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February 27, 2019

Programmatic Advertising 101: Its Evolution and How You Can Utilize It for Your Brand

Programmatic advertising continues to set itself as the new norm. According to Zenith’s forecasts, 65% of all digital advertising spend in 2019 will be traded programmatically. By 2020, the total programmatic advertising spend is expected to reach $98 billion, or 68% of all digital advertising expenditure. 

As programmatic advertising continues to cement itself as the most important method of digital trading, brands will have to hone their skills in the trade. Below is a brief discussion on the evolution of programmatic advertising, as well as tips on how to maximize its use for your brand. 

Programmatic Advertising and how does it work?

In its most basic sense, programmatic advertising is the automated buying and selling of digital advertising space, with technology using data to decide which ads to buy and how much to pay for them. With the advancements in AI and machine learning, technology can now help brands reach the right audience in real-time with the right message in the right context, at the right price for you. And with its ability to target a specific audience across a range of marketing channels, programmatic advertising has become an extremely powerful tool for achieving specific campaign goals.

As you can see above, programmatic advertising helps you make your different marketing channels work together in symphony at every stage of the marketing funnel – from increasing brand awareness and generating leads, to targeting potential customers and retargeting. And because it gives you an ocean of customer data to work with, it allows you to make smarter decisions with the rest of your marketing efforts. 

Utilizing effective use of data in programmatic advertising

Speaking of data, having an understanding of the behavioral insights that can be gleaned from it is an important first step in coming up with an optimal programmatic strategy. Below are the basic tiers of data to take into consideration:

  • First-party (the advertiser’s own data)
  • Second-party (data collected by someone other than the advertiser, such as an agency)
  • Third-party (data available to anyone at cost) 

A smart way to approach data is by thinking of it as customers and potential customers. For example, you can look at existing customers’ online behavior and look for people displaying similar behavior. You can then target these people with personalized messaging to try and convert them into a customer. 

Programmatic scalability

More importantly, programmatic advertising allows brands to scale campaigns depending on things like size, reach, and accuracy. For example, P&G moved its marketing spend from targeted Facebook advertising to programmatic because it felt like the company had “gone too narrow in its search for specific consumer groups.” Nespresso, for its part, targeted two distinct audiences – club members and new prospects – with different messaging, educating the latter more with the stories behind their products. 

Combining a good data team with an informed strategy enables brands to predict and prospect from the get go, optimizing campaigns right from the start, while relying less on retargeting. 

Finding the right programmatic model

The most common programmatic buying is done through media agencies using a demand side platform, an approach taken by 90% of UK companies. And there’s a reason why this is the common practice—simplicity. 

A lot of expertise goes into running programmatic in-house, you’ll need to assemble the right team with a thorough understanding of programmatic to be able to pull it off. While bigger companies like Unilever are able to have a dedicated team working on its programmatic interests, not everyone has the data, inventory, technology, expertise, knowledge, and resources to be able to justify doing it in-house. 

But, as concerns around transparency and ad fraud increase with the growth of the programmatic industry, more and more companies are transitioning into a hybrid approach. Here, companies typically license a part of the technology to run in-house, allowing them to have greater visibility of the process. 

While there is yet to be a one-size-fits-all approach to programmatic, investing in getting a thorough understanding of the system is a great plan, especially for those just getting started with programmatic. This will eventually help you choose the best advertising networks for your brand. 

How to do Programmatic Advertising

Start with a single demand side platform 

This allows you to:

  • Run campaigns across inventory from several ad exchanges like DoubleClick and AppNexus.
  • Bid by value assignments you allot for different variables (creative size, device, time of day, audience, among others).
  • Get access to different third-party data sources to search for customers, while also being permitted to use first-party data for retargeting.
  • Get billed with dynamic cost per impression.    

Prioritize new customers

This goes back to utilizing programmatic to go beyond retargeting. Using programmatic to seek out new prospects enables brands to expand to new audiences and avoid paying for inexpensive impressions that appear to drive performance but don’t necessarily further a company’s growth. 

Consider an in-house ad server

Once you get a deeper understanding of programmatic, you can consider bringing an ad server in-house. As alluded to earlier, this affords you visibility into the category of content and domains your ads are being served on. This also allows you to identify impression overlap between vendors, thereby optimizing your reach, efficiency and performance. 

Confirm transparency

Whether you’re able to bring an ad server in-house or not, you need to make sure that you’re able to confirm transparency. While this is easier said than done, this is an integral part of ensuring that your expenditure goes to high-value impressions and traffic. This also serves as an early warning system for potential issues that could arise. 

Establish realistic goals

As with any strategy, this is key in finding out whether a campaign performs or not. For example, setting an unrealistically low cost-per-acquisition (CPA) goal could only lead to unintentionally breeding inefficient practices. Instead, you may find that allowing for higher CPA for tactics further up the funnel may end up producing a better overall return. 

Monitoring and reviewing results

Monitoring and evaluating programmatic advertising can be a bit tricky as the main methods all have their pros and cons.

Last click – this gives an immediate view of the success (or lack thereof) of an ad placement. However, this method doesn’t provide an overview of a longer customer journey. There is also the possibility that a vendor could infringe on other channels to gain more clicks.  

View and click – This provides a more holistic look at ad performance, whilst also giving an immediate view of its success. The downside, however, is it’s vulnerable to double counting of engagement, particularly across multiple channels. 

Test and control – This method takes into account the entire customer journey and can even include repeat conversions and transactions per customer. The downside, it takes a lot more work and analysis. 

As you become more versed with programmatic, you’ll eventually find the method that both suits your needs, and makes your campaigns more efficient. Perhaps you can even successfully build an automated testing strategy. 

3 examples of Programmatic Advertising success

Missing People: Optimal advertising saves lives

Charity Missing People decided to shift spending from print to programmatic advertising. Prior to the pivot, the charity was only able to run one appeal a week for a missing child across the entire UK. 

With programmatic, they were able to run targeted, location-based appeals on outdoor spaces that can be replaced as soon as a child is found. This resulted in 50% of children appealed for being found alive. Additionally, their response rate shot up to 70%, thanks to messaging that is relevant to where people live.

O2: Targeting done right

O2 repurposed its TV ad campaign for mobile, using user data like their device and location in order to add relevant messaging to the video. This included ads that referenced users’ phone models, its respective recycling value with O2, upgrade offers, and where the nearest stores were. 

The campaign, which entailed the creation of over 1,000 versions of the TV ad, resulted in a 128% increase in click-through rate compared to the generic video.

Topman: Creative targeting

To promote its khaki collection, Topman created a different look on five models based on the brand’s different core customer types. Among the looks was for the everyday man that wants an understated, yet stylish look, the aspiring fashionista, and the extreme fashionista. 

Because they have the resources to do so, Topman ran the looks on their different media channels to find out which version works best for each. This allowed them to creatively send a targeted message to each of their different customer profiles. 

Takeaway

As programmatic advertising continues to reshape the digital advertising landscape, brands that haven’t gotten in on the action yet would be wise to start planning for it. In a world where personalization and relevance are the two of the most important things to customers, having an efficient programmatic strategy can bolster a brand all the way to the top, without spying on your online competitors. 

Have you started looking at how you can incorporate programmatic to your current strategies?


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Aaron Chichioco is a digital PR / business columnist. He has a vast experience in overseeing daily operations of several online businesses since 2011. He is currently the managing editor of designdoxa.com. You can follow Aaron on twitter at @Aaron_Chichioco

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