Programmatic ads: can they disrupt agencies and threaten ad sales jobs?OliverLuft 17th October 2014
If you buy ad space on behalf of advertisers and a technology comes along that, almost overnight, undermines your business model and makes it staggeringly easy for clients to place ads themselves, you might well have a few sleepless nights, perhaps even considering what other ad sales jobs are available.
Well, say hello to ‘programmatic advertising’.
The term isn’t one familiar to many, but for those focused on the future of ad sales and marketing, programmatic advertising is rapidly becoming the thing that dominates their thinking.
In a nutshell, programmatic advertising an online display advertising system that relies on complex algorithms to trigger ad deployment to a set of specific criteria. The process is versatile and quick. It allows advertisers to save resources by automating media buying at pre-determined rates, and book and optimise campaigns via a web interface. The optimisation ensures ads are only shown to desired audiences on relevant websites.
In recent months we have written about how this seemingly obscure topic is likely to disrupt the roles of ad sales executives and publishers alike, but we haven’t yet asked quite how significant the impact of programmatic ads could be for those working in media-buying agencies. Judging alone by the number of reports published in the last six months on the subject, it could be quite significant.
In August we referenced a report claiming 90% of UK publishers who’d heard of the technology believed it was future of advertising.
Those findings were reinforced by a further study – from Magna Global – suggesting the market for programmatic ads was already worth over $15 billion, as display ads were now routinely bought and sold through automated exchanges.
So, in a relatively short space of time, things are booming. What’s happened to cause that?
It seems a system originally used as a neat and efficient way to sell off remnant digital inventory is rapidly becoming the way to sell video and other premium ad inventory.
In 2014, 25% of digital video inventory will be traded programmatically, the Magna Global study said, rising to 70% within the next three years.
A further study – this time from Winterberry Group – has predicted spending on programmatic ads would triple by 2017. This study also said programmatic ads would eventually account for more than half of all digital advertising transactions.
More than half of all digital advertising transactions? Surely, for this to be the case, programmatic processes would need to break out of their common display ads use to be applied to different forms of advertising?
According to a new study from Visual DNA, that’s exactly what’s happening. Programmatic is changing the rules for planning, buying, and execution of ad campaigns by evolving from ‘real-time bidding for online impressions’ into broader territory where it’s used to manage and optimise customer engagement across various channels and devices. This is a significant and disruptive change that, naturally, would threaten the work broadly done by media agencies.
Not necessarily, claims the Visual DNA study:
The trading-desk team and planner/buyers should embrace programmatic as a way to free up time for more interesting, higher-value thinking around campaign strategy and tactics.
By enabling brands to target consumers more precisely across multiple channels and devices, programmatic will help you [media-buying agencies] add value for your clients and boost your career prospects.
Visual DNA identified six key ways agencies can make this disruption technology work to their advantage and continue to offer ‘added value’ to their advertiser clients.
Machines make it easy
The report claims that agencies can reduce the risk of being ‘cut out of the picture’ by becoming specialist in providing data services and optimising ad content.
If brands can measure and manage day-to-day campaigns themselves, agencies might consider the ‘more valuable and interesting work’ of designing and optimising strategies based on what they know of different audiences, the tactics and content that appeal to them.
When trying to target niche audiences demographic data might only be the first step. In a world moving more towards on-to-one marketing, agencies can enrich their offering by matching data with behaviour (and other factors) to predict habits and motivations of target audiences.
The ability to make sense of vast reams of data, reducing failures to reach the specific audiences, improving response rates – these qualities will grow in significance as ad sales and marketing relies more and more heavily on data. If agencies master these disciplines, they can increase their value-add.
It’s getting emotional
As campaigns get more personal, poorly targeted ads are irritating like never before. In fact, they can seriously damage a brand’s reputation. Through programmatic targeting, the report suggests, agencies have an opportunity to become masters of the emotional response; understanding how two people classified in the same segment may have different motivations – this means different creative approaches, and understanding how to use richer data sets to plan and manage.
Once programmatic systems were used to shift low-value inventory but rise in their popularity isn’t simply a matter of reducing the cost of campaigns. Boosting ROI, rather than cutting costs, is still the focus for brands. Agencies that provide actionable insights on hard-to-reach or valuable customers will make themselves relevant. It’s about getting better data, improving abilities to relate that to other information sources to create outcomes, not reducing costs and providing ads on the cheap.
Where they go, we follow…
Use of rich third-party data with cookies can help create detailed audience profiles that agencies can use to guarantee advertisers are reaching a human audience, thus ensuring genuine ROI.