Digital Essays 2014: Programmatic buying redefines the media landscape

Kavita Dhyani

And it is bringing with it a cascade of benefits, says Kavita Dhyani.

In the last three years programmatic buying has become a popular buzz-phrase in the digital media world, and it is interesting to see more and more agencies are adopting this new technology-led media buying method. At the moment, it is mainly online display ads that are traded programmatically, but increasingly media companies and agencies are exploring ways to sell ‘traditional’ media this way too, including TV spots and outdoor adverts.

This method of media buying is revolutionising the traditional process which involved manual insertion orders, manual negotiations and proposals from ad sales. Now, the technology replaces some of the menial jobs that humans have to deal with like sending insertion orders to publishers and sending ad tags. But people are still required for optimisations and set campaign strategies. With a programmatic approach, most ads are bought and sold through an auction-based pricing model (commonly referred to as real-time bidding). You pay the price the ad impression is worth at that moment and the automation handles negotiations and ordering. Your ads only appear on a website if the person viewing the site fits your established criteria. The goal is to target your audience and let the algorithms optimise the rest. However, RTB is not the only programmatic buying format as there is the option to have fixed deals and exclusive inventories guaranteed by publishers in advance which is called programmatic direct.

The worldwide RTB-based spending is expected to grow from $2.7bn in 2012 to $20.8bn in 2017 (a compounded annual growth rate of 51 per cent). RTB’s share of total combined online and mobile display advertising spending will grow from 8 per cent to 26 per cent during the same time. RTB is the predominant way to trade indirectly sold display advertising inventory, with an ever growing market share. Until recently, media planning had a serious flaw: whilst marketers had sharply defined target-based consumer research and competitor analysis, media planning and delivery tracking could not be mapped directly to the defined audience. Buyers did deals with vendors and publishers that they felt were subjectively a good fit for their target bracket, and committed certain ad spends without any surety about what proportion of impressions would get consumed. Therefore, moving from ‘problem definition’ to ‘optimal solution’ had a leap of faith.

Programmatic buying endeavours to fix this issue. It is able to marry the power of offline data with the efficiency of custom audiences instead of having to risk precious ad dollars upon instinct. It essentially enables reaching the defined audience wherever they consume media.

While RTB is most renowned for performance advertising, real new opportunities lie in branding-oriented marketing spend. Brands are starting to use programmatic buying to achieve branding objectives such as increasing brand awareness. The availability of new metrics such as interaction and viewability also allow a better control. Programmatic buying has initiated a new chapter in tailored advertising. It is aiding brands in controlling who they target across devices. Consequently, there has been rapid proliferation in terms of agencies developing their in-house platforms for programmatic trading through agency trading desks (ATD). Similarly brands are also developing their own brand trading desks (BTD) to follow suit. Programmatic buying has allowed all stakeholders – media owners, brands and agencies – better control in terms of reaching consumers online and increased transparency and flexibility when optimising inventory management and costs.

Many brands are seeing the benefit of brand trading desks, which allow them to map and customise their
message with specific consumer touch points, offering more relevant information in line with specific consumer needs. The end result is greater trust and other brand imagery parameters – all leading indicators for market share increase.

With the blurring distinction between TV and the internet, RTB video ads, whilst still small, offer huge opportunities (online video streaming, mobile video, catch-up TV and connected TVs). Mobile RTB spending has also taken off in 2013, and is expected to quadruple in 2014.

Programmatic buying is redefining the way we buy media, with a cascade of benefits. Media buying becomes, scalable, granular, data-driven, targeted and algorithmic for better attribution modelling, better decisions and better ROI.

In the programmatic world, the interface between the buyer and the inventory is the demand side platform (DSP).

A DSP is a platform that comprises at minimum: access to a media inventory (offline or online); the ability to buy this inventory programmatically (real time or not); buying optimisation capabilities (algorithms); and audience targeting capabilities (via third party data providers, in-house data etc.). The biggest challenge is to identify the best DSP partner. Most agencies move towards a vertical approach, where you partner with a single partner based on their internal audit and historical campaign performance, but this approach does not answer all brand objectives and campaign types. It becomes imperative that we develop horizontal growth, where agency technology is fully capable of integrating with multiple DSPs, thus increasing the agility to new technology, formats, new media, and limiting technology and business risk.

Some companies have already spotted the problem; each partially resolving it on distinct aspects, but none is fully integrated so far, enabling a holistic cross-media (display/video/mobile), data-driven, programmatic environment.

(Kavita Dhyani is head of digital media at Havas Digital UAE)