Programmatic and the changing state of marketing

CMO tenure may be rising as the economy improves, but as recent studies show, marketers remain under intense pressure to account for themselves and their profession. Our colleagues in the finance department still find us ‘fluffy’, the CEO doubts our effectiveness and the CIO worries about our ability to choose and manage the technology needed for modern marketing. Add the watchful eye of procurement and you have an environment that doesn’t exactly lend itself to radical innovation. Yet over the past few years, that is precisely what has been happening across the industry. From the early days of email marketing automation to the rapid growth of programmatic advertising, marketing is becoming more efficient, more effective and more accountable through innovation.

Indeed, there are surprising trends emerging as a result of this shift to a more data-driven approach. Growth in search, which has been at the core of digital marketing, is now slower than the growth of display advertising; the death of which has been forecast many times over. Social, the once ‘free’ platform for desktop engagement has become a paid-for walled garden in mobile. In fact, as technology speeds decision making and marketers are no longer dependent on media as a proxy for audience, we are seeing a convergence of owned, earned and paid media in real-time marketing activities.

This presents interesting decisions for the modern marketer.

Which is the best model for my business? What technologies should we deploy and when? How do I ensure that we capture the benefits and avoid the pitfalls of such major change?

While these are relatively easy discussions in the closed ecosystems of search and social, the display advertising world remains a very open and diverse ecosystem that is typically handled at arms length through the media agency. As a result, research by IAB Europe and WARC this year found that while 88% of UK media buyers are using programmatic, almost a third of UK marketers do not understand it.

Discussions around programmatic are often blighted by the kind of technical jargon and three-letter acronyms that are typical of the early adopter. However, the recent contributions by ISBA, WFA and Marketing Week are doing much to engage the marketing community. In working with IAB UK’s Display Trading Council, IAB Europe’s Programmatic Task Force and the DDMA (Data Driven Marketing Association), it is clear that marketers are increasingly aware of the opportunities and risks as we head into 2015.

Here are my five predictions for next year on how programmatic is likely to continue to evolve from a marketer’s perspective.

1 Focus on ‘how’ not ‘if’

In the IAB Europe/ WARC study, only 46% of organisations had a programmatic strategy in place. With forecasters predicting that 70% of digital media will be traded programmatically by 2017, the year ahead will see organisations shift to action. Premium publishers are making their content and audiences available rogrammatically, agencies now have the skills and technology in place and marketers can see the opportunity to identify and engage their audience in real time. The year ahead will therefore be one where marketers evaluate and determine the most appropriate model for their business.

In evaluating the ‘how’, marketers must take care to understand their current strengths as well as the technology and service options they face. While several large brands have talked about bringing programmatic in-house, the reality is that most remain aligned with a strategic agency partner. The WFA reports in-house programmatic is not growing, accounting for 2% of spend in 2013 and 2014. While 2015 may see an increase, it remains a complex area that still requires specialist expertise and strong media relationships to make the most of the opportunity.

2 Pound smart, not penny foolish

There is an old saying that if you take care of the pennies, the pounds look after themselves. Unfortunately, such incremental thinking is poorly suited to times of disruptive change. Marketers that look at programmatic only as a way to reduce transaction costs may miss the bigger gains in effectiveness and efficiency. Instead, informed marketers should be looking to understand how the programmatic industry will mature and consolidate, defining a strategy that is focused on how they will win in the long term.

3 Fraud, viewability and brand safety are measured and managed

Any real-time initiative requires careful planning because it is buying the audience where they are, not the pages they may visit. If your audience uses parts of the web where your brand would rather not go, then this needs to be built into your thinking from the start. It is also important that the campaign is managed dynamically and optimised over time so that brand safety can be monitored and managed.

Although estimates of the levels of fraud in the digital advertising ecosystem vary greatly, depending on what is being measured and who is doing the measurement, it is an issue that has defined the way that many think about the industry in 2014. In the year ahead, initiatives such as AppNexus Certified Supply, IAB standards on viewability and a greater sensitivity to brand safety among buyers will substantially reduce the number of bad actors and ensure that the promise of programmatic is effectively delivered.

4 Advertising return on investment increases

Together with improvements on measuring and managing risk, marketers and their agencies will be more imaginative in the application of programmatic as their confidence grows. Aligning the digital experience to offline will be one of the first wins. As second screening brings TV and digital closer, programmatic means brands can synchronise channels in real time. For example, Havas used programmatic to tie Hyundai’s digital advertising to the exact moment TV ads were broadcast in Germany. The ad triggered mobile and tablet advertising, as well as a 180-second homepage takeover of Hyundai.de for the advertised model; driving a 470% increase in conversion for less than 1.6% incremental spend.

5 Programmatic integrates with the rest of the marketing mix to boost effectiveness

Programmatic started out as a performance marketing tool. As it has evolved, the agility and accountability it delivers to display media across screens makes it increasingly attractive for brand building. Its flexibility makes it easier to align with real-time initiatives in the rest of the marketing mix. The technology creates the opportunity, but it is in planning and operations where the integration needs to happen.

So there you have it. Programmatic. At its most basic, the automated buying and selling of digital advertising. At its most advanced, the key to unlocking real-time consumer engagement at scale.

What accounts for the difference? Mainly, how well you understand the technology and how effectively your organisation is able to apply it to the unique needs of your business. As ever, what first appears to be a technology innovation is dependent on smarter thinking and clear action for the promise to be delivered. In 2015, its time for marketers to join the programmatic movement.