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YET ANOTHER TOP TEN LIST: Myths and Misunderstandings in Programmatic

mprove Digital, Staff Blog, Blog, Tech company, Programmatic

Advancing the state of play for programmatic sales in Europe requires a commitment to education, a true passion for the space, and, some days, a bit of patience. For many in the industry, programmatic is now second nature, and it’s easy to take that for granted, assuming everyone rolls just as deep. In truth, however, many misperceptions about automated advertising remain.

Improve Digital was founded in 2008, and we’ve been there every step of the way as programmatic has come into its own in Europe. We have seen it all, ranging from the simple misunderstandings of newcomers to the space, to the wilful resistance to change from industry veterans. As we were closing out 2014, we thought it might be good to collect the most common myths and misunderstandings we encountered over the past year, and (hopefully) put them to rest once and for all in 2015.

(And as with any top ten list, it is in no way exhaustive – if you have your own favourite falsehood, myth, or misunderstanding, and it’s not on the list, feel free to share it in the comments field below!)

1. PROGRAMMATIC IS A SHORTCUT TO SUCCESS

Programmatic means automation. Automation means efficiency. But efficiency does not mean an absence of work.

There are no easy answers, and there are no shortcuts to success. It’s just that simple. Programmatic means automation. Automation means efficiency. But efficiency does not mean an absence of work. Nor does it preclude the need for careful planning and effective execution.

In the long term, programmatic must be integral to the broader business strategy.  It’s not just a shortcut to new revenue.  When employed effectively, leading publishers use it to open up new sales channels to drive new revenue, reduce the cost of sale for existing business, and take to market a truly dynamic product set that meets the needs of the broadest set of buyers.   This “future state” is already a reality for leading publishers, and it should be central to the business strategies of most others in 2015.

2. GOING PROGRAMMATIC WILL CANNIBALISE MY DIRECT SALES

It is still a common concern amongst publishers: embracing programmatic trading will provide back door access for agencies to buy the same inventory at a lower price. This may have been true in the early days, but I’m here to tell you, the industry has moved on.

the challenge faced by publishers is quite the opposite of cannibalisation

With the abundance of available consumer data, and the sophistication in how those audience insights can be applied to tailor ad delivery, every impression has a value for someone. And for more than a few marketers, the most effective way to scale data-driven advertising is through programmatic channels.

Further, it’s not just about performance anymore. Increasingly, high value brand budgets are going programmatic. So, the challenge faced by publishers is quite the opposite of cannibalisation. Simply put, without a way to support programmatic sales, countless potential budgets publishers could have had a piece of will simply be spent elsewhere.

What does this mean for publishers? Not only must they support programmatic as a distinct sales channel, they should do so with a system that delivers the safeguards to ensure the audience and environment attributes carry fair price premiums relative to comparable placements sold direct. Ultimately, it means broadening your conception of price management, and introducing the concept of programmatic sales to your standard rate card.

3. I WILL FIRE MY SALES TEAM

While technology can automate some tasks, the human element will always be critical to what we do.

While technology can automate some tasks (and, let’s be frank: some very mundane tasks still exist in the average IO-based buy), the human element will always be critical to what we do.

Bidding techniques and yield management will always need analysts and highly skilled optimisers. Bespoke sponsorship and integration deals need sales and execution expertise. Platforms need to be understood, translated, and utilised according to commercial strategy and operational efficiency.

Above all, media has long been a relationship-driven industry, where mutual success comes from building a partnership based on trust, service, and commitment. We don’t see that changing anytime soon.

Programmatic doesn’t change what we do – just how we do it. We’ll always need strong relationships and skilled hands – they just have some new methods to learn to make sure audience, content, and advertising assets are monetised to their fullest potential.

4. PRODUCT TRANSPARENCY IN RTB IS A BUSINESS RISK

The more detail that is exposed about a product, the more likely you are to find a strong buyer match and drive an even higher price via auction.

As we strive to bring brand advertisers and dollars to digital, let alone to programmatic, transparency becomes a necessity rather than a choice. For example, as individual consumers, we would rarely buy a product without knowledge of – and trust in – the retailer. Arguably, many of us are even willing to pay a higher price for that trust and the perceived value and quality.

Advertising works to a similar set of expectations. Marketers want the assurance that their brand is appearing in an appropriate environment, and won’t risk spends without some assurances. Exposing and substantiating that quality content and audience therefore can increase opportunity rather than present risk. The more detail that is exposed about a product, the more likely you are to find a strong buyer match and drive an even higher price via auction.

With the growth of programmatic direct and private marketplaces, as well as the considerable growth in brand budgets looking for automated buying and selling, greater product transparency is becoming the norm. This willingness to pull back the covers a bit contributes to the growth, liquidity, and general health of the programmatic trading space and really has no downside.

