Marcus Pratt on What is Programmatic Buying

By September 9, 2013The Anvil Archive

Editor’s Note: The article was first published by AdEchanger in the “Data-Driven Thinking” segment on August 23, 2013.

Marcus Pratt is Director of Insights and Technology at Mediasmith.

3 Theories About Programmatic BuyingThe question of how to define programmatic buying is nothing new. It’s a term frequently discussed and written about within the industry and here at AdExchanger. But when five executives are asked to define it, they do not naturally come to agreement.When AdExchanger surveyed executives on this last year, what I found most interesting about the responses is how much they varied. However you define programmatic, there are some underlying assumptions I often hear:

  • 1. Programmatic is done in real time, leverages ad exchanges or is synonymous with RTB, an acronym that can refer to real-time bidding or buying, which can occur without an auction.
  • 2. Programmatic is more efficient because of process automation.
  • 3. Programmatic is better, at least for the buyer.

All of these beliefs suggest a need for a different skill set in media buyers, with a transition away from the tasks associated with actual media planning. But how true are these common associations?
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Theory No. 1: Programmatic Is Synonymous With RTBWhile RTB efforts tend to be programmatic, the reverse is not always true: There is an increasing amount of programmatic buying taking place without an auction or any real-time decision-making.Often referred to as programmatic premium or programmatic direct, the process of buying inventory directly from a publisher through software is clearly gaining momentum. Supply-side platforms are empowering this through creation of private exchanges that give buyers direct access to publisher inventory through the platform of their choice, but this process is far from automated. Frequently, this access is granted after a period of negotiation and once both sides agree on a fixed price for the inventory, sometimes with a volume commitment as well.That sounds a lot like old-fashioned media buying. There are, however, two key benefits to the buyer that are created by running through a programmatic platform: the ability to accept or deny individual impressions, which enable first- or third-party data targeting and global frequency capping, and the ability to track the performance of these efforts in a central platform, applying data to holistic optimization efforts.

Mediasmith Morsel

A World Without Cookies?

Facebook just hit 1 million advertisers, a milestone signaling that it has become a mainstream advertising channel for small and medium-sized businesses.

According to USA today, Google is seriously considering eliminating third party cookies. They are reportedly developing an anonymous identifier for advertising, or AdID that would replace third-party cookies as the way advertisers track people’s Internet browsing activity for marketing purposes, according to a person familiar with the plan.

See our CEO/Founder David L. Smith talk about this topic at the MMS next Monday in NYC.

Theory No. 2: Programmatic Is More EfficientThe promise is great: Programmatic buying will allow media buyers to automate mundane processes, remove unnecessary steps, and spend more time on strategy, thus becoming more efficient. These much-lamented mundane tasks include faxing insertion orders, collating RFPs (who really faxes and collates these days?), back and forth negotiations and long rep lunches.In reality, however, programmatic buying does not alleviate this workload. Consider Rocket Fuel, the DSP/ad network that just filed for an IPO after generating $106.6 million in 2012 revenue. All of the media Rocket Fuel buys is programmatic, but media buyers typically engage them with a standard IO. Another large programmatic ad company, Quantcast, recently implemented DocuSign to make paperwork processing more efficient amid a deluge of IOs.To be fair, those who do their buying in-house can alleviate this need for an IO as they set up their own campaigns through a self-serve platform. Those with a desire to access private inventory through these systems, however, will find they need to maintain a relationship with the media publisher and negotiate on pricing. This can be done through a platform in many cases, but it may be easier to negotiate over the phone or face to face. I recently attended a lunch-and-learn with a major SSP, who indicated that negotiations through their platform often go “much smoother” once both parties have a conversation.All of this requires media planning skills to evaluate proposals, negotiate buys and deliver the greatest value possible per dollar. The good news: Digital proposals don’t need to be collated.

Mediasmith Morsel

Using Facebooks’s “Like” feature to show support for a candidate in an election is speech protected under the U.S. Constitution, a federal appeals court said, handing a victory to the social networking company, which argued such protection is vital to its business.

video vs tv

The U.S. Court of Appeals in Richmond, Va., issued its ruling Wednesday in a lawsuit brought by former employees of a sheriff’s office who said they lost their jobs because they supported their boss’ opponent, partly by endorsing a campaign page on Facebook.

Liking a political candidate’s campaign page communicates the user’s approval of the candidate and supports the campaign by associating the users with it,” U.S. Circuit Judge William Traxler wrote. “It is the Internet equivalent of displaying a political sign in one’s front yard, which the Supreme Court has held is substantive speech.

As reported by Tom Schoenberg in the San Francisco Chronicle’s Biz & Tech section on September, 19, 2013. Tom Schoenberg is a Bloomberg reporter – tschoenberg@bloomberg.net

Theory No. 3: Programmatic Is Better For Buyers

As shown by rapid growth, programmatic buying certainly has benefits. It isn’t, however, the solution to every advertiser’s problem.

Many are working to bring more custom creative and rich media solutions to programmatic buys, but let’s face it: Most of the time we are talking about standard IAB ad units that elicit eye-rolling from bored creative directors.

So if briefs call for custom, unique executions, working directly with publishers may be a better bet. With so much scale efficiency, programmatic is certainly applicable to direct response media briefs, but sometimes even the best DR ad units are not available programmatically. Consider fixed position banners, text ads, newsletters and native advertising offerings – many can be effective at driving an action, and they cannot always be purchased through a DSP. Testing as part of a programmatic media budget can be a great way to gauge a site’s performance without committing significant budget. If a website performs well as part of a programmatic effort, buyers should consider issuing an RFP directly to the site to see if there are additional offerings available only through a direct relationship.

Mediasmith Morsel

Mobile users, especially the “Shifted”, have made their cell phone their preferred device for searches, particularly when out of the home and especially when shopping.

video vs tv

So how should agencies and advertisers plan for programmatic? Is this a specialized skill, or just an extension of digital media planning? Cop-out that it may be, I think the answer is “both.”

Setting successful strategies in programmatic is going to require the expertise of a media planner working alongside a counterpart well versed in the technology that enables programmatic buying. Strategists should spend time with media technology experts and understand what they are doing. These digital experts should understand the marketing strategy well enough to come forward with ideas on how to leverage technology in reaching campaign objectives.

Agencies realize this as more firms bring programmatic in-house or work more closely with their trading desk counterparts. Yet in many cases, there is still a wall — sometimes literally — between strategy and programmatic teams. If this is the case in your organization you should consider tearing it down.

By Marcus Pratt, Director of Insights & Technologies at Mediasmith, Inc.