Conferences, online videos and webinars are popping up everywhere promising to demystify programmatic advertising and give marketers insights on how to use it effectively. Damien Venuto looks into the hype behind the industry’s latest buzzword.
Throughout the 20th century, the stock market floor was typified by a mob of suited traders shouting, screaming, gesticulating wildly and waving papers as they vied to complete trades for their clients. And while this chaos still exists to some degree, the comparatively ordered hum of network servers is starting to take its place as more and more trading is facilitated through electronic means, which require traders to stare at the glow of digital screens for most of the day.
Sam Smith, the managing director of TubeMogul’s New Zealand and Australian operations, sees parallels between this example and the growing prevalence of automated ad buying in the Kiwi market.
“The trader in a programmatic world has moved away from being an ad operations person, who is kind of mowing lawns, to actually sculpting and doing incredibly sophisticated things,” Smith says. “What’s happened is that the technology has taken over this shouting, screaming and negotiation.”
This shift has largely been driven by the changing habits of online consumers, who now have easier access to local and international media and entertainment sources.
“The New Zealand population isn’t only on YouTube, Facebook and TVNZ,” says Smith. “They’re on tonnes of other websites. And the increase in inventory now available is phenomenal.”
To put the scale of this into perspective, Acquire Online, “a pioneer of online display advertising in New Zealand”, recently ran a report for the 30-day period ended 15 April and found that the quantity of ad inventory available in the Kiwi programmatic market was nearing the nine billion potential impressions mark.
“A year ago, the total volume available was seven billion, five months ago it was eight billion and now it stands at 8.9 billion,” says the company’s programmatic director Zane Furtado.
The scale of this availability makes it impossible for the traditional sales teams to buy and place ads effectively for clients.
“Selling manually is hard,” says Smith. “You’ve got to get sales people out there selling, drawing up contracts, emailing through PDFs to clients to sign. And then the client needs to build a schedule. They then get as many as 20 different reports coming through as part of a campaign. It’s punishing.”
For this reason, a slew of companies have entered the market, offering automation technology capable of informing decisions and expediting previously arduous processes. And as the programmatic market continues to grow (it is still just a sliver of the total online ad spend, here and around the world, but it accounted for nine percent or $3 million of the total $31.4 million spent on online display in the third quarter of 2014 and, according to SMI data, in 2014 in Australia it accounted for just shy of 14 percent of all digital dollars), it’s creating a technology arms race. In the last two years, Twitter has acquired MoPub for $350 million, Facebook has picked up LiveRail for $500 million, Yahoo forked out $640 million for BrightRoll and Google bought Adometry for an undisclosed sum. And all of them indicate that the quality of the ad tech will play a major role in the future.
At its simplest, programmatic ad technology gives the user a central control system through which online campaigns can be bought, sold, monitored, modified and measured, instantly and remotely.
As explained by AdRoll’s managing director for New Zealand and Australia Ben Sharp: “Brands can access inventory from over 200 different exchanges and supply sources, including on mobile and tablet, as well as Facebook and Twitter all through the single AdRoll interface. They can see exactly where their ads were shown, how much they paid for them and what the ROI for that campaign is. Our customers also have complete control to edit their campaigns and to pull reports at a moment’s notice.”
In most industries—and life in general—the promise of automation is treated with at least some level of mistrust. And this is also the case with programmatic ad buying.
The Magazine Publishers Association chair and Bauer chief executive Paul Dykzeul has previously criticised programmatic, saying it puts advertisers everywhere and nowhere at the same time, in reference to the fact that ad buying decisions are often made in terms of audiences no matter what sites they might be visiting.
“This can be true if the approach of the trading desk is to simply optimise spend to the cheapest inventory while ignoring the environment that the ads are running in,” says Andy Wylie, the group general manager of advertising operations at NZME. “However, local media owners are increasingly making quality inventory available via programmatic channels, which allows marketers to influence the percentage of their budget that is delivered on quality local sites.”
