FleishmanHillard’s Don Anderson chatted with Accuen’s Matt Harty about why programmatic ad buying is on the rise.
Q: What is programmatic buying, and what is prompting its ascendance?
Matt Harty: Simply put, programmatic advertising is buying ads against a set of instructions. What does that mean? This can be as simple as buying banner ads only in Hong Kong or it can be as complex as buying banner ads targeted at women in their thirties who have looked at cosmetics websites in the past 30 days and live in Bangkok. The growth of programmatic buying is directly connected with the increased digitization of marketing and the rise of analytics that allow us to pinpoint how we use ads to target specific audiences.
Banking, travel and other industries have already gone through these changes. Now, it’s our turn.
Q: What are the advantages of programmatic buying over traditional online media buying, or direct through publisher offerings?
Harty: There are a few, but let’s start with duplication. When you buy one site, life is simple but if you buy two sites, like say MSN and Yahoo!, you have a crossover audience. In fact, most of their audiences cross over. The third party ads serving technologies cannot control this duplication so you end up buying a much smaller reach and a much higher (and immeasurable) level of frequency. Programmatic via the real-time bidding protocol eliminates this problem over thousands of sites if necessary.
Then, there is the nature of advertising contracts. With the old model, we guarantee money to publishers and hope they perform. In the real-time bidding marketplaces, we make no such guarantees. We retain control of our budget and allocate it only to where it is best performing.
Other than that, I like to look at it this way. In Singapore we have say 200 sites that deal with finance that people use – some local, some international. A normal media plan would use research or some other way to decide which two to three sites to put the ads on. Our new and I like to think enlightened approach is to put ads on all 200 and move the budget to the best performing sites.
Q: So is this an example of big data?
Harty: I don’t like calling it big data. It sounds scary, and it’s just plain wrong. Maybe for total business analysis, you need big data. For marketing, relatively simple things like demography can make a huge difference. Imagine if we could talk to a cosmetics company and tell them, “We can target only women going forward.” That’s a big thing, and although the data may represent millions of records, it’s a pretty simple thing to understand and act upon.
Q: How common is programmatic buying today?
Harty: We are just at the very beginning in APAC. In the US where programmatic has had a bit more time, advertisers will spend more than $3.36 billion for display ads through RTB this year, according to eMarketer’s latest forecast. This amounts to 73 percent growth for the year. So we can say it’s a small, but rapidly growing part. And if the projections are to be believed, we have a number of years of double-digit growth ahead of us in the programmatic space.
Q: How should a client approach programmatic ad buying?
Harty: They need to take Sun Tzu’s Art of War approach. They need to be strategic, have a battle plan. They need to look deeply within themselves to understand their own goals and how they may be measured. The programmatic systems are smart and they can learn. Once the system knows the key performance indicators (KPI), it can develop the most efficient media-buying plan given time. The systems are smart, but they are still machines and need instructions. The more precise these instructions are, the better the end results.
Almost all clients exposed to programmatic buying get it pretty quickly. Experience seems to be the best way of teaching people. We have fast-moving consumer goods clients like Unilever in China. We have quick service restaurant clients like McDonald’s. We have tech clients like HP. Once the campaigns start doing what we say they will, the understanding clicks pretty fast for people.
Q: Programmatic buying is the latest ripple in online media and advertising buying, but beyond that have there been other changes in the past two or three years worth noting?
Harty: There have been technological developments such as real-time bidding and data management platforms that let us buy online display advertising better than ever before. I like to think we buy more inclusively now. We buy a larger group of sites that is better representative of the media consumption of the target audience. This is only achievable with these new tools, as the labor needed to enable the buying of a large number of sites in the past would have been highly cost prohibitive.
“Programmatic buying is the first toolset that supports an intelligent progression from campaign to campaign. “
Q: What is real-time bidding and when does it apply?
Harty: Real time bidding (RTB) is just what it sounds like—we’re buying advertising at the moment we need it and we’re bidding on it at the moment we need it in an auction, just like search. It applies in any case where we want to target a particular audience and not just a website.
Q: Are there certain industries better suited for programmatic ad buying?
Harty: There are some very obvious ones—those in the e-commerce space, travel and other businesses who are constantly prospecting for new customers. The way programmatic campaigns learn and adapt can become a large part of their business going forward. But the toolset that programmatic represents is useful to a far wider group of advertisers, such as the audience targeting capable with RTB.
Q: Are click-through rates and clicks per thousand still valid measures?
Harty: We are noticing something interesting about click-through. We have seen pretty consistently that when click-through rates (CTR) increase the quality of the audience drops. Where we have high CTR, we have low conversions. The best reason I can give is what Comcast found in the U.S. It seems that the people who click are the least economically active. I have seen evidence that clicks are meaningless at best and toxic at worst when a client has an actual goal that can be measured. But, the industry continues to support the click. They don’t want to upset the apple cart.
Q: So if not clicks, what should the measurement be?
Harty: How about the client’s actual goals? These goals could be anything measurable—that could be a sale, a request for more information or simply someone performing an action like playing a game or downloading an app.
Pretty simple, but it’s what it should be.
Q: How do you see online media buying evolving?
Harty: I see it being reactive to the information coming in from sales and prospecting based on probability models. Programmatic buying is the first toolset that supports an intelligent progression from campaign to campaign. Before this, we were surviving on insights rather than data.
It’s going to be very exciting to watch how creative and technical specialists will evolve with these new tools.
Q: Do privacy concerns such as we’re seeing in the EU and the U.S. slow down that evolution or does it alter where online media buying is going?
Harty: Empathy and respect have to be important and embedded into the business models of agency groups that develop programmatic advertising. Not collecting personally identifiable information and holding data in a way that it can never be tracked back to an individual are paramount in this relationship of respect with the public. As long as advertising we do is based on probability and inferred data collection, we respect the anonymity of the user and treating them as we wished to be treated