Programmatic advertising is in a state of constant evolution. It ranges from online ads to digital streaming. The gargantuan number of options available with programmatic advertising make it appear like something extremely difficult to understand and execute. However, with this post, we will try to make it easier for you to understand and start using programmatic advertising for your digital marketing strategies. 

Programmatic Advertising: A Beginner’s Guide

What is Programmatic Advertising?

The first step towards understanding Programmatic Advertising is navigating your way through the jargon associated with the field. According to the Display Trading Council, Programmatic Advertising is the use of automation in buying and selling of media. The term programmatic is applicable to anything from display to digital out-of-home and television.

According to Dee Frew, IAB UK senior programmers manager “Programmatic started off as a way of using up remnant inventory. It was a way of increasing the efficiency on leftovers, but as it has evolved it’s become more sophisticated. There is, however, a frequent misunderstanding that all programmatic is real-time advertising. That is a subset of programmatic, a way of utilising programmatic techniques to make instant purchases. It’s a bit like having a robot shop for you on eBay. Real-time advertising is an auction-based model, whereas programmatic is the full breadth of automation.”

In simpler terms, brands or agencies utilize a demand side platform (DSP) to reach the conclusion about which impressions to buy and how much to pay for them. On the other hand, publishers use a supply side platform (SSP) to sell ad space to brands. The two distinct platforms are then matched up together in real time.

 “The conversation going on between the buyers and sellers has a vocabulary of its own and sometimes it is like learning a new language. But ultimately the system is buyers on one side of an equation, sellers on the other and brokers in the middle,” Dee Frew went on to add.

Guaranteed impressions are a key aspect of programmatic advertising. The buyers and the sellers agree on a price before the impressions are made live online. In case the brand is looking to amplify the message, or reach a different audience group outside the scope of the continuous campaign, marketers have the choice to make a bid for real time impressions.

Programmatic Advertising utilizes a lot of acronyms  such as DSP and SSP, along with DMP (data management platform) and API (application programme interface). This can make programmatic seem overly complicated. LinkedIn Programmatic’s sales lead EMEA Kenneth Kulbok says that programmatic has a tendency to be extremely complex and loaded with jargon. He said: “Put very simply, programmatic is buying digital advertising space automatically, with computers using data to decide which ads to buy and how much to pay for them, often in real time. Traditional ways of buying digital ad space involve the publisher running the campaign, while programmatic puts the control to manage and measure back in the hands of the advertiser.”

According to Harry Harcus, who serves as the MD at Xaxis (programmatic agency of Group M), programmatic advertising can be construed as a media buy via technology rather than a manual process. Harcus said: “Programmatic boils down to the use of data and technology enabling marketers to make decisions in real time about the advert they want to deliver to the consumer. We are thinking about what audience we are trying to reach, on what kind of day, at what scale and increasingly on what devices. We look at what we know about them demographically and behaviourally based on the individual’s internet consumption habits over time.”

Harcus went on to add that  programmatic has equipped marketers with the ability to jump from a single media purchase with a publisher to conducting all of their transactions while going impression-by impression.

An example of that would be a scenario in which instead of buying a million impressions on The Telegraph in one go and committing to that over a period of time, a brand can choose to purchase a million impressions but split it across multiple publishers or media owners. The impressions can be targeted at different audience segments.

According to Sophie Dufouleur, who works as the global content and social media group manager at Nestlé Nespresso, the ability to personalise and automate media buy for every consumer is the very definition of programmatic. She said:“For me, [programmatic] is looking at the adaption of creative versus the different target audiences, in real time. We really try to understand who our target audience is. What do they do, where do they live, what are they interested in? You have a lot of data points that you can look into, from search data and social media listening, to your own data.”

How to use data effectively for programmatic marketing?

Data is a great tool for obtaining behavioural insight of the targeted customer base. Utilizing data for that purpose is the primary step towards achieving a programmatic advertising strategy.

For this purpose, three different tiers of data should be considered. First-party data consists of the advertiser’s own data on their customers. Second party data is collected by someone other than the advertiser in general. It’s usually an agency whose collected data helps form a brand’s programmatic advertising strategy. Third-party data on the other hand is available to anyone who is ready to pay the cost and the information is usually sold on a rate card basis.

Harry Harcus said: “Brands should think about data as customers or potential customers. That’s where terms like lookalike modelling come along. We look at the data and how existing customers are behaving on the internet, and then we look for people exhibiting similar behaviours who could feasibly be a customer in the future. We look at similar behaviours and then we’re able to target the advertising for different levels of scale and accuracy. If we need to do a scale campaign we might need to dilute the accuracy, or if it’s a very targeted campaign we can maximise the accuracy and compromise on the scale.”

All brands put this balancing act for consideration. P&G chief brand officer Marc Pritchard talked about shifting its marketing spend away from targeted Facebook advertising. He said that the company had gone very narrow while searching for specific consumer groups. P&G will be looking for balance and precision while going forward with its programmatic advertising strategy.

