Change is neither good nor bad. It simply is. That’s what Don Draper says in the third season of the TV series Mad Men. The fictional creative director of an advertising firm in New York could have been speaking about any number of seismic shifts in his industry. And yet, if he’d known the extent of the upheaval caused by the technology boom of the early 21st century, there’s a good chance he wouldn’t have sounded so nonchalant.
Could Mr. Draper have ever imagined a machine that makes millions of personalized ads based on where people shop, what cars they drive, or which cities they live in? Probably not. After all, he worked in an era when advertisers negotiated deals on cocktail napkins. The thought of automated advertising (also known as programmatic advertising) — in which social, search, and display ads are bought and sold through machines — was still a long way off.
Technology is transforming traditional marketing, and programmatic advertising is leading the way. With programmatic, the computer does what it does best, and so do you. So, what are the benefits that marketers stand to gain? Who is doing it well? And, is there a downside?
Managing the Campaign-Buying Process Manually Is Becoming Less Acceptable.
Advertising to targeted audiences is nothing new. But, the depth to which marketers can identify highly specific groups is. As the number of variables and data sources intensify, it’s becoming less reasonable for brands to manage the ad-buying process manually. Consumers access brands across multiple devices, screens, and channels; and with a wider range of inventory and ad choices, personalization at scale requires an algorithmic, data-driven approach. Competitive markets require real-time optimization, and the future of ad-buying will, inevitably, be automated.
The Role of Marketers Is Changing.
As digital advertising matures, the move toward programmatic makes sense. There simply isn’t enough time for marketers to shake hands and clink glasses with each potential partner — millions of publishers offer access to highly targeted, high-value audiences. Add to that the fact that consumers interact with multiple channels en route to making purchases, and it’s next to impossible to imagine not heading toward a digital marketplace.
Creative is still king. However, assets are more specialized, and delivering targeted, custom messages to granular audiences based on recent interests in real time is the new norm. The key is to discover an amazing algorithmic strategy — optimizing your system to deliver the best results and then capitalizing on the patterns, trends, and opportunities that emerge.
Programmatic Advertising — The Good, the Bad, and Those Who Are Doing It
Entrusting campaigns to an automated process can be tough and may even require reengineering marketing teams. In programmatic campaigns, machines buy and sell ads, and success depends on the quality of the strategy and data — the creative that is served to the customer. There’s certain to be a learning curve in terms of gathering and analyzing the data needed to power an effective programmatic system. And, of course, it won’t be easy to fight a negative perception spurred by poor transparency, as marketers struggle to see exactly what the machines are purchasing or to view transaction details.
Nevertheless, despite its drawbacks, programmatic marketing enables greater precision as well as more time to be precise. Understanding customers ensures relevant and consistent experiences. Done well, programmatic offers a granular view and a fast, clear picture of consumer behavior, allowing businesses to better anticipate the appeal of their messages with different audiences and resulting in better performance.
Brands that successfully use programmatic are seeing exceptional results across a wide range of quality inventory, channels, and devices.
Textbook-rental company, Chegg, used programmatic buying to perform extensive audience testing so they could compare the different types of students. The company’s data-management platform optimizes around groups that are responsive to various campaigns, taking advantage of one of programmatic’s chief selling points — the ability to target highly specific audiences. The result was a new understanding of Chegg’s most valuable audiences. With a 22 percent reduction in cost per acquisition and a 100 percent increase in lifetime value per customer, Chegg’s decision to automate enabled them to reach a higher-value audience at a lower cost.
Insight into the best-performing audiences isn’t the only benefit from a programmatic strategy. Redbox used programmatic to learn about potential new customers and second- and third-party data to reach new audience segments. Redbox monitored the behaviors of existing customers and then used that data to identify new audiences with similar traits and predict messaging that would resonate with these groups, resulting in a 300 percent increase in return on campaign-ad spend.
A programmatic revolution is underway. Research predicts that, by 2019, global programmatic-ad spend will reach $37 billion — accounting for half of all display and video expenditures — and it’s easy to see why. Programmatic delivers:
• Clearer Data — Simplifying the process of gathering and unifying customer data, programmatic is a very useful tool for marketers. Fed through a powerful analytics engine, an exceptional customer view becomes reality and sets the table for smarter planning and execution.
• More Strategic Planning and Analysis — Automation empowers advertisers. A cross-channel programmatic solution can help gauge campaign performance for planning and capitalizing at scale.
• Smarter Decision-Making Capability — In a unified, cross-channel programmatic world, decision-making is informed by not only more data, but also a broader context. Decisions can be made at speed, at scale, and with confidence.
This is good news for marketers. With fewer rule-based tasks, there’s more time to devote to higher-level skills that determine a campaign’s success or failure: targeting, testing, and analyzing audience segments and campaign performance. Clearer data, easier analysis, and smarter decision-making mean marketers can do their jobs better. As the reach and influence of programmatic expands, advertisers everywhere will be compelled to adapt. Those who don’t will find themselves working harder than ever before to process orders of increasing complexity and specificity.