Making the business case for programmatic advertising

The first banner ad appeared on Hotwired.com, the original website for Wired Magazine all the way back in 1994.

Since then, the time and attention that consumers have to see and consider advertising has reduced significantly.

This is for a number of reasons.

1. Consumer trust

Firstly, and perhaps most importantly, is the issue of trust.

Before the advent of the World Wide Web and in particular the universal ability to publish, there was an asymmetrical relationship between sellers and consumers, particularly when it came to selling high value or technical products such as motor cars.

One side (the seller) was fully informed, and the other side (the consumer) was partially in the dark.

This balance has now shifted. Consumers are now far more educated about what they are purchasing.

In many cases, they may have just as much information as a seller, along with a means to report on their experiences via blogs, social media or review engines like TrustPilot and TripAdvisor.

2. Fragmented consumer attention

The second reason may be due to the availability of media and the devices where media is consumed, leading to a fragmentation of consumer attention.

It’s not as easy to capture their attention now via newspaper, radio and television advertisements.

Consider the well-worn example of the average Londoner’s 45-minute tube journey where they are exposed to more than 130 advertisements, featuring over 80 different products.

In an entire day, the average Londoner is may be exposed to 3,500 – 7,000 marketing messages according to some sources.

In addition, as channels proliferate, it is becoming easier for marketers to create and distribute content.

At the same time, because so much media has been democratised, it has also become easier for people to create and distribute cat videos.

This makes it incredibly difficult for marketers to cut through the noise, which creates a requirement for marketers to focus on value, quality and relevancy as very few can make volume, quantity and reach work.

And so marketers have a new priority, to be able to deliver the right message, via the right medium, at the right time.

To make things even trickier, they need to be able to do this at scale.

Enter programmatic

Programmatic advertising may be the key to help marketers overcome this challenge.

It’s a fairly new addition to some marketers’ toolkits and for this reason there is a long tail of marketers that haven’t taken the time to understand the opportunity.

I recently attended a programmatic workshop delivered by Head of Digital at Disrupt the Market Ltd and Econsultancy trainer Andy Letting to get a better understanding of the opportunities that programmatic offers.

Problems solved

According to Andy, programmatic solves two key business challenges.

Firstly, both buyers and sellers of digital media struggle with the complexity involved in digital media transactions.

Planners can easily spend hours manually sorting through available inventory and discovering prices to begin negotiating deals with the sellers or publishers.

And publishers compete for these sales in a cumbersome, highly manual agency-created RFP process that keeps them at arms-length from advertisers.

Programmatic brings efficiency in terms of insertion orders, pricing negotiations and the back and forth which traditionally accompanied negotiations.

Secondly, programmatic also solves the problem of where media is bought.

Marketers didn’t always know if the media purchased was on websites that were relevant to their brand. There was little control.

Now, in theory, marketers have the ability to reach the right person, in the right place with the right product so they no longer need to focus on volume.

According to Andy:

We can focus on quality rather than quantity. This is where programmatic stands out… Marketers can now use their time planning rather than negotiating. Agencies can use what was negotiation time for planning and optimisation.

Programmatic as part of a wider integrated approach to marketing

So if programmatic advertising is such a boon for marketers, how come some organisations have been slow to integrate it into their other marketing activities?

According to Andy, programmatic has really only become mainstream relatively recently.

“Programmatic has been around for a long time but it has only really become mainstream in the last two years.

“Publishers have got their acts together and developed programmatic solutions so it’s still early days. Programmatic this year is expected to reach over £2.5bn in spend. That’s 10% of total UK advertising spend so it is making a real impact.

“In terms of maturity, I think channels will (eventually) evolve into programmatic channels so if you think of radio and TV, this is only starting. Digital media buying is at the forefront of this.

“I believe when we go into above-the-line activity programmatically, that’s where we will see another shift in gear because then you’ll get senior executives understanding programmatic as it’s touching a world that they are immersed in and understand more than digital.”

Towards making programmatic part of other brand building activities

On the subject of above-the-line activity, I asked Andy if programmatic can be used for big brand ideas.

Andy advised that for any campaign that’s part of brand activation, there should be an element of programmatic as it is a useful tool for testing.

“Brands should know or at least have a good understanding of their customer. There is no reason why you can’t build a customer subset to examine via programmatic in an attempt to understand them better. That’s a good enough reason for doing it.”

This suggests that programmatic could be used to test messaging either before or during a live campaign.

As well as offering results in its own right, programmatic can be used to capture real time insights that can be used to make campaign updates.

“If you can bring that insight back in to contribute to your view of the customer, you can keep developing your understanding and hopefully strengthen that customer relationship.”

Getting started and reconsidering the traditional budget cycle

Ultimately, programmatic should be focused on the customer.

This means pulling together skill sets within the organisation to reach that customer in ways that haven’t been done before.

According to Andy, this means that marketers can’t start doing programmatic on their own. They will need brand buy in and support and will also require the support of legal and data teams.

“If you take an FMCG company that manages multiple brands, how to immerse programmatic (into marketing activities) might be to test programmatic with a single brand to put the building blocks in place and take other stakeholders on a journey.”

If programmatic can be used to capture insights and update campaigns once they are live, then this might suggest that the traditional budget cycle is old hat.

If that’s the case, marketers will need to work more closely with their Financial Controller to develop a new approach that empowers them to adjust budgets and campaigns to take advantage of clearly defined opportunities.

 

source – http://bit.ly/2cUMUzy