Programmatic has quickly become one of the growth drivers in the digital advertising industry. Once you understand how it works, it’s no wonder why. It’s the kind of speed and efficiency we could only wish for a decade ago. But on the other side of the coin, it can be a little unsettling to the average ad professional. Is this the beginning of the end?
Don’t hold your breath for the machine takeover. There’s a lot more to this technology than meets the eye.
To understand why programmatic does not spell the end, you have to look at how programmatic actually works. Before you run for the hills, stop. I promise I won’t get too technical.
How Programmatic Advertising Works
- A publisher makes their ad space available on an Ad Exchange using a Supply Side Platform (SSP)
- A brand wants to run their ad on the publisher’s website
- The brand uses a Demand Side Platform (DSP) to bid for the ad space by setting conditions like price, audience and purchase period. Other brands are also bidding for similar audiences and spaces
- If the brand’s conditions are met and it is the top bidder for the ad space, the DSP automatically wins the purchase for the ad space and the publisher’s ad server hosts the winning ad
- If the conditions are not met, the DSP does not purchase ad space and the brand must decide what rules or bid price they need to change to win the bid for the ad space
Benefits of Programmatic Advertising
- Eliminates the headaches of the traditional Insertion Order process
- Gives price and placement transparency to everyone involved
- Advertisers only pay for the audiences they want
- Advertisers have a vast amount of data points to target against
- Publishers get the real market value of their audience
Don’t Fear the Machines
Debates over automation have been heating up over the last century. But programmatic is not going to completely replace agencies. Instead, it will (and already has) take much of the busy work out of their hands and free them up for more important and mentally taxing projects.
The major reason that agencies are safe from programmatic advertising is the technology’s reliance on standard ad sizes and placements in order to scale. It can’t effectively generate high interactive experiences based on the audience. It can’t supply native ads (yet). And we’re still heavily entrenched in a media landscape where interesting and engaging content in king … which doesn’t fit well in the typical ad unit.
Programmatic ads are a necessary strategy today, but they won’t completely replace direct buys. In fact, we’re seeing stronger success for direct buys when they’re paired with programmatic ones. The two (seemingly competing) technologies are stronger together than they are apart.
So don’t worry about circuits taking over your job just yet.
“Big data” has been a headline in digital media for years now, but 2015 is the time to shift our focus from third-party data to first-party shopping data.
Pinpoint Targeting? Not Without First-Party Shopping Data
Advertisers are getting tired of accepting watered down third-party data and “lookalike” audience segments. First-party shopping data allows us to differentiate between passing interest and purchasing intent. It is the holy grail of data, giving advertisers the option of targeting to audiences who are looking for a new smartphone versus 18–24 year olds who are interested in music.
If an advertiser is selling cars, the most valuable audience to reach is in-market car buyers. But if a consumer just leased a car two months ago, all the car ads served to them for the next two years are a waste. That’s where first-party shopping data comes in to help advertisers make wiser investments, and avoid serving ads to consumers who simply aren’t in the market.
First-Party Shopping Data Drops the Need for Clicks
In current programmatic exchanges, the common measurement for success is the click rate. But as publishers build platforms like the Walmart Exchange, or WMX, CTR will matter less. Because Walmart owns the sales data, it can directly tie advertisements to in-store and online sales lift. This year, expect this kind of real-time ROI metric and optimization technology to set the bar.
Most publishers don’t have direct access to first-party shopping data at the scale advertisers want. This gives publishers like Walmart and eBay a huge advantage over third-party research companies or services like Facebook and Pinterest, who have to make educated guesses when targeting their audiences.
Developing First-Party Shopping Data to Include Cross-Screen Targeting
As mobile usage continues to outpace desktop, advertisers will want cross-screen solutions to track their customers across devices. While several third-party vendors attempt to deliver “probabilistic” cross-screen measures, only large-scale publishers with logged-in customers (like Facebook, Amazon and eBay) can truly make accurate cross-screen connections. Other retailers are starting to make moves to provide the login or a similar system that would allow them to follow shoppers from PC to device, but it’s slow going so far.