It’s far from being a risky move. Instead, it is emerging as standard practice among market leaders, and when carefully employed, product transparency can be central to maximizing inventory yield.

5. DATA WILL FIX EVERYTHING

it’s no silver bullet, instead, it’s simply an incredible strategic means to an end.

Advertising has always been audience driven.  You can still see that in the most basic of print ads. The value proposition of even the most traditional magazine or newspaper still comes down to two things: audience and context.

With targeting, cookies, profiles, segments, DMPs, first- and third-party data sets, jargon, buzzword, jargon, we’re not doing anything new – we’re simply doing the same old thing in a more precise way.

Data is important, and it has emerged as an asset class all its own. Every player, buyer and seller alike must invest in new tools and develop a data-centric business strategy to remain competitive in today’s market. But, it’s no silver bullet, instead, it’s simply an incredibly strategic means to an end.

6. DOING NOTHING IS LOW RISK

The market has already developed too quickly to sit on the sidelines and wait to see what happens.

By 2017, global programmatic ad spend is expected to leap to $32.6 billion (Source: Magna Global). With that much revenue sloshing around the market, holistic monetisation and optimisation will be critical for publishers. The market has already developed too quickly to sit on the sidelines and wait to see what happens.

We’re entering a world where it is not uncommon for programmatic to represent 50% or more for some publishers, and any buyer or seller who is still sitting on the sidelines is facing incalculable opportunity cost with every day that passes.

7. USING MULTIPLE SSPs WILL INCREASE MY REVENUE

Using multiple platforms can present more risk than opportunity.

In today’s overheated programmatic market, it’s safe to assume most SSPs and exchanges have access to roughly the same pools of demand.  What sets each apart – what drives the real value – is less what demand they have access to, and more the decision-making and optimisation performed by their proprietary algorithms and, of course, their people.

As such, using multiple platforms can present more risk than opportunity.  One must allocate inventory across multiple systems, leading to more waste and lower net fill rates. Further, that competition is diluted when similar inventory lands in two marketplaces simultaneously, and the highest possible bid might not always be attained.

For most publishers, a single system for all of their programmatic needs – one closely aligned with their direct sales operation as well – is what leads to the highest revenue, greatest efficiency, and least risk of opportunity cost when managing direct and indirect sales channels.

8. THE TECHNOLOGY IS THE STRATEGY

In a market crowded with vendors and competing ‘big ideas,’ technology can lead to short-sighted, ill-planned commercial decisions.

As revenue flowing through programmatic advertising continues to increase, so too do the requirements for platforms and technology – fulfilling ad delivery across desktop, video, mobile; supporting new ad formats and new categories like Native; and supporting brand safety, ad viewability, data management, and myriad other tangential concerns. Too often, however, in a market crowded with vendors and competing ‘big ideas,’ technology can lead to short-sighted, ill-planned commercial decisions.

In the data space for example, many publishers rushed to employ third-party data sources before defining a holistic data strategy, investing in the right data management infrastructure, and organizing their first party data assets. Similarly, in programmatic, many still rely too heavily on vendors to monetise inventory on their behalf, treating everything as low value unsold, and not looking to the new ways programmatic direct can enhance sales strategy.

The key to employing technology successfully is in understanding the core business needs being addressed and finding the ‘right’ solution to cater to those needs. The alternative is jumping too fast into business with service providers that are unproven, too quick to make big promises, or too narrowly focused to be practical.

9. PROGRAMMATIC IS JUST A NEW CHANNEL FOR REMNANT

Programmatic is about more than just optimising those lower yield programmes – it’s about reaching new markets in new ways.

Well, okay, so it is about remnant, just not exclusively, not by any means.  RTB replaced the ad network and others who had a chokehold on the direct marketing and performance space.  Today, however, programmatic is about more than just optimising those lower yield programmes – it’s about reaching new markets in new ways.

It’s about seeking the way buyers wish to conduct transactions, finding new sources of advertising revenue in a highly competitive market, and developing new and innovative ways to package and sell your hard-won media, content, and audience assets.

Programmatic isn’t the future.  Programmatic is the now. Those publishers that haven’t moved up the yield stack yet to at least experiment in private marketplaces and programmatic premium are not making the most of their assets. More importantly, I guarantee they are missing out on revenue opportunities today, no matter what kind of publisher they are. They risk being left behind in a market that is developing at an unprecedented pace.  And I suspect their buyers would agree.

10. PROGRAMMATIC WILL ONLY EVER BE A SMALL PART OF MY BUSINESS

We thought we would let others do the talking for us on this one. If a picture is worth a thousand words, how much is a chart worth?  If you’re still wondering if programmatic is going to be important to your business, take a look at these. Data source: Magna Global.

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Chief Strategy Officer

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