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Digital Marketing & Social Media Blog

Debunking 5 Myths of Programmatic Buying

in Media Planning & Buying with tags , , ,

At last week’s iMedia Agency Summit, I spoke on a panel called ‘Demystifying Programmatic Inventory.’ The entire session was geared toward helping marketers better understand the somewhat murky world of programmatic buying.

As someone who lives and breathes in this space everyday, I’m often surprised by the number of misconceptions that exist about this subset of marketing. It is my belief that the lack of clarity on programmatic buying is a big part of our industry’s general ambivalence toward it: Whereas some advertisers are reticent to accept programmatic buying as a viable tactic, others have embraced it with open arms.

The goal of this column is to distill what programmatic inventory entails at its most basic level and debunk some of the most common myths that surround it.

Myth #1: “Programmatic buying and real-time bidding (RTB) are one and the same.”

Fact: Programmatic buying is a term widely used to define the automated nature in which media buying and selling takes place. It is simply the process of executing media buys through digital technology platforms rather than through manual negotiations. Real-time bidding, or RTB, is a form of programmatic buying where ad inventory is bid on and sold within an auction environment in real-time.

Programmatic methods remove the friction that exists in traditional media buying to permit faster execution of user-level targeting at scale. Most often you’ll hear this term associated with online display buying, but, as programmatic evolves, it is growing into other areas such as out-of-home and – someday – television, too.

RTB has existed in search for more than a decade. The most common description of how RTB functions involves a “pipe” (access to inventory, such as an ad exchange) and a “brain” (bidder that uses an algorithm to determine whether to submit a bid request). The “pipe” announces each biddable impression available for the “brain” to evaluate and determine the optimal price to pay.

Myth #2: “Automation will replace media management.”

Fact: The human element of programmatic buying is critical to its success.

Programmatic buying is both an art and a science. The scientific component – the algorithm – gets most of the glory, but the human element is crucial to proper execution. Algorithms are only as good as the data that feeds them. And data is only as good as the strategies it informs.

Marketers can use data to inform optimization strategies, such as frequency capping, distribution of money and seasonality. So, while systems help bring data to light, human intuition still matters. Technology has altered the role of the media planner, but it has not eliminated it. More data requires more strategic thinking around that data, especially when it comes to assessing potential partners and optimizing buys over time.

Myth #3: “The inventory is no good.”

Fact: There is, in fact, quality inventory available to advertisers and real push from within our industry for publishers to police their inventory and expand the creative canvases available for programmatic buying.

Some of the most premium publishers around the web open their inventory to exchanges and SSPs. Top-tier pubs like Forbes, Conde Nast and Hearst have all opened up their inventory to allow for programmatic buying.

And while advertisers are constrained to a subset of formats (standard IAB ad units), there is promise for future growth and maturation in the types of ad canvases that marketers can utilize. Of course, the continued evolution of emerging units (such as those put forth as part of the IAB Rising Stars program) is dependant on publisher adoption.

As inventory becomes more and more commoditized, it is in publishers’ best interest to be more selective with the ad space they offer. Promoting scarcity – to some degree at least – and creating more premium ad experiences will allow them to clear bids at higher rates and provide higher quality inventory to advertisers. This will also help overturn the misconception that the quality of programmatic inventory, generated in large part by ad exchanges, is universally poor.

Myth #4: “Programmatic buying is hard to do.”

Fact: Programmatic buying isn’t inherently “hard,” but proper management cannot be understated. Choosing the right partner is essential for marketers entering the programmatic space.

Marketers should enlist partners that not only have access to inventory and the ability to process millions of bid requests or queries per second (QPS), but also ones that are positioned to incorporate rich audience segmenting and provide deep data intelligence to meet their goals and objectives.

This is where the “art” piece of the puzzle comes into play. Having access to the right technology does not automatically guarantee success in the programmatic space. Marketers should assemble a team of the “right” people as well – experienced buyers and analysts able to pull the levers and make sense of the data.

Programmatic creates efficiencies and eliminates artificial cost inflation on a plan by consolidating efforts and minimizing overlap among partners that are achieving the same ends within the campaign. Of course, these efficiencies are only met by employing a strategy that places a human filter on the wealth of data on hand.

Big Data necessitates big brains behind it – analysts able to continuously decode patterns and identify opportunities from a stockpile of data, including first-party data from the advertiser, second-party data originating from the analyst teams themselves and third-party data from various partners and providers. Constant and vigilant data-mining and analysis is critical to developing ongoing optimization strategies.

Myth #5: “Programmatic buying is a ‘black box.’”

Fact: Programmatic buying is actually the most transparent type of buy marketers can put on a plan.

At its core, programmatic buying promotes transparency and increases the control marketers have when it comes to when and where their ads are displayed. It allows advertisers to see the market value for each user – and in some cases, gain transparency into the actual fee that third-parties apply to the media or data. The automated nature of programmatic also allows marketers to set bid thresholds, customize their own inventory mix for optimal performance and obtain URL-level performance metrics amongst other things.

Some marketers see programmatic buying as a challenge since it involves working with their holding company’s trading desk— which is separate from the day-to-day media team.  At 360i, we have a dedicated programmatic buying group that handles such efforts directly on behalf of marketers, and works closely with the media and analytics teams to inform optimization strategies.

*****

Programmatic buying methods, especially RTB, are on the rise. According to a recent eMarketer study, digital display ad spend is projected to increase 73 percent this year. This means that about 1 in 5 display ad dollars will be transacted via RTB in 2013 – a healthy and growing share of the display market.

As programmatic buying continues to grow in prominence, advertisers and media buyers can no longer afford to be afraid of or perplexed by automated processes. Education will be paramount to socializing programmatic within the media buying space and dispelling the myths outlined above.

Planners should feel empowered to ask the same questions they would of a third-party vendor and recognize that a sound strategy is core to the success of any programmatic campaign. Though automated, programmatic is far from a ‘set it and forget it’ panacea for digital media buying. It’s simply another tool in a media planner’s ever-expanding toolbox for achieving client objectives.

Cover photo via MITSloan

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