2015 will be a landmark year for mobile, programmatic and other developing advertising technologies. But unless they’re powered by first-party shopping data, they won’t make half of the impact they could.
(Photo courtesy WikiMedia Commons and Intel Free Press.)
Programmatic is one of the advertising industry’s most effective forms of buying and selling, which makes it a big priority as the technology continues to improve. New research from Chango reveals that 75% of brand marketers currently use programmatic and 7% intend to increase their programmatic budgets in 2015.
Despite the attention and rapid growth, publishers still face several obstacles adopting the technology. I had the pleasure of speaking on a panel called “Programmatic Priorities” at the AdMonsters Publisher Forum with Phil Bohn, programmatic sales director at SheKnows.com. We discussed the biggest programmatic challenges publishers are facing today.
Programmatic Education for Staff
Organizational education was a big concern for publishers during the panel. Programmatic is a technical sell, so publishers are faced with the challenges of staffing appropriately and training internally without putting too much burden on operational departments.
Triad Retail Media cleared this hurdle by merging programmatic and direct sellers into one strategic sales role and creating a comprehensive training certification program. Every team member is required to attend training sessions and pass a proctored exam to ensure full understanding of each product we offer.
Managing Multiple Supply Side Platforms (SSPs)
Another issue our audience faced was managing multiple SSPs. Publishers are increasingly making their inventory available through multiple exchanges in hopes of increasing sell-through rates and creating the highest possible rate for impressions.
No one has a great solution to line up multiple exchanges so they can compete against each other to reach a positive outcome. In reality, using multiple SSPs increases the risk of generating pass backs — when one network can’t meet the floor CPM and the impression is redirected to another network. These pass backs often slow site speed and expose the same impression multiple times to the same buyers.
Publishers should look at their SSPs and define a specific purpose for each exchange partner. Consolidate when possible to give the end user and buyer a better experience.
Not Just Publisher Concerns
Research from AOL suggests that education and inventory quality are two of the top hurdles. The survey revealed that more than 60% of U.S. marketers, agencies and publishers are concerned about inventory quality and transparency.
By educating sellers and consolidating SSPs, publishers can relieve these programmatic concerns for themselves and their advertisers … while providing a smoother experience for everyone involved.
Photos courtesy AdMonsters.
Google’s Holiday Shoppers Intention survey reported two intriguing facts that should drive your mobile strategy this holiday season:
- 75% of consumers plan to use their mobile devices shopping in-store this season
- One third of all shopping research happens between 10 p.m. and 4 a.m.
Why the huge intention to rely on mobile? Consumers are better at searching, finding and ordering on their mobile devices than they were last year. The technology to deliver relevant advertising on mobile devices has also matured — capabilities like geolocation or beacons — along with the presentation of content on a small screen.
The weird hours are also easily explained. Given the time constraints during the holidays, people are planning their shopping lists on mobile devices — and often during “off” hours. Brick-and-mortar sales may be moving closer to 24 hours of operation on big shopping holidays, but mobile is always 24/7.
Mobile Design Concepts to Keep in Mind
If a shopper is on their mobile device, they likely have time and bandwidth constraints, and are more susceptible to distraction. It’s important to keep the smaller screen in mind while developing the layout, design and functionality.
Store location finders need to be front and center. Shoppers use this feature as much as everything else and, as they plan their busy day, they want to know where the store is.
Overall, we should be providing content that will help the consumer most when they are mobile. Defining the composition of information on the screen based on the relevance to the shopper is paramount.
On the other hand, tablets are unique because obviously not a lot of people go on an excursion with a tablet. But they are an important screen at home, particularly if someone is intrigued by a televised offer and wants to get more information. This is another reason why having a multi-screen approach for any campaign is so critical.
