Act now to benefit from a programmatic future
Programmatic is marketing’s biggest buzzword. It’s been discussed and rehashed time and time again; covered by every half respectable marketing publication, blog, and social media page trying to stay relevant. On the one hand, this coverage is warranted because programmatic represents the next big industry shift in communicating with customers. However, it has also brought on a sense of confusion with an underlying tone that programmatic is a complex approach for marketers of the future. The internet is so saturated with diverse and intricate opinions on programmatic that the majority of readers are struggling to fundamentally understand what it is and why it’s important.
Put simply, programmatic is an automated online bidding process for advertising inventory. Highly targeted, programmatic allows advertisers to place specific ads in front of specific customers in real-time, based on information collected milliseconds before. As a result, programmatic can significantly improve a company’s exposure to its target audience, and ultimately increase ROI. A good analogy for programmatic is the stock market, because it consists of a vast array of buyers and sellers that trade in advertising inventory. The price of inventory is pushed up or down based on supply and demand.
The key players in programmatic are advertisers and publishers. An advertiser uses a Demand Side Platform (DSP); software that can purchase advertising inventory automatically based on a series of criteria and scenarios specified by them. The DSP informs itself with data in order to make the best possible trade for the advertiser.
Simultaneously, the publisher uses a Supply Side Platform (SSP), which delivers information about its inventory (ad space) to ad exchanges, ad networks, and ultimately DSPs. The SSP is designed to find the best price for the publisher, in order to optimise yields and maximise revenue for allowing an ad to appear. Both the SSP and the DSP are informed by a Data Management Platform (DMP) on the marketers’ side, which collects multiple user data points and segments this data in order to provide the most relevant information.
Programmatic is not something to be feared, because it’s nowhere near as complex as it’s been made to sound. All a brand needs to do is formulate clear goals for what they want to get out of an advertising strategy, and get to grips with a fairly simple management interface. The more technical bits can be outsourced if necessary.
Theoretically, implementing programmatic should enable marketers to accompany a potential customer on their journey to buying a product; utilising data to show the most relevant messages for the customer’s stage of the journey. Unfortunately, several problems stand between present day usage and the theoretical programmatic utopia.
The first problem is posed by internal silos within businesses. This is illustrated by my recent phone contract renewal. I had already been contracted with the same supplier for several years, meaning they had multiple data points about me at their disposal, including my name, browsing history, and location. Because I knew my contract renewal was imminent, I’d researched which phone I wanted and found the exact package that suited me, which should have been reflected in the data points collected from me. With the use of a DMP this data should have been stored, unified, and utilised in a way that would ensure relevant communication with me, based around how to close me on the particular phone deal that I wanted. It could have sealed the deal.
In reality, when I contacted the company, their communication with me was a mess of different departments offering irrelevant packages and ultimately trying to steal the sale from each other, which nearly resulted in me leaving the company. Programmatic gives a company the power to be relevant, and in being relevant it avoids the confusion of internal competition. In addressing this problem, companies need to work towards a common goal and place the consumer at the centre of everything they do.
The second problem relates to the mind-set of brands today. Generally, when businesses invest they do so tentatively under the premise of a quick results. Although programmatic will certainly yield the results over time, implementation is neither a particularly quick nor cheap process. In fact, determining which data sources should be used, and then mastering how this data can be managed, segmented, and utilised most effectively may take several months, and may also cost upwards of £50,000, depending on the size of your operation.
Make no mistake: this investment is essential. Forward-thinkers have already invested in programmatic, and big brands are also jumping on the bandwagon. Proctor and Gamble is currently converting 70-75 per cent of its digital sales to programmatic, while American Express is undergoing a complete overhaul that will see 100 per cent of its digital ad spend processed programmatically. In a matter of years this software will be at the heart of all successful companies’ communication strategies, while those that failed to invest struggle to keep up and face appearing irrelevant in the eyes of the customer.
The benefits of programmatic are extensive. Research from Boston Consulting Group (BCG) found that programmatic significantly improves click and view-through rates, while reducing cost-per-action, cost-per-click, and cost-per-view. In summary, programmatic offers a proposition we marketers have been dreaming of since the advent of our craft: the ability to deliver a well-designed message to the right consumer at the right moment; time and time again.
Programmatic is not as hard as it’s been made to sound, but in order to navigate the shift it’s important that businesses invest time and resources to get it right. There will be an element of trial and error, and that’s ok.
However, this means your company’s switch to programmatic must take place sooner rather than later, because the programmatic investment is not just a question of money, it will also take considerable time. To ensure competitiveness in the programmatic era, companies need not only to get to grips with the technology, but also cultivate an atmosphere wherein programmatic can be successful, an organisational culture that does not compete with itself, but works towards a common goal – improving customer engagement.