Programmatic ad-buying in 2017: What marketers should know

2016 saw some powerful new trends begin to emerge for programmatic marketers, presenting both new opportunities and challenges.

While data continues to be the cornerstone of transacting programmatically, most buyers are still too reliant on commoditised third party data and need to do a better job using first party. 

Programmatic creative became a hot topic this year, but in reality it was not being properly executed at scale even though the enabling technology was (and is) available.  

Ad tech has birthed an abundance of new vendor solutions that provide valuable services, but the continued addition of these middlemen has exposed the unacceptable costs and lack of transparency in buying and selling programmatically.   

So with 2016 coming to an end and programmatic projected to increase from $19bn this year to $42bn in 2020, what might be some key trends in 2017?

Better use of data

We continue to progress with our use of data to target the right audience at the right time, but we need to do better.  Developing and understanding marketers’ first party data is a start, but it is also imperative that sellers also endeavor to achieve this with their own first party data in order to take full advantage of the promise of private deals executed via deal IDs (which currently represents less than 20% of programmatic spend). 

This much-praised way of one-to-one programmatic trading has been somewhat of a bust to-date, primarily because buyers have a target audience that they want to reach across a publisher’s inventory.

But upon execution of a campaign, they often just don’t find their target users and the campaign doesn’t fulfill – a waste of time and effort. 

A key component to making this work going forward is for publishers to continue to focus on building out their first party DMP solutions, bringing in not only cookie-based/user ID based data, but also subscription, eCommerce, etc.  

The ongoing development of sell-side DMPs will be a big trend in 2017 and buyers can take advantage of this by better aligning their data with these publishers’ users, greasing the wheels for PMP success.

Programmatic creative

There has been a lot of talk about the promise of programmatic creative and how it will allow brands to use data and dynamic creative to tell a unique story to an individual or a segment of users, in real time and at scale. However, the reality is that this has not yet been put into practice effectively. 

Some large marketers have brought their media buying in-house, eliminating agency media buying costs

The technology is essentially there, so what is preventing us from taking advantage of this powerful new opportunity? To me the primary reason is a legacy structural hindrance that needs to be addressed at the agency level. 

Creative and media have historically operated separately, with creative starting the process with marketers before handing over a finished product to their media counterparts to execute campaigns. 

Compounding the disconnect, it is not unusual that the creative and media teams are not part of the same holding company.

For programmatic creative to be successful agencies need to tear down the walls between creative, data and media planning, and to upend the process so that these stakeholders are working with each other from day one. 

Although a daunting challenge, the opportunity is so great that I still see this as a major trend moving into 2017. But marketers who want to successfully take advantage of this instrument will need to apply significant pressure to their existing agency partners to change their approach and/or find new nimble partners who can provide an environment where these silos don’t exist.

Bringing your ad tech in-house

Initially we had two intermediaries that enabled programmatic buying, DSPs and SSPs, each taking a percentage of spend. 

Today we have added an excess of ad tech vendors that are providing value in different ways.  Each of these middlemen take a piece, not only increasing costs, but also opacity. 

This lack of transparency has been a point of contention for some time, but really came to a head this October when The Guardian revealed that they were receiving as little as $0.30 for every $1 of media spent on its properties. 

This exposed that marketers could be seeing as little as 30% of their working media expenditures going to the actual cost of media, which clearly not sustainable, so what are smart marketers doing about it? 

To start, some large marketers have brought their media buying in-house, eliminating agency media buying costs. Many digital-only brands with built-in digital expertise and loads of valuable, internet-ready first party data have not only taken this approach, but have gone a step further by deploying in-house ad tech solutions. 

This presents several benefits, including:

  • Reducing the ad tech tax by eliminating certain middlemen
  • Increasing transparency and control by creating more direct relationships with publishers
  • Reducing data leakage by actually hosting data management solutions and not handing over data to a variety of third party vendors
  • The marketer or agency now has a unique and differentiated solution, customised to their needs

This too might seem daunting, as it could cost a marketer or agency millions of dollars and years to build a DSP from the ground up, and of course there are questions about the prospect of becoming a technology company when you do not have the expertise or will to do so. 

But there are available solutions and partners out there that can carry the load of providing technical expertise, development and maintenance, helping reduce costs and speeding up time to market.

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