Internationally, the Guardian, CNN, the Financial Times, Reuters and The Economist are attempting to circumvent the problem of low-quality inventory—and compete against the networks—by forming the Pangea Alliance, which allows clients to purchase ads programmatically that run across these major publishing brands.
“The Pangea alliance offers marketers an efficient way to reach high quality audience in trusted environments at scale,” says Wylie. “These factors may result in media buyers carving out spend from their programmatic budgets for the consolidated buy, in which case the media owners stand to benefit more than going it alone in the open market, so it is an approach worth considering [in
However, Smith sees it differently, pointing out that the move is a reaction to the perception that programmatic devalues ad space.
“The motivation for this is that they want to control high-quality, premium price points. And so, that then tells me that they’re afraid that they’re going to lose that price position if they go programmatic. But we’re saying that that’s not the case. Since programmatic trading arrived in Australia, the only thing that has happened is that the price has increased.”
This is because demand for the ad inventory dictates price. And as more premium publishers have made their inventory available, clients have competed for these slots on the open market, pushing prices up.
“Think about the current housing market,” says Wylie. “When demand exceeds supply there’s a reason why vendors use auctions as their preferred trading method.”
Although, unlike the housing market, most would agree there’s an oversupply of online ad inventory. And publishers generally don’t get as much revenue from programmatic buys as they do from
AdRoll’s Ben Sharp says that programmatic has opened the door to more creativity in the online space
“It allows brands to use data to serve more personalised, relevant advertising to targeted groups at scale,” he says. “It helps them to learn about their customers and develop creative based on their behaviour and characteristics. And it also allows them … to optimise creative on the fly.”
And looking at some of the examples that have emerged over the last few years, it certainly seems as though advertisers are enjoying the flexibility programmatic offers.
Here’s a taste:
Burger King and Colenso BBDO created an ad campaign featuring 64 videos that called out pre-roll ads for being a nuisance. Each ad was linked to a term the viewer originally searched for and came with a customised line relevant to the content.
Instant football updates
At the 2014 FIFA World Cup, Nike partnered with Grow, Wieden+Kennedy, Mindshare and Goo Technologies to develop ‘Phenomenal Shot,’ a campaign that let fans all over the world view, remix and share key football moments through the animated characters developed for the campaign. These videos were then broadcast through the Google ad network, giving the campaign fresh creative on a consistent basis throughout the tournament.
Hitting the big time
At this year’s Super Bowl, Mondelez became the first company to purchase a halftime spot programmatically. The quirky animated ad for Oreo was served regionally and provided a pretty strong argument against the idea that programmatic only includes cheap, low-quality ad space.
Eat before spelling
Snickers ran a simple, yet clever campaign out of the UK focusing on the fact that people can’t spell when they’re hungry. So they bid on 25,000 commonly misspelled words and then were able to bid on those keywords and serve ads to those that were ‘hungry’ or had misspelled a word.
Target partnered with Google last year to build a mobile campaign called Bullseye’s Playground. Based on the premise that shoppers check their mobile phones while in-store, Target created a series of mobile games that unlocked surprises and new levels when customers accessed their phones inside the stores.
Targeting sick people
In 2013, Mindshare, Kimberly Clark and Google tapped into historical data on flu outbreaks snd then mixed this information with Google adwords data on keywords such as ‘flu remedy’. And in doing so, Mindshare was able to adapt the media spend on the Kleenex winter flu campaign by geographic region in real time with 96 percent accuracy.
A Creative gap?
Media owners are becoming comfortable in programmatic and increasingly see it as broadcast complement to the content that they create.
“However good your content is, ‘if you build it they will come’ is a risky strategy, and programmatic can be a great device to direct engagement with branded content,” says John Baker, the director of content marketing at Tangible Media.
Programmatic thereby serves to deliver the messaging to the online target market in much the same way that TV, radio and print have previously served to deliver promotional messaging in traditional media. But rather than simply sending a blanket message through a TVC, programmatic offers new creative opportunities through its targeting capabilities.
