Investing Confidently (and Safely) in Programmatic

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Produced for Brands and Agencies, this presentation addresses the challenges and risks associated with Programmatic buying.

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Investing Confidently (and Safely) in Programmatic

  1. 1. © 2015 Encore Media Metrics. Confidential and Proprietary. May not be shared without permission. Investing Confidently in Programmatic Media March 2015
  2. 2. 2 Information is confidential and may not be shared. © Encore Media Metrics 2014 Executive Summary q  The promise of self-optimizing buying platforms is intriguing…" …but it doesn’t replace the need for objective, transparent analysis q  Programmatic introduces new threats and challenges to optimizing §  Relying on antiquated metrics will do more harm than good q  Algorithmic attribution is critical for measuring and optimizing media §  Fractional, statistical attribution is needed for cross-channel, full-funnel insights q  As brands increase reliance programmatic, the need for objective, attribution- based insights analysis will become even more critical
  3. 3. 3 Information is confidential and may not be shared. © Encore Media Metrics 2014 Context: The Rise of Programmatic Media Digital media is growing market share q  $47bn spend, growing >10% annually q  #2 media channel (and gaining on TV) Digital is experiencing yet another significant shift q  2000: Ad networks emerged to fill gaps in publisher- direct buying q  2008: Exchange traded (programmatic) media began taking share from direct and network buys §  Low-funnel tactic relies heavily on Retargeting via cookie matching §  Often has lowest CPA vs. other strategies Programmatic is growing rapidly q  Accounting for 10% of digital spend in 2014, now growing 25-30% annually q  Projected to double by 2017 to $9bn
  4. 4. 4 Information is confidential and may not be shared. © Encore Media Metrics 2014 Programmatic Measurement Challenges Despite the advantages of Programmatic buying, drawbacks exist: q  Most programmatic impressions are Retargeting (vs. Prospecting) §  Cookie matching is the most prevalent strategy q  30-70% of programmatic impressions are wasted (see http://bit.ly/RTBwaste) §  Non-viewable and Fraudulent ads comprise 20-40% §  Overlapping reach and inefficient frequency comprise additional 20-40% q  Trading desks optimize on the wrong metrics §  Clicks and post-impression (view-through) conversions are predominant KPIs §  Limited metrics are easily gamed (via cookie-bombing) q  Lack of transparency §  Few brands know which strategies actually work (and how they work)
  5. 5. 5 Information is confidential and may not be shared. © Encore Media Metrics 2014 Lesser Known Programmatic Challenges ‘Spray and Pray’ prospecting (common strategy) relies on Retargeting: q  Serve 1 ad to large group of users q  Wait to see which exposed users visit advertiser’s site q  Retarget visitors (across exchanges) to win the last touch before conversion q  Claim success for the Prospecting campaign Lookalike modeling relies heavily on Retargeting: q  Trading desks use retargeting to develop profiles of likely converters q  Often continue to Retarget within Lookalike campaigns to keep CPA low q  Advertisers have no visibility into what is really going on within each buy Our Views q  ‘Spray and pray’ is not prospecting (it’s more like giving coupons to people in your parking lot) q  If using Lookalike modeling, Retargeting is largely redundant q  Lack of transparency and perverse incentives give way to significant waste Investing in programmatic media increases the need for advanced analytics
  6. 6. 6 Information is confidential and may not be shared. © Encore Media Metrics 2014 Programmatic Frequency Challenges !"!!!! !1,000,000!! !2,000,000!! !3,000,000!! !4,000,000!! !5,000,000!! !6,000,000!! !7,000,000!! !8,000,000!! !9,000,000!! 1! 2! 3! 4! 5! 6! 7! 8! 9! 10! 11! 12! 13! 14! 15!>15! Frequency) Exposed)Users)by)Frequency) 0.00%! 1.00%! 2.00%! 3.00%! 4.00%! 5.00%! 6.00%! 1! 2! 3! 4! 5! 6! 7! 8! 9! 10! 11! 12! 13! 14! 15!>15! Frequency) Visitors)as)%)of)Exposed)Users)by)Frequency)) Frequency of 1 is least effective 56% of users served 1 ad 5% served more than 36 ads As shown below, Programmatic buying may include significant waste q  Frequency of 1 has lowest probability of success (yet accounts for most Imps) q  Excessing frequency (due to retargeting) represents another significant cost
