Is programmatic advertising all it's cracked up to be?

The Gartner Hype Cycle can be remarkably useful in describing the acceptance curves for numerous technologies. And for programmatic ad buying, it has proven remarkably apt.

Programmatic buying burst onto the scene earlier this decade with the promise of easing the process of booking digital campaigns, and rapidly ascended to its peak of inflated expectations in Australia around 2015.

Then in early 2017, it plunged into its trough of disillusionment. Pundits began questioning its true ability to boost effectiveness, and whether its cost matched its benefits, especially when campaigns were booked through an agency.

At the same time, a significant brand safety scare at YouTube led many brands to question whether they had sufficient oversight of how and where their dollars were being spent, and saw many pull out of programmatic buying on that platform.

Programmatic promised to make the process of digital campaign buying easier, and naturally brands were attracted by that. While its hype and subsequent disappointment remain topics for debate, there is no question of its impact on how digital advertising is bought and sold.

“This is classic Gartner Hype Cycle,” says OMD’s group business director, Jonathan Betts. “I genuinely believe we will climb out to the more long-term, sustainable expectation about the value it can provide and where it is useful or isn’t useful.”

Betts works on OMD’s media team for McDonalds, where a programmatic approach is used to support 70 per cent of the client’s display, video, and social platform advertising. He says two key reasons underpin his team’s reliance on programmatic.

“Operationally, it is the most efficient way to enable our teams to buy and deliver the campaigns that we need to get away,” Betts says. “For television, a single TV spot on a national network could be reaching one million people with a single ad. Whereas to reach a million people in online you often have to deliver a million separate ads.

“And those fundamental differences between the two channels mean that you need different technology to deliver the equivalent outcome.”

The second reason is another of programmatic’ s much-touted benefits - better targeting and more sophisticated approaches to our campaigns.

“It allows us to do things like advertise to people who are part of the customer CRM database,” Betts says. “It allows us to use those people as a group, to ask who else can we find online who actually have similar interests or behaviours to this group, to try and find other valuable customers for us.

“And it allows us to vary the message we show to people, based on a number of different factors, whether it is time of day, location, external factors, and what we know about that audience in term of demographics or their level of engagement with McDonalds as a brand.

“All of those things which we believe makes the performance of our advertising better are enabled by having technology that enables us to do that.”

Making data actionable

WA-based second-hand goods retailer, Cash Converters, has also found programmatic is essential for delivering real-time actionable data.

 “Our challenge is to be able to have a single view of our customer across both online and offline, so the data points are critical,” says chief marketing officer, Alice Manners. “What programmatic provides us with is that ability to reach audiences in an effective way. So part of it is technology, but the more important part is the people and teams who use that data.

“What we are doing is getting to that nirvana of reaching the right person on the right screen with the right message.”

While programmatic ad buying has received its inevitable kicking, perhaps the real problem has not been with the practice and technology itself, but how we have been using it. And one of the key issues has been ensuring ads purchased programmatically don’t turn up in the wrong places.

For Cash Converters, Manners says she and her agency Dentsu Aegis network perform a series of checks, including blacklisting and whitelisting various sites, as well as using pre-bid technology for verification of content and contextual relevance.

“A smart operator needs to ensure you have all of those levels in place to ensure you have the right audience and in the right context,” she says.

At OMD, Betts says his team solves the brand safety aspect for McDonalds by placing a strong focus on where the advertising actually runs.

“We have very limited investment into what we would describe as open exchanges where there are thousands of sites we could run against,” he says. “And if we do that, we have very strict inclusion and exclusion lists that we apply and we use technology to provide additional brand safety.”

Up next: How programmatic is transforming creative

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Tweaking creative

One area of investment for many brands and agencies is in using data to not just better target audiences, but to tweak the creative message to actually achieve a better response from those audiences. This has created an opportunity for the people-based creative optimization and data activation platform, Sizmek.

“You don’t get personalisation by just being able to target audiences,” says Sizmek’s general manager for EMEA, Andrew Bloom. “You get personalisation by being able to deliver differentiated messages and stories to people as you touch them on their journey. And that is the promise of marrying optimised creative to an optimised audience.”

The integration of creative processes is finding favour across the board, and plays well for integrated agencies such as integrated Melbourne-based player, Spinach Advertising.

“As a media agency, you can do a certain amount of optimisation,” says Spinach’s general manager and media director, Ben Willee. “But if you don’t have the opportunity to sit down with a creative person and say what’s happening, you can’t get the real benefits.

“The impact of creative is three to four times the impact of media optimisation on campaign results. That is where we think the really exciting game is.”

This in turn, has altered the creative process in the agency, due to the ability to use programmatic to rapidly test alterations to the campaign creative.

“There was a time when a creative director was a god in an agency and the arbiter of what was good and what wasn’t,” Willee says. “Well not necessarily any more – now we can say, ‘let’s test that’.

“The problem we are finding is we get a bit excited and want to test too much.”

But as long as an agency is planning, buying and executing programmatic campaigns on behalf of clients, there will always be a question of the margin it can charge for doing so.

This question, and the desire for some advertisers to maintain greater control over the process, has seen many brands decide to take their programmatic activity back in-house, including the Australian operations of technology maker, Lenovo, which has opted for TubeMogul as its technology supplier.

“It is the best decision that I have ever made,” says Lenovo’s head of digital and social, Danielle Uskovic. “Back then, agencies didn’t really want to tell you everything that was going on. So when I bought it in-house, what I was really surprised by was how willing publishers were to give you a lot more inventory, a lot more bonuses, access to first-party data, access to events, native pieces, and creating your own pages on their sites.

“It was just amazing to me that all of this stuff you could get, instead of just a simple ad buy. You don’t know what you don’t know until you actually go and do something like this.”

Uskovic is adamant any brand’s success today relies on the technology it uses, and this definitely has to be owned by the brand, not the agency.

“Because the agencies for too long have profited from owning the data and on-selling it, and using it across multiple customers,” she says. “From a brand’s perspective, these are the things we should be owning, and having that full transparency.”

Challenging the agency status quo

Statements such as these have forced a rethink from the agencies in terms of how they price and communicate their activities. In May for instance, Havas Media announced it has delivered a fully-transparent client-facing programmatic solution, dubbed Client Trading Solution (CTS), which it described as a ‘client facing, fully transparent control tower displaying all programmatic trading, allowing clients to track and monitor their programmatic buying in one place’.

Spinach chose to buy its own tool – a universal data hub from Tealium – delivering the ability to identify individuals, match those individuals to their devices, and then match that device and individual to behaviour.

“We estimate in the digital space it will save 30 percent where you’ve got waste age of crossover across device and across channel,” Willee says.

At OMD, Betts says his agency has always been clear with its clients about how much it charges to manage activity.

“Our clients can come to us and look at how much money we have spent programmatically though the channels of video and social and mobile and display, and they understand exactly how much has gone to the media partner and exactly who much has gone to any technology partners required to run that advertising, and exactly what they have paid us to run that advertising for them,” Betts says.

As a result, Betts sees both McDonalds’ and OMD’s overall spending through programmatic continuing to increase. The agency is starting to buy TV in a programmatic way of targeting audiences, rather than just buying inventory on an age and gender basis or picking spots in programs

“There will always be some of it that is more integration or idea-led – that will require that people-based piece,” Betts says. “But we are working on a brand that has 1.5 million customer every day. For any of our advertising – digital or traditional – to have an impact on their business, it has to be seen by millions of people.

“And so we require opportunities that enable us to buy our advertising in that way.”

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