Technology is becoming ever more integral to marketing, with brands exploring ways of leveraging technological advances to improve efficiencies and increase overall return on their marketing spend.
As Sir Martin Sorrell commented at last week’s Ad:Tech London conference:
“Three quarters of our business is now in areas Don Draper wouldn’t recognise. The next step is the fusion of the CMO, CIO and CTO role – bringing together the mad men and the math men.”
The growing trends towards programmatic buying is one example of this union between creative and technology.
Programmatic Buying in a Nutshell
To date the placement of online advertisements has been a predominantly manual process for media agencies who will negotiate with multiple media owners to place their clients’ ads in the right places at the right prices.
Programmatic buying automates the process. Technology enables the media buyers to understand and analyse the profiles of individuals visiting a site (often in real time) and crunches the numbers to place advertisements in the right place at the right time and price based on the campaign’s target audience and objectives.
This means that brands and their agencies are able to move from site buying, where media titles and content published are used as a proxy for understanding the audience reached, to genuine audience planning. As a result, brands will be able to better target and personalise their digital advertising to:
- Increase their relevancy to online media users and
- Reduce wastage by ensuring impressions bought are relevant to their business.
The Future of Programmatic Buying
Programmatic buying is viewed as a significant development. For Mondelez’s VP Global Media & Consumer Engagement, Bonin Bough, this technology is the future of a traditionally creative industry and is key to unlocking additional value for brands:
“Brands need to think about the long game. All channels that can be bought programmatically will be – TV will go that way. It will unlock more value, because if I know the audience that is behind a media then that media might be more valuable to me than a prime time spot.”
According to the Internet Advertising Bureau’s Digital AdSpend report –
- 28% of the UK’s £1.9bn digital display market was bought programmatically in 2013.
- This is expected to rise to 46% in 2014 and to 60% by 2017.
American Express and P&G are amongst the brands embracing the trend: In May 2014 American Express announced plans to shift 100% of its $128.5m online ad budget to programmatic buying, whilst P&G has said it is looking to buy 70% of its digital advertising in the US programmatically by end of this year.
But for programmatic buying to realise its full potential, there will need to be significant industry focus on the following three areas:
- Investment in data management: Reliance on disparate data repositories represents a huge challenge for many brands who are looking to gain a single view of the customer and derive actionable insight from their data. Data management is fundamental for programmatic, as the ability to target the customer with relevant and personalised advertising will only be as good as the data available.
- Effective integration of the feedback loop: The success of programmatic, as with all real-time analytics, lies in the ability to effectively act on the data and insight which is being fed back. Effectively integrating the feedback loop will enable continued gains in marketing effectiveness based on lessons derived from past activities.
- Training and Upskilling: The introduction of programmatic will require different skills and experience for both brands and agencies. There will be a need for the math men, the data and technology specialists, alongside the mad men that have dominated this industry in the past. This will be particularly significant for brands looking to build capabilities in-house where all media buying is currently outsourced to an agency.
The Changing Roles of Brands and Agencies
Perhaps the most significant impact of programmatic buying will be its impact on the relationships between brands, agencies and media owners.
Whilst many organisations are looking to their media agencies to provide the expertise to deliver programmatic buying, the current lack of transparency over ad costs and efficiencies is a barrier to brands increasing investment in this model. Agencies are looking to value the service by outcomes delivered, but visibility over costs and efficiency gains are critical to brands for both internal reporting and continued learning and improvement in their marketing effectiveness.
An alternative model has emerged where some brands are seeing this as an opportunity to build programmatic buying capabilities in-house and have a direct relationship with media owners. As programmatic buying is currently limited to online spend and building in-house capabilities requires high investment, this model is unlikely to gain much traction in the short-term.
In the longer-term, as the technology becomes more established and extends to high spend channels such as TV, the delivery model and roles of partnerships between brands, agencies and media owners will likely be reassessed and subject to significant change. One thing is certain, the industry will continue to evolve beyond areas Don Draper would recognise and the math men will lead this evolution.