  7. 7. 7 Information is confidential and may not be shared. © Encore Media Metrics 2014 Programmatic’s Attribution Problem DSPs still optimize largely on " ‘Last-touch’ attribution models q  Last view or click gets credit " (the indicator of success) ‘Last-touch’ is a flawed approach q  Rewards retargets and low-funnel " placements §  Overstates results by 20-100% q  Penalizes brand-building, upper-" funnel placements §  Understates results by 25-200% !20%% 0%% 20%% 40%% 60%% 80%% 100%% Adara% CBS%Digital% Daily%Candy%Digilant%Even;ul% Evolve%M edia% GENOM E%Yahoo% Gum Gum % Hulu% M obile%Theory% M obileFuse% Orbitz%US% SpecificM EDIA% SpoPfy%US%Tapad% Travelocity%Trem or% USA%Today% Videology% W eatherBug% Over/Understatement-of-last1click-repor6ng- Discrepancy%in%AcPons:%Last!click%vs.%FracPonal% Vendor information obfuscated Optimizing via last-touch can do more harm than good.
  8. 8. 8 Information is confidential and may not be shared. © Encore Media Metrics 2014 SWOT Analysis: Investing in Programmatic Strengths Weaknesses Opportunities Threats •  More efficient •  Lower cost •  Programmatic •  Scalable •  Waste from redundant reach •  Wasted frequency •  Optimizing on wrong KPIs •  Improve efficiency •  Improve Return On Spend •  Suspect Quality / Fraud •  Reliance on Retargeting •  Lack of transparency •  Perverse incentives •  Strengths propel you forward •  Weaknesses inhibit progress •  Opportunities create upward lift •  Threats inhibit lift Programmatic Efficiencies may be offset by Weaknesses and Threats
  9. 9. 9 Information is confidential and may not be shared. © Encore Media Metrics 2014 Solution: Algorithmic Insights Objective, expert analysis of digital media q  Cross-channel, full-funnel conversion path modeling q  Fractional (multi-touch) algorithmic attribution q  Clear recommendations for optimizing spend q  Delivered by an objective, independent partner Compelling benefits q  Mitigate risk via independent analysis q  Reduce waste q  Optimizing on the right KPIs q  Forecast performance with accuracy Display Imp: #1 Paid Visit
 #1 Display Imp: #4 Display Imp: #3 Display Imp: #2 Paid Visit 
 #2 Non- Paid Visit Display Imp: #5 Conversion The need for independent insights are Illustrated in the following SWOT Analysis
  10. 10. 10 Information is confidential and may not be shared. © Encore Media Metrics 2014 SWOT: Investing Confidently in Programmatic Strengths Weaknesses Opportunities Threats •  More efficient •  Lower cost •  Programmatic •  Scalable •  Redundant reach •  Insufficient frequency •  Optimize on the wrong metrics •  Decrease Return On Spend •  Improve efficiency •  Improve Return On Spend •  Validated Insights •  Suspect Quality / Fraud •  Reliance on Retargeting •  Perverse incentives •  Lack of transparency Mitigate threats and maximize opportunities via algorithmic analysis •  Strengths propel you forward •  Weaknesses inhibit progress •  Opportunities create upward lift •  Threats inhibit lift
  11. 11. 11 Information is confidential and may not be shared. © Encore Media Metrics 2014 How To Fill the Gaps in Programmatic Buying Standard Approach The Gap Recommended Solution Optimize based on: 1.  Last touch or static attribution model 2.  Black-box model 1.  Rewards the wrong ads 2.  Susceptible to fraud 3.  Lack of validation 4.  Relying on bad KPIs may do more harm than good 1.  Algorithmic attribution (better signals for optimizing) 2.  Greater transparency 3.  Enables better optimization Measure average frequency 1.  Average frequency is a bad KPI (masks waste) 2.  Redundant reach and excess frequency are common 1.  Analyze distribution of impressions served 2.  Identify wasted spend from over- serving or under-serving Measures Programmatic buying in a silo 1.  Doesn’t incorporate direct and network buys 2.  Silo-based approach over-allocates to Programmatic while under- allocating other buys 1.  Integrated reporting 2.  Comprehensive (unified) view of each converter 3.  More accurate reports and recommendations for optimizing
  12. 12. 12 Information is confidential and may not be shared. © Encore Media Metrics 2014 The Case for Trusted Validation There is a growing need for independent, data-driven analysis: q  Objective auditing and validation of media (no conflicts of interest) q  Alternative models for measuring performance (one-size doesn’t fit all) §  Determining the right KPIs for optimizing performance §  Fractional algorithmic attribution (vs. static models, clicks or view-thrus) §  Cross-channel analysis that incorporates paid, owned and earned media q  Expert analysis and interpretation of strategies, reach and frequency As brands increase reliance on programmatic media, the need for advanced, independent insights is becoming even more critical
  13. 13. 13 Information is confidential and may not be shared. © Encore Media Metrics 2014 Contact Info encoremetrics.com 888.848.4571 @EncoreMetrics attribution101.com Encore Media Metrics 401 Park Ave. South, 10th floor New York, NY 10016
  14. 14. 14 Information is confidential and may not be shared. © Encore Media Metrics 2014 Contact Info Encore Media Metrics 401 Park Ave. South, 10th floor New York, NY 10016 (888) 848-4571 http://EncoreMetrics.com Info@EncoreMetrics.com @EncoreMetrics http://Attribution101.com

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