Ad Age recently broke a story about P&G’s intention to have 70 percent to 75 percent of its digital advertising purchased through programmatic buying by the end of this year. Meantime, an estimated 20 percent to 30 percent of digital display ads are purchased through programmatic buying.
Indeed, “programmatic” has joined the crowd of marketing buzzwords, yet its definition isn’t quite clear.
Many marketers associate programmatic buying with real-time bidding (RTB). RTB is a market approach to buying ad inventory where the price is based on both buyers and sellers working from the same information to make informed decisions. Just like the stock market, the real efficiency that enables RTB for digital ads is that the buy can be facilitated by a computer.
The automation of the buying process in an RTB environment is actually what the term “programmatic” means. While programmatic seems to be a relatively new buzzword, it’s kind of shocking to discover in this day and age that some amount of advertising is still purchased through negotiations and facilitated through email, fax, and written orders.
The expansion of programmatic buying changes our world. Now it’s not just digital display ads that will be bought programmatically, but really any advertising. With an increase in TV Everywhere--up 250 percent, according to a recent Adobe report--programmatic buying for TV is a reality. (Note: Adobe is CMO.com’s parent company.) And this technology will level the playing field for any company that can provide better value, scale, and price. The old model put the power in the big agencies’ hands based on the volume of inventory they could manage through their extensive publisher relationships. The new model allows those with data and intelligence on the audience and a computer to play a larger role in the buying process.
To me, the most interesting opportunity for CMOs is in linking data--connecting the places where the intelligence is gathered and insights are generated about how marketing works and how customers behave--with marketing execution. Too often, a big gap exists between the insights marketers generate and the rules by which marketing is executed. The bigger the gap, the more likely those insights never deliver the value they should. There's no doubt that insights are important. There is certain value in knowing something, but significantly more value in using those insights to execute more effective marketing.
So the discussion around programmatic buying is really a subset to the broader trend toward automation. The automation of marketing processes has been going on for decades. The automation of how we manage customers has been a slow march, but today, very few companies are operating without an automated CRM process. The same march is happening around ad buying, and its pace is starting to pick up.
Just like the stock market, the real value in programmatic buying is the opportunity to take action based on better knowledge about consumers. Gordon Gekko, the fictional capitalist from the movie Wall Street, said, “The most valuable commodity I know of is information.” The reason programmatic buying is going to advance beyond remnant advertising to premium advertising is because information will allow it to do so more effectively.
In fact, what we define as remnant will begin to look much more valuable once we’re able to master automated targeting and timing in a more integrated manner. Brands will then be able to execute in smarter ways proportionally to how much smarter they are about their customers. For those who thought programmatic buying was for low-quality remnant space, think again. Programmatic buying might soon be the sharpest tool in your marketing toolkit.