There has been a major shift in the way that digital media is bought and sold, which has opened up a lot of new digital targeting opportunities for marketers. While programmatic advertising is not a new technology, a lot of people are not aware of what it is and how they can use it. A Pulse Study found that one-third of Fortune 500 brands are not using any programmatic techniques. Of those that are using programmatic, 25% of feel they need more education on how to use programmatic techniques.
Episode Show Notes
Introduction to the Podcast: Programmatic Media
(0:00 – 4:02) Introduction to the Iterative Marketing Podcast: Welcome to the Iterative Marketing Podcast, where, each week, hosts Steve Robinson and Elizabeth Earin provide marketers and entrepreneurs with actionable ideas, techniques, and examples to improve marketing results.
The topic of this episode is programmatic media, which is important for modern marketers. We will cover the concepts of programmatic and real-time bidding and explore their implications for marketers within the iterative marketing methodology.
The resources discussed on the show can be found at brilliantmetrics.com, which includes a blog and a LinkedIn group for community interaction.
Decoding Programmatic Media
(4:02 – 4:58) Simplifying the Definition of Programmatic Media: Programmatic media seeks to streamline digital media buying by minimizing human involvement. This technology-driven process enables faster and more accurate media buying, optimization, and placement, thus reducing potential human errors. It also allows more sophisticated targeting, previously limited due to human time and effort constraints.
(4:58 – 6:11) Evolution of Digital Media Buying: The initial digital media buying process followed the traditional method involving significant human interaction. The process included steps such as the media buyer issuing a Request for Proposal (RFP), followed by negotiation between the buyer and publisher to settle agreement terms. The details of media placement, as well as the delivery of creative files, were managed manually.
(6:11 – 6:50) Automation with Programmatic Media: Programmatic media brings automation to this process. The media buyer, which can be either an agency or a brand, places an order online using a Demand Side Platform (DSP). The order, depending on its type, is locked in the publisher’s system and then goes out on a public exchange as a bid, similar to eBay’s operation.
(6:50 – 9:37) What is Real-Time Bidding? Real-time bidding (RTB) operates much like an eBay for ad space but with a more automated and instantaneous process. As a user browses a website, an ad slot is announced as available via an ad exchange. This announcement includes data about the user, enabling advertisers to bid for impressions that fit their target demographic. If the advertiser’s bid is the highest, the ad is instantly displayed on the user’s screen.
(9:37 – 11:13) Distinguishing Real-Time Bidding and Programmatic: Real-time bidding and programmatic are not identical, though they are often used interchangeably. Programmatic refers to the automation of media buying, which may or may not occur in real-time. Programmatic direct, for instance, blends traditional media buying with programmatic by reserving impressions in advance and using them programmatically later. Another term, private exchange, refers to a scenario where ad bidding is limited to a select group of advertisers.
The Value of Programmatic Media And Real-Time Bidding for Marketers
(11:56 – 12:58) Growing Prevalence: Programmatic media is becoming increasingly prevalent, accounting for a significant portion of digital ad sales. Understanding and integrating programmatic media is crucial for modern marketers.
(12:58 – 13:37) Beyond Display Ads: Presently, programmatic media supports display and video ad buying. Soon, it will be extended to television, broadcast radio, and even outdoor advertisements. Learning about programmatic media today prepares marketers for future advancements.
(13:37 – 14:12) Precise Targeting: Programmatic and real-time bidding allow marketers to target specific demographics rather than simply purchasing ad space. Ads can be delivered directly to the target audience, improving the efficiency of the campaign.
(14:12 – 14:59) Broad Reach: Approximately 90% of websites sell ad space programmatically. Marketers can cover nearly all websites on the internet without setting up individual buys, focusing on reaching the right people instead.
(14:12 – 15:39) Empowering Marketers: Programmatic media shifts power to marketers by enabling them to select their target audience rather than choosing publications. It optimizes the use of marketing budgets and aligns with the principles of iterative marketing.
(15:39 – 17:10) Rapid Optimization: Real-time bidding provides immediate data about ad performance, enabling rapid optimization. Marketers can access real-time data about impressions, clicks, viewability, and creative performance. Adjustments can be made immediately, accelerating the process of improving and iterating ad strategies.