Take Full Advantage of Mobile on Big Shopping Days
Black Friday will still be big … but it has creeped into Thanksgiving. I have seen it called “Grey Friday” now as a lot of the deals start around dinner on Thanksgiving. Shoppers skip dinner or go shopping right after the Thanksgiving turkey, instead of using that time to do research for Black Friday. Retailers are trying to get a head start and are putting some offers online as well. The net result is that consumers are researching earlier than they used to — and primarily on their mobile devices as they try to figure out both their in-person stops as well as their online orders.
Shoppers are going to use mobile devices to seek out major retailers for the greatest deals on hot items like toys, apparel and consumer electronics. The latter category has always been a big draw as mobile offers a tremendous solution to compare prices and features. This also opens the door for cross-promotion—if you’re buying toys, you need batteries; if you’re buying a gaming system, you need games. A noncompeting, complementary brand has the opportunity here to jump in and contextually offer the right content to accompany the products shoppers plan to purchase for holiday season.
How is your brand planning to capitalize on mobile throughout the holidays?
Even in September, some of us are still trying to nail down our 2014 New Year’s resolutions. The same can’t be said for advertisers —many of whom are already mapping their digital strategies for 2015.
Their main focus? Full speed ahead on digital.
Digital strategies may help drive the U.S. advertising market to $172 billion in 2015, according to new research from Magna Global. One in three ad dollars will go to digital advertising next year, meaning digital media spending will be almost equal to television spending.
“Many of our advertisers have now hired a digital manager or a team in order to keep up with the quickly changing media landscape. For those who have not, now is the time,” David Morgan, VP of Sales and Talent Development at Triad Retail Media explains, “Many traditional agencies have now developed entire digital divisions when a few years ago digital might have been an afterthought.”
Spending on TV advertising may be safe now, but Magna Global predicts it will take the biggest beating over the next few years as digital strategies gain more traction. It projects digital advertising will top television advertising by 2017. This is due in part to the growing popularity of online video, with sites like YouTube, Hulu and full episode players (FEP) from broadcast networks like ABC and CBS. So, television: You have two years.
Increased traffic from mobile devices and social sites has also helped push digital to the forefront — social represents 32% of the digital market share and mobile 51%.
While it’s important to assess strategies year-round, the promise of a new year can help put things in a new perspective. Take this chance to review the state of the industry to better prepare for where it’s headed. Come January 1, 2015, expect to see digital alignment at the top of advertisers’ resolutions lists—right above joining a gym and cutting back on sweets.
The average American carries at least two, sometimes three, mobile devices with them. It sounds like a lot, until you break it down—there’s the omnipresent smartphone, a tablet or maybe an e-reader, an MP3 player … it’s pretty easy to get to three.
So many devices. So little time. Photo courtesy Blake Patterson.
Tom Boisvert, Triad’s VP of Product Innovation, wrote on Retail Online Integration about how critical it is to optimize advertising programs for mobile. He explained different tactics to optimize a retailer’s mobile presence, but we wanted to give you six more reasons to start optimizing for a mobile strategy:
- More digital content is being consumed on mobile devices. U.S. adults will spend 23% of their time consuming media on a mobile device this year
- Tablets are increasingly used for online shopping. Tablets are projected to bring in $76 billion in online sales, twice that of mobile devices
- Mobile ad spending has exploded—and is expected to hit $31.45 billion this year. By 2018, mobile ad spending is projected to top $94 billionMobile devices lead to in-store purchases. 52% of U.S. shoppers have used a mobile device to research products while browsing in a store
- Age makes no difference: 69% of older Baby Boomers and 97% of Gen Yers use their smartphone to shop while in stores
- Mobile advertising on social channels is critical too. For the first time, social mobile advertising revenues surpassed social desktop ad revenues
As Tom said, “[Shopping] can begin in-store and end on a smartphone, or vice-versa. If any of these entry points is lacking in any way—e.g., the path to purchase isn’t clear and direct—consumers will get lost.” Whether at home or at their local retailer, consumers are using their multiple devices to complete the path to purchase.
