Specific Media's UK Country Manager, Paul Oronoz, talked us through the ins and outs of the process that has taken the digital advertising world by storm, namely programmatic trading. We spoke to him about what it entails, and whether programmatic buying technology is the future for the digital advertising industry.
TechRadar Pro: What is programmatic buying?
Paul Oronoz: Programmatic buying is a method of purchasing online advertising through an automated bidding process usually consisting of standard display and video formats, along with audience segments. Programmatic buying is driven by market demand, price, and algorithms created from a large pool of information.
Over the last several years the advertising industry has witnessed an explosive growth in this technology that is set to change the way advertisers, media owners, and agencies operate. Recent research by the IAB (Internet Advertising Bureau) further illustrates this point, with 89% of European publishers, advertisers and agencies all stating that they believe programmatic trading will indeed have a significant impact on digital advertising.
These claims aren't unfounded with figures already showing a sharp increase in the use of programmatic technology – a number that is only set to increase over the next few years. In fact, Magna Global has predicted that programmatic spend is set to triple over the next three years with spend expected to reach $32bn (around £20 billion, AU$37 billion) globally by 2017.
TRP: How are brands using programmatic buying to target their segment audience?
PO: When segmenting audiences, brands can use a number of strategies to reach their desired audience and therefore buying objectives through programmatic buying. There are essentially two primary objectives, either the desire to achieve a direct response result or branding result.
For example, automotive advertisers might want to reach people who are showing interest in purchasing a car and look to drive these people to their site where they can gather more information about a certain make/model. Through an automated bidding process an advertiser can purchase display and/or video inventory, select their audience through 'behavioural targeting' and/or relevant automotive sites and measure the results in real-time (i.e. actions on the automotive sites such as requesting a quote).
In addition, brands are starting to use programmatic buying to achieve branding objectives such as increasing brand awareness. This can include the use of targeted video ads to reach people who are interested in travelling to Thailand, and measuring the impact on awareness of the brand and/or specific offer from the travel company. This way of buying also provides advertisers the ability to buy across all devices (i.e. mobile, tablets, etc.) and geographic areas which can further enhance brand strategies.
TRP: How is programmatic buying changing the market?
PO: Programmatic buying has allowed media owners, brands and agencies more control on reaching consumers online with more transparency, and flexibility on inventory management and costs.
The advent of programmatic buying has signified a new era in tailored advertising, enabling brands to control who they target – regardless of which device the consumer is using. As a result, we have seen significant growth in agencies developing their own platform for programmatic trading through what is typically referred to as an Agency Trading Desk (ATD). We are also seeing brands develop their own in-house Brand Trading Desk (BTD).
This will allow brands better control of their data and increase their transparency. Many brands have already seen the benefit of Brand Trading Desks which allows them to match and tailor their message with specific consumer touch points, offering more relevant information in line with specific consumer needs, which for the brand will result in increased loyalty and sales as well as a stronger presence in the market.
TRP: Is this technology the future for the digital advertising industry?
PO: It will be part of the future for digital advertising. Innovation, good technology, audience data and quality content are key to developing the digital advertising industry. As consumers are constantly looking for ways to increase their buying power, more than ever advertisers need to be cleverer in how they communicate.
With a world of knowledge at their fingertips consumers are continually becoming more efficient and clued up, so reducing the time it takes them to find a brand's product/service will only be achieved through further technological advancements and creative thinking on how to use this technology to improve desired results
TRP: How do you think this platform will develop over the next few years?
PO: I see more of advertising budgets being spent on direct response objectives, but now brand objectives too. For example, buyers will look to purchase larger formats, rich media, video inventory across all devices, specifically mobile (which has been a larger contributor to programmatic growth). As a result, brand measurement will increase with a focus on reach against demographics and/or lift in brand awareness.
Also, there is a greater focus to purchase based on quality content and viewability across both video and display. Furthermore, I think the use of new datasets will become more interesting as brands are now leveraging their CRM data beyond email campaigns and into programmatic display capabilities including measurement of ROAS. Overall, more capabilities are becoming a reality within programmatic buying and these capabilities are getting closer to in-house solutions for Brand Trading Desks.
TRP: What are the main challenges associated with programmatic trading? And how can agencies overcome these challenges?
PO: Programmatic buying is by no means a perfect solution and there are challenges associated with it. Automated buying always brings up the issue of brand control and viewabilty – how do you stop your ad sitting next to an inappropriate article or how do you know if your ad even has the opportunity to be seen? These are concerns that have sat with purchasers of display and video inventory for some time so it is not exclusive to programmatic buying. Uncertainty can be reduced, however, with various steps that include testing new technology, careful planning, and accurate reporting supported by clear objectives.
TRP: How are ad impressions from programmatic trading measured? How are brands ensuring that their advertising spend is not wasted?
PO: Programmatic ad campaigns have been traditionally measured by metrics such as CPA (cost per action), CPC (cost per click) and CTR (click through rates), although I don't agree with the last two metrics since most people online do not click on display/video ads.
For those advertisers who are running campaigns with brand objectives they will look at reach among their target audience, change in brand awareness, intent and consideration which can be validated by third-party reports. Also, brand safety metrics can be measured which includes ads served within appropriate content or approved sites along with viewability for both video and display.
TRP: How is programmatic trading addressing the industry concerns about digital ad viewability?
PO: Media owners, agencies, and trade bodies such as the IAB are continuously educating the market on viewable impressions. There are many helpful guidelines and workshops to help educate and address some concerns. Also new technology has been developed over the years to allow advertisers, agencies and media owners to measure and action viewability across any given programmatic campaign and web property for both video and display. These steps have also started happening for mobile and tablet devices as they continue to drive growth for digital advertising.
Recently, more advertisers are looking for partners to trade with based on viewable display and video ad impressions. From my experience, one in five clients will ask about trading based on viewability. There is more work to do within this topic (i.e. more education, improved actionable insights, consistency in measurement, and so forth), but for programmatic and non-programmatic trading the industry has made progress towards addressing viewability concerns which is a good thing.
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