Before we start, thanks for the feedback on my first instalment on programmatic media, this was much appreciated and forms a useful basis for this next piece.
This post covers the mechanisms that underpin programmatic, and attempts to portray the varying perspectives of those involved.
Programmatic media has quickly become a catch-all name for the seemingly clandestine automated trading relationships between agencies, advertisers, publishers and tech vendors.
This misunderstanding is largely due to the legacy of advertiser and publisher centric ad networks, ignorance of the benefits involved and, sometimes, the surprising reality that many Real Time Buying (RTB) platforms are still manually optimized, despite appearing to be automated.
The mechanisms behind RTB
Most agree that RTB or programmatic media debuted in 2009 as a way of allowing access to multiple publisher inventories through a single trading platform.
Demand Side Platforms (DSPs) allowing publishers to help manage and optimise inventory yield, and Supply Side Platforms (SSPs) designed to allow advertisers to rationalise access to the same inventory, were effectively combined as early RTB platforms.
These single platforms were designed to bring about obvious efficiencies and scale opportunities for both parties, reducing the need for intermediaries, and unifying inventory into a single market for all.
Although these forward facing objectives may have looked similar, their legacy functionality and the different advertiser, network and publisher objectives, meant there was usually no consistent or standardised RTB ‘protocol’. This led to an element of mistrust and paved the way for the confusion and misunderstandings that accompanied the growth of the sector.
RTB-based sales as a percentage of display ad sales in the US and Western Europe, 2010-2015:
(Chart taken from Econsultancy's Real-Time Bidding (RTB) Buyer's Guide).
How I normally explain programmatic media
Just as the ‘just in time’ fashion industry model provides catwalk to shop logistics to modern retailers, RTB gives advertisers the opportunities to buy digital publisher inventory slots as soon as they come up.
Whether ‘bought’ before the ad unit is available, as a ‘pre-auction’, or as soon as the ad call is made to the publisher server, the main trading systems that sit behind the majority of sites allow a 'fair bidding model' to determine which ad from a pool of competitive bidding advertisers is displayed to any particular consumer.
These opportunities began as standard display formats, but soon merged into rich format options across mobile and video.
This RTB technology was effectively removing the need for multiple ad networks, who were in reality selling overlapping publisher inventory on pre-agreed terms, and attempting to place the true value of the transaction in the hands of the publisher and advertiser, plus any valuable intermediaries.
What are the publishers’ perceptions?
Following a recent talk to a packed room of publishers, it was clear that the RTB debate is still deeply divisive within this part of the industry.
A clear trend emerged of publishers underestimating the resources required on their side to implement and manage their inventory sources, alongside programmatic technology overestimating the potential yield in the short term, while underestimating it in the long term.
They were also underestimating the value of the audience and the bespoke engagement opportunities they could offer. It seemed that RTB technology was in danger of becoming better at ‘valuing’ publisher’s audiences than the media owners themselves, many of whom were still thinking in traditional advertising terms.
An agency perspective
True RTB allows agencies to trade the value of media across 15 billion buying points in the UK each month at a 98% reach efficiency within a single tech environment.
At my agency, programmatic is seen as an ‘audience management platform’ that allows us to use both client and third party data to outperform traditional planned media channels. We work in collaboration with publisher partners to establish trading agreements that add incremental revenue to their yield optimisation efforts.
They can also often reveal new audience engagement opportunities and new publisher sales products. Indeed, we are now talking to key clients and publisher partners about establishing complex conversion goals that would not have been possible in the past.
Clients care about performance
We have a number of clients actively engaged in programmatic media buys. The initial attraction is normally led by performance needs rather than branding requirements.
Using RTB to match or better ‘cost per action’ (CPA) targets against search is a common starting point, but the additional benefits of a more immersive experience through content serving, clearer prospecting and more efficient retargeting off the back of other channels makes programmatic a central component of all media planning.
Going forwards, we are building out our trading platforms to incorporate in-depth brand engagement metrics, widening the products that sit across our trading platform, such as video, social and mobile, and building bespoke closed group programmatic environments, such as private networks.
These enable more connected media campaigns for our clients. A key element will be working more closely with publishers - who seem keen so far!
Next time: I will be looking at the role of technology and people, data and planning from a programmatic perspective.