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A Byte of Programmatic Buying
 

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This article written by Diarmaid Byrne, Editor, STQ, was published in issue 07 of Social Technology Quarterly. ...

This article written by Diarmaid Byrne, Editor, STQ, was published in issue 07 of Social Technology Quarterly.
Summary: In a data driven economy Programmatic Buying is the approach marketers are shifting to in order to best utilize data and examine their selling strategies better.

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A Byte of Programmatic Buying Document Transcript

  • 1. 16A‘Byte’ofProgrammaticBuyingCampaigns
  • 2. Kuliza Social Technology Quarterly Issue 07 17In a data driven economyProgrammatic Buying isthe approach marketers areshifting to in order to bestutilize data and examinetheir selling strategiesbetter.by Diarmaid ByrnePhoto Credit: rednuhtMarketers traditionally try to combine thebest ideas with the best copy and visualdesign. Then, through placements inmagazines, on radio and television, and inpublic spaces, they try to attract people totheir product and in to their stores.Publishers and broadcasters spend timeand money to understand their audiencein order to be able to earn revenue byoffering advertisers the appropriateaudience for their products. If an advertiserwants to sell luxury watches they willtarget locations where their buyers – high-income earners – spend their time: lifestylemagazines, business magazines, financialnewspapers, and specific sporting events,to name just a few.This entire process seems outdated: tooslow, expensive and inaccurate. Surprisingly,the amount of money spent on suchtraditional brand advertising has not changedgreatly since the growth of the internet.This is disconcerting considering we are inthe most disruptive shift in communicationssince the invention of the modern printingpress. Sophisticated supply chains, cheapprocessing power, constant internet access,smart-phones, and tools to connect withothers and express opinions have causedthis shift. This has led to an evolution inbehaviour to more permissive online sharingof everything from location and opinionsto purchases, feelings, photographs, andmusic. Entire lives are shared online.Naturally, with this new normal of unequalledunderstanding of people based on their socialdata, the traditional method of advertising isunder threat. It is increasingly challengedby fast-paced, algorithmic bidding systemsthat target individual customers instead ofan aggregate audience. This is known as‘programmatic buying’. It explains why anadvertisement for furniture follows usersacross multiple, non-furniture sites.In an interview with Forbes, Bob Arnold,the Associate Director of Digital Strategy atKelloggs, explains programmatic buying ata high level: it allows advertisers in a matterof seconds to bid through a platform for adspace based on a number of parameters:price, data, context, and placement ofthe ad. The platform can also take intoaccount the client’s digital media plan –brand, budget and success metrics – whileincluding other data sources and decisionalgorithms to find the appropriate locationsfor the right consumer at times when they aremost likely to be receptive to the message.Based on a user’s online data, a companywill decide whether to target a particularcustomer if the customer’s data suggeststhat there is a high chance that they willpurchase the product. If I am a consumerwho frequently reads and watches contentabout fitness and exercise, and who buyssports products online, Nike may decidethat I am the correct type of person to targetwith their ads.Through the flexibility and speed that itprovides, programmatic buying is becomingmore common. According to data fromForrester Research, programmatic adsincreased by 17.5 percent between 2011and 2012. Federated Media, one of theworld’s largest digital advertising networks,estimate that 10 percent of display adsthat people see have been sold throughprogrammatic buying. Indeed, with thedemand dropping for display ads in general,Photo Credit: Accendomarkets.com
  • 3. Federated Media decided in November2012 to focus its business on programmaticadvertising and conversational and nativeadvertising.With algorithms choosing which onlinelocations to pursue for advertising,programmatic buying is having a big impacton publishers and their ad revenue. Ratherthan spend $10,000 on advertising on apublisher’s website, a brand can insteadbuy ad impressions on any website wheretheir relevant audience is, and pay lessper ad. In a recent article, Tanzina Vegacommented that in the New York TimesCompany earnings in October 2012 digitaladvertising fell by 2.2 percent. This wasattributed to a “shift toward ad exchanges,real-time bidding and other programmaticbuying channels” by their CFO.Thisisashiftthatisonlygoingtocontinueandgrow over the next years. The major causeis the ever-improving ability of companiesto measure, analyse and understand ever-increasing mountains of social data thatpeople produce daily through their onlinebehaviour. Apart from demographic data, itis data about what they like, their opinionsand views, their intentions through contentthey share, and also location information.The understanding based on this is themost valuable information available tobrands because it allows them to offermore relevant ads to their target consumersacross many more online locations thatpreviously. As a result of targeting theappropriate consumers they will learneven more about them. It will also allowthem to utilize other online social tactics tounderstand more about their friends andfollowers, such as a group coupon offer.In theory this greater understanding willbenefit both the brand and the consumer,who will experience fewer irrelevant ads.Social data will have an enormous influenceon business decisions. A report by BazaarVoice and The CMO Club titled “ChiefCustomer Advocate: How social dataelevates CMOs” found that 78 percent ofCMOs considered social data to be effectivein indicating the influence of individuals orgroups on purchase decisions. 73 percentfound it effective in indicating consumersentiment towards a brand or company.This means that social data will enablebrand marketers to understand their targetgroup, measure the impact of their onlinemarketing efforts and thus allocate moremoney to methods and locations that allowthem to reach their target audience moreeffectively and profitably. It will be a win forboth brands and consumers, but publisherswho rely on traditional advertisingunfortunately face an uncertain future.Social networking sites may be the winnersin this evolution. Many posts, tweets andshares online are inane, but added togetherand they can contain valuable information.As social networking sites collect ever moresocial data they may start to find ways toprofitably use that data rather than relyingon advertising. The issues then are whoowns the data and what is the relevance ofprivacy laws to protect people.References“CMOs Tapping into Social Data for ConsumerInsight (Social Media Marketing).” MDG Blog.MDG Advertising,09 Aug 2012.Miller, Ron.“AdsWill Be A Footnote In Social’s FullStory.” Forbes.com LLC,24 Nov 2012.Gutman, Brandon. “Kellogg Proves ROI of DigitalProgrammatic Buying.” Forbes.com LLC, 11 Sep2012.“Sipping from the fire hose: Making sense of atorrent of tweets.” Economist,01 Oct 2011.Vega, Tanzina. “The New Algorithm of WebMarketing.” NewYork Times,15 Nov 2012.Cheredar, Tom. “Federated Media is done withbanner ad sales.”Venture Beat,09 Nov 2012.Thomases, Hollis. “What Media Planners Need toKnow About Programmatic Buying.” Clickz.com.Incisive Media,03 Apr 2012.“Global Online Advertising Spending Statistics[Infographic].” Go-Gulf.com,02 May 2012.Photo Credit: Poster Boy NYC