Making Sense of Programmatic Buying

Commentary

• by Ken Beaulieu, 2014, 
Ken Beaulieu is senior director of marketing and communications for the Association of National Advertisers.
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• Bob Arnold, digital media and strategy lead, North America, at Google, believes programmatic buying will one day revolutionize the industry because it will bring about more effective and relevant advertising to target consumers. Until then, he says, much work is needed to educate brand marketers about what programmatic buying really means and how best to capitalize on the trend.

Arnold, a featured speaker at the ANA Media Leadership Conference, March 30-April 1, in Boca Raton Fla., shares his perspective on programmatic buying, including the biggest misconception about the space, the main benefits to marketers, and what the future holds.

How do you define programmatic media buying? Do you feel there’s an adequate understanding of the term throughout the advertising industry?

Programmatic buying is utilizing technology to plan and buy media in order to reach the right person with the right message when they’re most receptive. It eliminates a lot of the guesswork of media buying. From an industry-understanding standpoint, brand marketers are just now starting to hear of the term. The ecosystem is very complicated; a lot of terms are being used interchangeably.

For example, many people call real-time bidding programmatic media buying, but real-time bidding is a subset of programmatic as a whole. So it’s going to take more education and a simplification of the ecosystem. Also, as more people utilize programmatic, we will need to show results. Then people will have a greater impetus to learn what programmatic is and how to use it. We’ve already seen great results for direct response marketers, and now we’re starting to see results for brand marketers as well.

What are the main benefits of programmatic buying to brand marketers?

Programmatic allows you to have your cake and eat it too — in other words, it drives stronger marketing via efficiency and effectiveness. Process automation drives efficiency, which reduces a lot of the heavy lifting during the planning and buying process. When you use technology, you become more precise in your media placement to drive effectiveness. It's a better user experience because users will only see relevant ads.

With more brands buying programmatic media by themselves, how can they set themselves up for success?

First, centralize analytics to have consistent measures from campaign to campaign. This allows you to spend more time on furthering your media innovation plans and less on trying to create new measurement plans. Which leads to the second point: centralize insights to scale the learning across the company. Marketers can then share answers to questions like: “What types of creative techniques work best?” and “What programmatic buying techniques work best?” The centralization of analytics and insights enables you to take programmatic to the next level.

What is the biggest misconception about programmatic buying?

Many people believe programmatic is simply a race to the bottom — in other words, an attempt simply to drive CPMs as low as possible. The reality is that programmatic is starting to shine a light on quality publishers. As that happens, more publishers will benefit from programmatic because marketers will pay for quality. And as media investment funnels toward higher quality publishers, that will drive up prices in an open-market system. Quality publishers will win at the end of the day. And as programmatic becomes easier for marketers, they will be drawn to quality inventory, thus creating a virtuous cycle.

What does the future of programmatic buying look like to you?

Marketers want to deliver the right message to the right person when they’re most receptive, and programmatic enables that. So I think programmatic will simply become the way media planning and buying is done. In fact, we’re actually starting to see TV and out-of-home advertising utilize programmatic media planning and buying. That said, there is an opportunity to develop better solutions for brand marketers. We know, for example, that there’s no correlation between click-through rates and brand awareness, purchase intent, or sales. If we are able to create a measurement for brands that is as meaningful and actionable as the click has become for performance advertisers, we think it will really help unlock brand spend. And we’ll see an even stronger push for everything to become programmatic.