“With the enormous wealth of targeting options available, developing targeted and customised creative not only appeals to the audience, but also drives curiosity,” says Furtado.
And this is something that Roberta Macdonald, Google’s head of creative agency engagement for Australia and New Zealand, can also attest to.
“Creatives don’t always know what’s possible with technology,” says Macdonald. “That’s brilliant, because it makes you question your fundamental assumptions.”
This creative curiosity—and uncertainty—recently led Colenso BBDO to collaborate with Google on the innovative Pedigree Found app, which helps dog owners locate their lost pets by sending out a pre-registered ‘lost dog’ advertisement via the Google Display Network to anyone located with a 2.5km radius of the owner’s location and other app users. This approach also offers a creative execution that the message recipient will find interesting enough to potentially engage with—and this really gets to the core of why creativity remains relevant in a programmatic world.
As Sharp says, “you can be absolutely sure you’re serving an advert to the right person, on the right device, in the right format, at the right time, but if the creative doesn’t appeal to them, they still aren’t going to engage with your brand.”
Some marketers are starting to toy with the idea of taking programmatic in-house. And while it does have some advantages, it’s not as easy as downloading software updates and letting a machine take over.
In an article published by IAB Australia, DataXu country manager for Australia and New Zealand Matthew Joyce says that taking programmatic in-house isn’t for everyone and that it’s often prudent to leave these responsibilities to the media agency that already has the necessary structures in place to manage campaigns effectively.
Joyce explains that establishing these structures requires investment, given that the marketer will have to hire people with expertise necessary to manage campaigns through the technology provided by an ad tech partner.
Tube Mogul’s Sam Smith also warns against taking the tech in-house on account of the fact that media agencies play an important strategy role, which ad tech partners are incapable of fulfilling.
“Clients that have taken the tech in-house push us into conversations that we’re not really equipped to have,” says Smith. “They ask us how much they should be spending on television. We’re not a television buyer yet, so we can’t really help with that one.”
However, programmatic is expanding very quickly, and if clients are willing to invest in the staff and expertise to manage campaigns in-house, then this could lead to significant savings in the long-term. And this is particularly true of multi-national brands.
“Everything’s browser-based, so if you’re a global advertiser, like Air New Zealand, you could run all your video campaigns from Auckland across the world because all the global inventory is available through your sign in,” says Smith.
Furtado says that by 2017, programmatic is expected to be the only way media is bought in advanced markets. That seems unlikely, but it’s clear the influence of ad tech is only going to increase over the next few years.
As things stand, media owners are becoming increasingly comfortable using in-house ad tech (NZME works very closely with digital sales house Adhub) and they’re also regularly selling digital native advertising products directly to clients, bypassing media agencies in many instances. So, if programmatic ad buying is set to continue growing and if the technology becomes more user-friendly, then does this threaten the longevity of media agencies and the sales people that facilitate communication with them?
Media agencies aren’t just sitting around and waiting to find out what happens. They are quickly positioning themselves as programmatic experts by investing in staff and technology aligned with the changing industry. They are also in a good position because clients continue to rely on media agencies to manage the buying process for them.
“Globally, we’ve seen clients taking technology in-house, but in most instances they get close to the technology, but they get their agencies to manage it for them,” says Smith.
Baker doesn’t think media agencies are facing obsolescence either, saying that they will continue to play a vital role in the industry because “creativity and strategy can’t be programmed” and someone will still need to lead these responsibilities.
However, some would argue against this. In the stock market, complex algorithms are already being used to effect trades automatically and it isn’t far-fetched for this to start becoming more common in an ad-buying context.
Also, late last year, Google Creative Lab’s Tom Uglow told NZ Marketing that creation is simply a “very, very complicated pattern recognition algorithm” and we’re now getting to the phase in history where AIs are stepping close to the ability to intuit or create.
In response to this, Baker jokes: “The next thing you will be suggesting is algorithms creating editorial content based on big data. Oh, wait ...”
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