While this presents an opportunity to win customers, this also means retailers have to work twice as hard to make sure they don’t get lost. To ensure that, you need to implement cross-device mobile strategies that will keep the potential customers on the path to purchase with you.
“U.S. retail e-commerce will continue its torrid growth in 2014.” If your livelihood depends on e-commerce, you’ve got to love any report that begins that way. eMarketer’s U.S. Retail Ecommerce: 2014 Trends and Forecast highlights both overall growth and the increasing interplay between online and offline retail.
Some key findings:
- U.S. retail e-commerce will continue to grow in 2014, with sales predicted to hit $304 billion (up 15.5%)
- 90% (nearly 197 million) of U.S. Internet users over the age of 14 will shop online this year
- 163 million of these shoppers will complete a purchase digitally this year
There seems to be a discrepancy between the last two points, but they show how buyers are integrating digital channels into their shopping process. Even if the consumer does not complete the transaction online, the impact of digital interactions on the shopping process has become increasingly important.
As e-commerce grew, retailers were initially afraid of the “showrooming” phenomenon, where shoppers would browse in a store but buy online. But an Accenture study found 72% on U.S. shoppers had showroomed, while 78% had webroomed, or browsed online before buying at a store.
Consumers today are going digital at some point on their purchase journey, whether they’re researching or in the store looking at a product. This trend makes it crucial for retailers to examine how they integrate their digital properties into the shopping experience and direct consumers to products while browsing online and in-store.
The real issue isn’t how a shopper buys, but how they buy with a certain retailer.
Mother’s Day gift ideas—from sparkling jewelry sets to luxurious spa day packages—are already popping up all over the Internet. For retailers, Mother’s Day is a lot more than flowers, cards and candy. It’s the third-largest retail holiday behind Christmas and Back to School.
If you’re still planning your Mother’s Day advertising copy, remember this: Emotion matters. Mom is often the first person with whom we create a deep, emotional bond. She feeds you, clothes you, cares for you and she also lays down the law when you’re out of line. It’s a complex relationship that may change over time but rarely loses its resonance with consumers.
Give a gentle tug on your customers’ heartstrings by reminding them how special Mom is and why the product you offer is the best gift to reflect the special bond they share. It’s not about the size of the gift; it’s about the sentiment the gift represents.
Mother’s Day is Digital Too
Nearly 3 in 10 Americans will buy Mother’s Day gifts online. Why the surge in online shopping? One factor might be Millennials, who are perfectly comfortable researching and purchasing products online. And their purchasing power is impressive. Millennial purchasing power is an estimated $170 billion annually. In 2011, Millennials between 25 and 34 spent approximately $191.35 on Mother’s Day, and the younger Millennials (18 to 24) came in a close second at $183.38. This may be a bit of double-duty gift-buying. Many Millennials are themselves, new parents—80% of U.S. births are now to Millennial parents.
Millennials are equally comfortable to purchase items online or in-store, but their first inclination when researching products is to grab their laptop, tablet or smartphone. Earn their attention with helpful buying guides, creative Mother’s Day gift ideas, and emotional, uplifting stories. They also love a good deal, especially if it’s promoted on their favorite social media. In an eMarketer study, more than half of the women and 44% of the men surveyed said they used Facebook or Twitter to receive notifications for sales and specials.
Forget About the Flowers
Flowers are a big seller on Mother’s Day. About $1.9 million goes toward bouquets and other floral gifts for moms. But they are hardly the biggest Mother’s Day gift category. Jewelry and electronics top the gift charts, with average spending at $4.2 and $2.3 billion, respectively.
Make your shopper marketing dollars count with media placed where shoppers are likely to be browsing for Mother’s Day gifts on major retail and auction sites, as well as social media.
There are an estimated 2 billion moms in the world, but she’s always one in a million to the people who love her. With the right digital marketing strategy, your product can be the one gift that makes her day.