The programmatic revolution

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How technology is transforming ad buying and marketing communications.

For programmatic to work well, the data must be applicable, representative and  accurate.  As automated processes become more sophisticated, high-value data like Kantar Media’s TV audience data (return path data and increasingly PeopleMeter currency services) and attitudinal sources such as TGI will have a bigger role to play.

In certain quarters, the term ‘programmatic’ is now almost cliché. But it’s hard to underestimate the value and efficiency automation will bring to the traditional practice of media trading and marketing communications. Automation in trading has revolutionised many industries across the past four decades. In fact, advertising technology is relatively late to the game. In the 1980’s it was the NASDAQ stock exchange, in the 1990’s the travel industry when Sabre launched Travelocity. eBay and Amazon have changed the way we as consumers buy and sell things. Now it’s advertising’s turn.

2015 will be a pivotal year and likely the tipping point for programmatic ad buying and what’s become known as “martech” (marketing communications technology). Those who don’t engage now ignore at their own peril.

So what is programmatic? In short, it is data-driven automation of the ad trading process. This can be done in real or near-real time with various levels of control and automation. An example is real time bidding (RTB) on websites. Typically an exchange processes multiple bid requests using data to better target the audience and delivers an auction-won ad all in under 100 milliseconds. It is a very efficient and effective process.

In a buying context, programmatic means utilising metadata to target consumers based on variables including: demographics, geography, behavioural patterns, time of day, weather, device and more. In the selling context, it means the provision of inventory, ads or ad space, sometimes at a pre-negotiated cost, through an exchange. Currently, not all inventory is loaded to an automated trading environment but this is changing as sellers get more comfortable with their ability to control the process – like which buyers are allowed into the exchange, and sometimes pre-negotiation of price for the inventory.

Programmatic is already having a large impact on the ad buying business. The streamlining of manual processes has created cost savings efficiencies and has broadened the scope of buyers and sellers that are brought together. The ability to process large amounts of data and reach niche audiences at scale provides a better than ever way to target and connect advertising and marketing opportunities.

If we consider that traditional TV planning has been based on program and ad break-level performance from same day and daypart the previous year, this ability to reach the right customer in the right place, on the right device, in real time and with a more relevant message, is pretty revolutionary.

And all of this is leveling the playing field for sellers and buyers. Greater access to technology for ad trading, coupled with richer data for targeting, has given agencies a run for their money. But as some advertisers take media planning and buying in-house, agencies are evolving better and more innovative offers to stay relevant. All of this will only better our industry.

Given the tremendous cost-saving and efficiency upsides, this revolution can only gather pace. When we consider the above, this might be enough to justify the momentum. But occasionally, unexpected – sometimes even ‘force majeure’ – factors come into play that demand a rethink of traditional practices.

Consider the Sony hack. When brick and mortar movie theatre chains refused to screen ‘The Interview,’ Sony went ahead and released it online through Google’s Play and YouTube, Microsoft’s XBox Video, Sony’s own portal and it is now also available through Netflix. Large Hollywood studios may have been already preparing for direct-to-web distribution, but it’s unlikely they were planning to jump this quickly. Suddenly we had another example of digital media and technology disrupting an established media distribution model.

For programmatic to work well, the data must be applicable, representative and accurate. As automated processes become more sophisticated, high-value data like Kantar Media’s TV audience data (return path data and increasingly PeopleMeter currency services) and attitudinal sources such as TGI will have a bigger role to play. Online video measurement is already there – and, increasingly, large networks such as C4 and Sky in the UK, ESPN in the US and no less than 70 of MCN’s subscription TV networks in Australia are making TV inventory programmatically available.

Those that join up the data siloes will be the biggest winners. There is only one purchase funnel. Companies like Kantar who focus on connecting and quantifying each step along the consumers’ journey will be best positioned to provide maximum value and a more holistic picture to clients.

The danger with programmatic is to believe that small panels and human intervention are no longer valuable. Big data and algorithms can only do so much. More representative data which crosses media data siloes and bridges the off and online worlds will go the furthest to effectively target and message to the right audience. This data should command a premium as opposed to big numbers.

As with online stock trading, what will differentiate the day-traders from savvy brokers will be those who demand premium data and carefully curate the planning and buying process. Approaching programmatic armed with a trusted advisor and good data will ensure the revolution is both peaceful and profitable.

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