Richard Lowden from RTBIQ and I created this document to teach the MMA about Programmatic and help others understand. Here is our work, with photo from two MMA experts, Michael Becker and Paul Berney.
“One area nearly every marketer would seem to agree is a key area of focus going forward is programmatic advertising, i.e., the use of automated systems, software and data to buy advertising, digital and otherwise. Just look at eMarketer, which keeps raising its estimates for programmatic ad spending growth...The researcher’s latest study found that programmatic ads will jump 137.1% in 2014 (not a typo). That represents $10 billion in total spend, or 45%–nearly half–of the US digital display ad market. This is no fringe thing anymore: At least in digital media, the quants are taking over the way the business operates.”
Wall Street Journal, CMO Today 17 October 2014
We know that mobile delivers the audience at the right time at the right place and in the right context. How has the power of scale transformed the manner in which purchasing decisions are being made in today’s mobile marketplace and how you can become a participant in these automatic transactions?
How did we get here?
Let’s discuss the market changes. Instead of dealing with just a few vendors, today’s digital marketplace is full of thousands of sellers and it’s not possible to know each one of them. Digital ad networks make it easier for brands and all advertisers to buy and sell ads. Buyers are able to distribute marketing messages across many thousands of publishers with a handful of purchases and the networks were able to optimize to the individual campaign success metrics. The problems we found was there was no transparency of who the ad was actually reaching and how much was being paid for that ad.
Advertisers became increasingly agitated at the lack of transparency in placement, pricing and targeting. Ad Tech companies sought ways to alleviate advertisers' concerns about transparency. Programmatic buying has helped mobile marketers buy the right audience in the right place at the right time.
Comparison to airline industry and stock market
Consider the airline industry and how you now book a trip. That same opportunity has been delivered to the mobile advertiser, where you can “Priceline” your ad dollars. You select the audience you want to reach and submit an electronic bid and wait for results.
Programmatic also resembles the stock market in that the exchanges are the places where the transactions occur. With those exchanges, there is more stability, transparency and oversight. Buyers and sellers get their transactions processed in a fraction of a second. Picture a human trader at the terminals of all the stock exchanges at one time, accessing NYSE, NASDAQ, and all stock exchanges. In the media business, the buyer has a chance to trade across multiple Demand Side Platforms (DSP’s), to access the whole market, buying audiences primed for purchase.
Understanding the process
For Real Time Bidding (RTB), the bid request gets presented by the publisher into an exchange, and specific information about that user is shared to help advertisers determine the value of that given impression. Information such as what site that person is on, what device they are using, where that person is located, etc. With pre-set values on different audience types having already been set by all participants in the auction, the buyer who ends up winning the bid can feel confident that they are paying the market rate and that they are getting what they actually paid for. An additional consideration of purchasing media this way is that advertisers can now buy audiences directly without having to use historical panel-based research (i.e., Marketing Research firms with secondary data) or to use site content as a method to determine the audience.
Here is an example, that describes how, by using RTB, you can better target your specific audience without waste. We know that females make up nearly half of the mobile video games viewing audience. If you wanted to target the male demographic and you purchased ads in mobile video games, you wasted half of your budget. With RTB, you can target just the males in a given content category, such as mobile video games.
Difference between Programmatic and RTB
"Programmatic simply means automated. A lot of people confuse it with buying ads through computer-run auctions -- known as real-time bidding (RTB) -- but that's just one way to buy ads programmatically. At its core, programmatic buying is any ad buy that gets processed through machines." (Ad Age, 2014) So, in essence, RTB is a subset of programmatic buying.
Real Time Bidding, a subset of Programmatic, has been created to help buyers target, place and price their ads better than before. We will describe all three kinds below. Here are ways you can buy programmatically today and benefits of each
RTB - scale, individual bid transparency, confidence in ad placement and pricing
Private exchange - confidence in ad placement
Programmatic guaranteed - confidence in ad placement and relative confidence in ad delivery
Before choosing a programmatic partner, you should consider some of the following questions:
What does transparency mean to you? Will we see bid level information? Targeting? Pricing? Actual CPM paid? Can we see this by exchange? What tools do you have to handle attribution? Fraud? Do you provide support for my buying team? If so, how much?
Addressing trust issues and fraud
What is occurring in programmatic is more transparent and traceable than ever before. And it is happening in a very rapid time frame. Trust within and among marketers and agencies is more available, and the tools to monitor that transaction are readily available from your vendor. If you feel that this is not accessible or transparent, consider asking for a testimonial from an independent source.
Best practices for marketers
1. Ask someone to explain their technology in a way that you will understand
2. Continuously hypothesize, test, correct, scale
3. Leverage your first party data
Programmatic buying is the way that mobile marketers are scaling their digital messaging. With more accuracy, transparency and speed, transactions can be processed more efficiently and with better attribution support than previously.
Objective Answers to the Basic Question Brand Marketers Should Have About Programmatic in Mobile Advertising
1. Why should a marketer even care about the advertising exchange marketplace?
Brands need every possible leverage to be successful in today’s complex world. They need to be looking forward at future business opportunities, not just seeing the history. Programmatic buying/selling is becoming a reality for most national and many smaller brands, and it started with self-serve platforms like Google AdWords.
2. What is it?
In 16 words, “It is automated advertising by leveraging computers and technology allowing brands to target effectively and efficiently.”
3. How does the exchange bidding process work?
Here is the very basic answer since this is the 101. The brand/agency makes the bid on a CPM, a middlemen process the orders, and the publisher delivers the audience. Next, middlemen inform brand/agency what resulted.
4. Who are the players in the marketplace?
This is not a simple answer, exactly, but we will simplify. The brand/agency spends the money. The automation is processed by companies who specialize in getting you the best results at the lowest cost and they have many names, including DSP’s and trading desks. At the end of the supply chain is the content provider or publisher, who has the audience brands/agencies want to reach.
5. What can be bid on?
An advertiser can bid on demographic variables in their consumer profile, and a lot of other factors. for example, you can bid on registered voters in a certain zip code based on their political affiliation, if it is what you need. This could help focus your ad budget. With every bid request, the goal is for accurate, reliable and consistent results and reporting.