The Nespresso team also changed its way of communicating with targeted audience groups. “Club members are already aware of Nespresso and are more advanced in terms of the coffee they drink, so we targeted them with different messaging versus someone who is just a prospect, who you might need to educate more,” explains Dufouleur. “For club members you look at people who already buy a certain product and give them the story behind the product.”

Havas Media Group’s global head of programmatic solutions, Hossein Houssaini, has advised brands to not focus solely on retargeting if they want a perfect strategy for running their programmatic campaign.

“You can’t rely on retargeting. I think a good data team and a good strategy gives you the ability to predict and prospect right from the start to make every campaign better and hit your KPIs with less retargeting,” Houssaini explained.

How to find the right programmatic model

As things stand today, the most widely used method of buying programmatic is with the help of media agencies. A DSP does the job of running the programmatic activity.

According to Frew, the agency model is the most widely used model in the UK. over 90% of the companies have opted for this approach. However, rising transparency concerns and the risks of frauds have resulted in brands transitioning from managed buys to running programmatic in-house.

Both Unilever and Reckitt Benckiser have opted for internal programmatic teams.

Kulbok  has acknowledged that when it comes to programmatic, a ‘one size fits all’ approach does not work, rather it’s a matter of being able to adapt quickly and control the spend, resulting in more efficient buys.“An in-house team would need the necessary knowledge, tech or resources to do this efficiently,” he added.

“It’s important to have the right understanding within an in-house team, so that you can ask your agencies the right questions and challenge them. But too much focus on the execution may not be as fruitful as working with an experienced partner.”

As per Harcus: “While in theory marketers could start buying programmatic themselves with a credit card and access to a demand side platform, there is much to consider both logistically and in relation to the campaign’s ambitions. You need to consider what kind of sophistication you want to bring. What level of resource or risk are you willing to take? The reason for working with an agency is simply scale.  I would say there are four pillars to programmatic success – data, inventory, technology and expertise/knowledge/resource. Agencies and programmatic businesses are able to dial up on all four of those areas and take the risk away from advertisers.”

According to Harcus, more and more brands have started taking a hybrid approach. In this approach, the  advertiser licences an aspect of the technology to run in house. This provides the advertiser with greater visibility of the process. 

While Nespresso usually depends on its agencies to work on the buy, Dufouleur completely gets why some brands might want to bring programmatic in house.

“There have been a lot of shifts in terms of really trying to have transparency on programmatic and some brands thought the best way to deal with it was to get internal team. But it’s very heavy to have programmatic in-house. You need to have the right team and there’s a shortage of people who understand programmatic. If you don’t [have internal teams] then you need to push your agency and know who you’re working with. You need to put tools in place to verify the buys because there’s a lot of fraud out there.”

In order to attain the best results and high level of transparency, brands and agencies should work hard to obtain a thorough understanding of programmatic, as per Houssaini.

“You think you understand 80%, but it is still 20% to 100%. And the second you go in the wrong direction it might have a bigger impact on media spend than you think. I’m not a fan of brand trading desks because programmatic is an ecosystem that needs strategies, data scientists, data managing platforms and buys that optimise attribution. It’s not enough to have two traders to deal with a £100 million media spend. You will hit your limits. It is easy to say I’ll just go to the big players like Amazon or Google, but it doesn’t mean it’s the best route for you,” Houssaini went on to add.

What to consider when defining KPIs

Programmatic has helped marketers with tracking the impact of their investments in advertising. It also helps them optimise their advertisement campaigns in real time. Xaxis gives programmatic campaigns a couple of weeks to run prior to advising advertisers based on them.

Harcus emphasized on the importance of clarity towards the desired objective when dealing with programmatic advertising.

“It’s very important from the outset to establish what the primary and secondary KPIs are. Due to the real-time nature, where changes are possible all the time, it’s very important to remain crystal clear on what the goal for the advertiser is,” Harcus added.

Dufouleur opined that programmatic advertising’s real time advantages are completely dependent on the analytical ability of the marketer. 

“The real time aspect is only an advantage if you know how to use it. If you’re buying real time, but you’re not looking at the result and you’re not optimising then it’s like when you make a TV booking two months in advance,” she added.

Programmatic buying should  possess the power to free up brands and agencies  so that they can spend some more time thinking creatively about customers, according to Kulbok.

Frew agreed on the potential of programmatic advertising to eventually enable brands to move past the traditional budget allocation to a much more customer-centric approach.

“Eventually I don’t think you’re going to be sitting down buying your TV based on your TV budget, or your display, search, outdoor and audio. Instead you will look for the audience that is going to work best for you. You know everything about your audience and then you will model out from that. If you have mass-market appeal you absolutely should [use programmatic], but we anticipate that programmatic adoption will never quite make it to 100%. There is always going to be a niche website or brand that doesn’t want automated decisions. If you are a luxury brand like Louis Vuitton or Bugatti maybe you don’t want any risk at all. You want hand-tillered creative in prime positions that are unique executions and you can’t have machines making those decisions.”