Limitations and Challenges of Programmatic Advertising
(17:10 – 18:04) Direct Response vs. Brand Advertising: While programmatic advertising provides excellent tools for optimizing direct response ads (those designed to trigger an immediate action), it’s not as effective for brand advertising (designed to increase awareness and positive perception of a brand over time). This is mainly due to the optimization levers available for direct response ads – such as immediate feedback on clicks, conversions, etc. – which are not applicable to brand advertising where the results are more long-term and less tangible. However, insights gleaned from direct response campaigns can still be useful in shaping brand advertising strategies.
(18:04 – 19:27) Budgeting Challenges: Budgeting for programmatic advertising can be challenging due to the dynamic nature of the ad inventory. While models can be run to estimate available inventory for a specific audience, the reality can change overnight. This could result in either underspending or opportunities to spend more than the initially allocated budget. This fluid situation requires a flexible approach to budgeting, which can be difficult in rigid corporate environments.
(19:27 – 20:22) Ad Fraud: Programmatic advertising can be more susceptible to ad fraud, where false impressions are created to generate revenue. This is partly due to the automated nature of programmatic buying, where the decision-making process is controlled by algorithms rather than humans, making it easier for fraudulent activities to slip through. While protective measures are continually being improved, ad fraud remains a reality that marketers need to be aware of.
(20:22 – 21:01) Brand Safety and Media Quality: Programmatic advertising carries the risk of ads appearing on sites that are not in line with the brand’s values, damaging the brand’s reputation. This is because the automated buying process can place ads on any site that matches the target audience criteria, regardless of the site’s content. Tools can be used to manage this risk, but it’s crucial to be aware of it.
(21:01 – 21:48) Lack of Control Over Ad Placement: With programmatic advertising, brands have less control over where their ads are placed. This can result in ads being placed on lower-quality sites or in less visible areas of a page. On the flip side, this lack of control can also lead to discovering new opportunities where ads might perform well, which might not have been considered for direct buying.
Programmatic Advertising in Iterative Marketing
(21:48 – 22:20) Rapid Feedback and Iteration: Programmatic advertising fits perfectly into the iterative marketing approach due to its inherent feedback mechanism. This advertising method allows marketers to quickly iterate, test, and optimize campaigns based on real-time data. The abundance of data and easy accessibility of optimization tools in programmatic platforms enable rapid changes and improvements.
(22:20 – 23:50) Right Message, Right Person, Right Time: An essential aspect of iterative marketing is delivering the right message to the right person at the right time. Programmatic advertising provides the tools to achieve this. As DAX Hammond suggests in his article, “Programmatic Storytelling: How Programmatic is Evolving Traditional Branding,” programmatic advertising is like building with Legos – it’s about combining different pieces (data, media, timing, individual intent) to create a successful campaign. By aligning programmatic with organizational objectives and customer journeys, marketers can build a strategy that balances their needs and contributes to the overall objectives of the organization.
Getting Started with Programmatic
(23:50 – 25:11) How do I get started? When venturing into programmatic advertising, the first step is to choose a Demand-Side Platform (DSP) partner to place your media. It’s crucial to select a DSP partner that allows for a reasonable minimum investment, letting brands start small in line with iterative marketing principles. Some DSP options suitable for beginners include Site Scout, Blue Agile, and Exact Drive. These platforms provide a good starting point for brands wanting to experiment with programmatic advertising. Additionally, marketers can use a variety of resources to further educate themselves about programmatic advertising and how to implement it effectively in their strategies.
Join Us Next Time
(25:11 – 26:20) Conclusion: In this episode, we covered programmatic media, a critical aspect for contemporary marketers. We delved into the principles of programmatic and real-time bidding, investigating their ramifications for marketers operating within the Iterative marketing methodology. Join us next week, where we will discuss the role of experiments in iterative marketing.
Have a great week and we’ll see you next time. This concludes this week’s episode. For notes and links to resources discussed on the show, sign up to the Brilliant Metrics newsletter.
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The Iterative Marketing Podcast, a production of Brilliant Metrics, ran from February 2016 to September 2017. Music by SeaStock Audio.