What is this thing called Programmatic Buying?

Leave a Comment (0) ↓

It may seem a silly question to those in the know, but the reason I pose it is that in a recent poll of 153 marketers, 74% either had to own up that they did not know what it meant, or they admitted that they needed enlightenment on how it actually works.

And yet it has won an estimated 20% share of the digital advertising market already, according to agency Interpublic, with predictions that it will take a majority share within three years or so.

So here’s a quick primer on programmatic. It’s actually a lot simpler conceptually than many people like to make out. At base, it’s the automation of media selection, the machine taking over the decisions previously taken by humans. And really it all began with the birth of Google AdWords in 2002. This for the first time allowed advertisers to target people according to the searches they were making. Agencies began to create digital divisions to handle this new Pay Per Click medium, as well as display advertising.

Probably the first development of the next step, and what we now know as programmatic, came with the creation by WPP of their Xaxis platform in 2011, using algorithms to decide where to place advertising based on the habits of consumers. We are now able as never before to personalise the business of ad placement.

Social Media Data

Going once – going twice…

At the heart of the process is the auctioning of media on an advertising exchange: the inventory available is valued in real time according to bids made by advertisers (or their agencies) and on the perceived attractiveness of the target demographic and the medium’s coverage. Real Time Bidding (RTB) is the catchphrase; and its primary application at present is Retargeting, the following by advertisers of your recent trawl through the internet, and the serving up of material that is thought to be relevant to your interests.

Other sub-divisions of this new market are:

  • Private Marketplaces (PMP) which are really RTB for posh media
  • Demand-Side Platforms (DSP), the aggregation of data sources into a single platform, which (done properly) can be more efficient

Where does Big Data come into the equation? Well, this often-used term describes the complex and multi-stranded data sets that are used to track us. It comes in three varieties:

1st Party Data – directly from CRM and web visit data that you own

2nd Party Data – collected from ‘cookie pools’ that record other peoples’ site visits

3rd Party Data – aggregated from a whole range of sources and sold on to you and I

In the future, a 4th data source is expected to stem from the much talked-about Internet of Things, when smart household objects will supply as yet unimagined information on our actions and preferences.

‘I got the sale’  ‘No, I did’

So far so amazing – but as with all things in life, there are downsides. One of the most difficult issues is Attribution: how to credit the different ‘touchpoints’ that may have contributed to convert a prospect into a buyer. There are many possible methods, which are beyond the scope of this article: but it is a thorny problem because it affects how the media are rated. Most of us only buy after initial research and subsequent reflection – but all of the process contributes to an eventual decision.

Another serious issue is fraud. Much discussed, this is said to represent as much of 10% of the available inventory. In the wrong hands, bogus sites can be created where no-one will never see the ads on them: and other bad practices can be used to claim that ads have been served, when in fact the so-called service might include ‘pixel stuffing’ where ads are the size of 1 pixel and thus invisible: or ‘ad stacking’ where ads appear on top of each other: or ‘bot attacks’ where cookie data is gathered to be used randomly and claim that it is useful.

Even when you are in good hands, and everyone is trying to do the best for you, things can go wrong. You can overdo retargeting and annoy people. You might be doing side-by-side tests of DSP and you inadvertently duplicate the delivery of your ads, generating fatigue and lowering response. And in your enthusiasm you might spread yourself too widely around the internet and find that you have generated competition with yourself, and thus increased your media rates…

Digital Marketing

Choosing wisely

It is for all these reasons that we at Hannon Digital have been careful in our choice of programmatic partners. After much searching, we have elected to partner with Digilant, an internationally successful programmatic pioneer and platform owner that offers DMP & DSP; the integration of 2nd and 3rd party data sources with your own; and all of the analytical processing power that you need to navigate this new world of media selection and buying.

Already successful in Spain, the USA and Latin America, Digilant is now working with Hannon Digital to bring its many genuine benefits to clients in the UK. We look forward to talking to you about how programmatic tools can work for the good of your business.