Programmatic advertising: 5 key questions answered
As the IAB publishes its latest Digital Adspend Study, revealing a 16.4% rise in digital adspend during the first half of 2016, programmatic advertising is once again high on the agenda.
So what is the future for programmatic advertising and what are the real benefits both for brands and for the end recipients of ads – consumers?
Here, our COO Alex Kuhnel, answers 5 key questions to provide clarity in this increasingly complex market…
#1 What are the benefits of programmatic advertising?
First, what is programmatic? In short, it is data-driven automation of the ad trading process, done in real or near-real time with various levels of control and automation. An example is real time bidding (RTB) on websites - the buying and selling of online ad impressions, using data to better target the audience and delivering an auction-won ad all in under 100 milliseconds. It is a very efficient and effective process.
In an advertising buying context, programmatic means using metadata to target consumers based on variables including demographics, geography, behavioural patterns, time of day, weather, device and more. It offers advertisers the ability to deliver the right advert at the right time to the right audience – and for consumers, delivers ads that are of specific interest to them.
The ability to access multiple partners in a programmatic environment, for example certain data sources or measurement capabilities, makes it in many ways easier for the buyer to manage a single invoice over multiple – so is a less labour intensive process.
#2 Will all advertising eventually be programmatic?
Very possibly. Programmatic advertising has moved from being the young upstart of digital to the new normal, representing the bulk of digital display advertising bought and sold in key markets, including the UK and the US.
There continues to be huge demand for programmatic and therefore scope for its ongoing growth. The bottom line is if it’s more efficient and ultimately more profitable to do something programmatically then it will happen.
But certain types of creative executions will always require a human element to ensure campaign success, in creating an appealing ad or tapping into the emotions of consumers for example, so to automate everything will be difficult. Automation needs to happen in such a way it improves, rather than complicates, processes.
For programmatic to grow further, the market also needs to embrace the technology. One fear on the publisher side is that automation will erode value - that their valuable data could be compromised and that they won’t obtain market rate for the editorial.
#3 How can programmatic change the way consumers view advertising?
Consumers hate feeling duped. In advertising the way to make it impactful is by having a thorough understanding of your audience, in the context you’re reaching them.
Programmatic technology enables brands to use highly detailed online and offline consumer data to seamlessly serve ads across devices, not only benefiting the brand, but also the consumer in providing a fluid and wholly relevant experience - combatting the frustration consumers feel regarding irrelevant ads.
The creative is still an essential part of the advertising chain. Ad technology companies have perhaps been guilty of blinding advertisers with science, but ultimately the end user needs to see an ad which has the combination of being eye catching, relevant and with a clear benefit to the consumer. For the advertiser, the ad must be measureable, with metrics such as recall or brand favourability key when a hard ROI cannot be attributed back to it.
#4 Is advertising selling to audiences or serving audiences?
Good advertising should be serving, not selling to audiences. All too often, programmatic can be simply ‘sell, sell, sell’ and it’s not always done in the most refined and effective way.
Programmatic advertising – when driven by high quality data – enables ads to be truly relevant and of interest to every customer, ensuring they are not trying to force a sale upon the wrong audience. This is beneficial not only for customers of course, but also for brands themselves, by increasing efficiency and ensuring their ads are placed in front of the right audience.
There needs to be a strong level of trust between brands and consumers - particularly on mobile, where you’re reaching the consumer on the move, in a more direct way – to ensure a brand’s reputation is not damaged through over advertising.
The swift adoption of ad-blocking technology has been a necessary wake up call for the industry. With the use of ad-blockers increasing almost daily, there is even more of a need for advertisers to pinpoint audiences with the right messages on the right platforms at the right time, whilst ensuring this targeting is informed by reliable and accurate data.
#5 In five years, what will be the most significant change in the way we advertise?
Certainly programmatic will be even more prevalent, but as we are seeing with the rise of automated guaranteed, the automated process of direct media buying, where the advertiser still buys directly from the publisher, automation cannot do everything. Increasingly a sensible balance will be reached. Nor is one type of programmatic necessarily ‘better’ than another. All inevitably have their strengths and weaknesses and increasingly the industry is recognising the best way to achieve desired results is with a mixed approach.
A continuing shift in consumer habits will force agencies and advertisers to reach their audience; for example, with the reduction in press circulation, publishers are having to innovate in terms of creative executions and TV channels are pushing more content online to ensure consumers stay engaged.
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