One of the biggest trends in media buying is occurring within the online display advertising segment, the rapid expansion of programmatic buying. Ironically, few advertisers have delved into the intricacies of this approach and its impact on the stewardship of their media buys.
In short, programmatic buying is the execution of online media buys utilizing quant technology, demand side software interfaces and algorithms to book, analyze and optimize display ad campaigns, often on a real-time basis. The RTB exchanges, ad exchanges, demand side platforms (DSPs) and sell-side platforms (SSPs) were initially utilized by publishers to move remnant display space. However, given the success of programmatic media buying, there is a growing push by agencies and ad exchanges to encourage publishers to expose more, if not all of their inventory, including premium inventory with guaranteed impression delivery which is currently sold on a direct basis.
Why? The use of programmatic buying yields a number of benefits ranging from enhanced targeting, the ability to select desired rather than bundled impressions, price clarity and enhanced agency control. Programmatic buying is a more efficient means for agencies to place and manage media buys. The processes and workflows affiliated with programmatic buying software solutions allow for improved analytics while yielding significant operational efficiencies for ad agencies, chiefly related to time savings. Furthermore, they can also integrate with other financial and marketing automation platforms which work across paid, owned and earned media channels.
The concept of selectively targeting users based upon behavior and projected responses to campaign inputs and to dynamically allocate resources based upon near real-time analysis of reams of data tied to a campaign’s objectives is appealing. Demand side platforms make decisions for an advertiser based upon inventory availability, pricing, placement data, context and other decision making algorithms that align the advertiser’s media plan, budget and campaign KPIs. Hence, the potential of programmatic buying to enhance the effectiveness of an advertiser’s media investment and to positively impact their return on marketing investment could be substantial. Thus, it is no surprise that many stakeholders are already talking about the potential expansion of this concept to cover a higher percentage of online media activity and even extending its application to other media types such as television and print.
The application of new technology that can effectively leverage “Big Data” to make better resource allocation decisions and evolving media marketplaces that dynamically match seller inventory with buyer demand has tremendous potential. In fact, most would agree that this is a “game changer.” Who wouldn’t be supportive? The question to be addressed in the context of programmatic buying is, “What is the impact on the role of media buyers in the placement and stewardship of a client’s media buy?” Further, how does an advertiser benefit from the realized “operational efficiencies” generated by programmatic buying that currently accrue to the advertising agencies and publishers? Perhaps more importantly, “How will this automated approach to media buying and stewardship impact the role of agency media buyers?”
Today, marketers pay a premium in the form of agency fees and commissions for digital media buying relative to those paid for traditional media. If technology is ushering in a more efficient, more automated form of buy management should advertisers be paying more, or less? For some of the more progressive client organizations, the question may even be, “Should we utilize an agency at all or purchase media directly via electronic exchanges?” The potential for disintermediation is very real in this context. The challenge for media agencies will be to redefine the role of their media buying organizations in an evolving media marketplace to clearly identify how and where their buying staffs add value. It is likely that their future role will be more strategic, giving way to technology to handle the basics of media execution such as the placement, monitoring, analyzing and adjustment of buys. That being said, there are media buyer generational issues which will require training and development to school agency media buying professionals on emerging programmatic buying platforms and electronic exchanges. All stakeholders can benefit from the perspective of Bill Gates when it comes to the promise of technological advancement:
“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”
Exciting times to be sure. Will there be challenges for clients, agencies, publishers and media workflow and data management system providers? Absolutely. But in the end, all have the opportunity to benefit from a rapidly evolving and much needed evolution in the way media buys are executed and optimized.
Interested in discussing the impact of programmatic buying on your client/agency letter of agreement, staffing plans and remuneration system? Contact Cliff Campeau, Principal at AARM at ccampeau@aarmusa.com for a complimentary consultation.