmatic allows advertisers to limit this waste and in turn, become more efficient with budgets and grow reach.

The good

It allows for robust targeting, efficiency and scale, in most instances.

The bad

There will always be concerns about brand safety, ad visibility, transparency, etc. within the digital realm. But, with the numerous tools at our disposal – there are ways to monitor, combat and alleviate this.

The future

It will continue to grow; it’s already expanding beyond digital and at some point it’s possible that the majority of media buying will be programmatic (though I think that’s far in the future). Nevertheless, I believe there will always be the human and partnership element to media buying. I can’t imagine custom integrations and promotions being purchased through an automated tool.

Best use

In my digital-specific experience, it’s best used when you have more of a direct-response campaign, either a purchase or a specific action you want taken on your site (enrolling, generating a lead, etc.). Different targeting technologies, combined with the ability to track that specific action, allow for more impactful optimizations.

Why use Programmatic Media

Why programmatic advertising matters: (2)

Efficiency. Before programmatic ad buying, digital ads were bought and sold by human ad buyers and salespeople, which are expensive and unreliable. Programmatic advertising technology promises to make the ad buying system more efficient, and therefore cheaper, by removing humans from the process wherever possible. Humans get sick, need to sleep and come to work hungover. Machines do not.

Retargeted (6) – Automated media planning through ad exchanges and DSPs provides enormous benefits to both direct response and brand advertisers. Programmatic buying offers a 100% transparent pricing model. Buyers can leverage third party data to automatically cherry pick impressions and optimize at the impression level. Programmatic buying automates the placement process by selecting whom to serve impressions to based on data an advertiser thinks is pertinent to the campaign. In a programmatic campaign, an ad may only show on a specific website if the correct person is browsing that site.

The Future

Is programmatic “the future of ad buying”?
Probably (2), yes. It’s impossible to tell what portion of advertising is now traded programmatically, but it’s definitely on the rise. Some agencies now say they’re eager to buy as much media as possible through programmatic channels, and some major brands have even built out in-house teams to handle their programmatic ad buying as they spend more of their marketing budgets that way. At the moment, it’s mainly online ads that are traded programmatically, but increasingly media companies and agencies are exploring ways to sell “traditional” media this way, including TV spots and out-of-home ads.

Retargeted (6)

As the technology advances, buyers’ approaches to programmatic buying will become more sophisticated. Recently, an advanced ecosystem has formed around programmatic buying with specialized providers leading the way and some larger agencies building in-house platforms. It’s safe to say programmatic buying will eventually have a dominant market share of online display buying. With the addition of RTB to social networks like Facebook, new strategies will present themselves that weren’t previously possible. Like many digital advertising trends, programmatic buying has evolved rapidly to become an essential tool

Conclusion

(1) Programmatic media and big data are both intrinsically interconnected. It has been suggested by Nick Couldry and Joseph Turow that practitioners in Media approach big data as many actionable points of information about millions of individuals. Thus, the industry appears to be moving away from the traditional approach of using specific media environments such as newspapers, magazines, or television shows and instead taps into consumers with technologies that reach targeted people at optimal times in optimal locations. The ultimate aim is of course to serve, or convey, a message or content that is (statistically speaking) in line with the consumer’s mindset. For example, publishing environments are increasingly tailoring messages (advertisements) and content (articles) to appeal to consumers that have been exclusively gleaned through various data-mining activities. This process is managed via algorithms that process information in an automated manner.

Many media agencies leverage technology partners with access to ad exchanges, while others have chosen to develop their own trading desks that allow them to directly transact in media programmatically. Programmatic media buying allows the use of audience insights and technology to tailor messages to a particular individual, at a particular moment, in a specific context, ultimately enabling an additional layer of value. Programmatic media is transacted across a wide and diverse array of mediums including digital media (desktop, mobile and social media), Television (TV), Print, Radio and Out-of-Home (OOH). Technological innovation, an abundance of data, and liquidity in the media has given way to a more democratized process, which has changed the mechanics of transacting media in a manner that has never been possible before.

Programmatic Media Terms

Ad Exchange – Ad exchanges allow practitioners in media to transact in media inventory in an auction-based model. Buyers and sellers allow algorithms to pin point media inventory based on its value with reference to key performance indicators (KPIs).

Real-time Bidding (RTB)

Real-time bidding is an automated method of transacting in media inventory, which is bought and sold via technology platforms such as ad exchanges or supply-side platforms (SSP), in real time. In this process, sellers (publishers) make their inventory available for buyers (advertisers) who bid on the inventory in the marketplace. Parameters set by the advertisers include bid price, network reach, and the type of individual that they are targeting. One of the benefits of this process is the unrivaled opportunity for optimization.

Private Marketplace (PMP)

The private marketplace (PMP), also known as a private exchange, is where buyers and sellers interact in a closed environment in order to gain an additional layer of control over the transaction. Media inventory available via a private marketplace (PMP) is limited to premium environments.

Demand-side Platform (DSP)

Demand-side platforms (DSPs) work as a central hub that connects various data sources into one key platform. DSP’s provide an additional layer of control over media inventory via a centralized overview of multiple data sources and in turn create efficiencies in terms of management, reporting and optimization. Real-Time Bidding

RTB refers to the purchase of ads through real-time auctions.

Programmatic Direct

Programmatic software also allows advertisers to buy guaranteed ad impressions in advance from specific publisher sites.

Sources:

(1) http://en.wikipedia.org/wiki/Programmatic_media

(2) www. digiday.com

(3) www.inc.com/author/john-boitnott

(4) ww.chocestreamn.com

(5) www. Inlinemedia.com

(6) www.Retargeter.com/blog/strategy-2/programmatic-buying-intro

Learning tools

AD WEEK – Programmatic for Dummies www.Adweek.com

www.BrightRoll.com – Getting Started with Programmatic: A Digital Video Primer

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