The Next Phase Of Programmatic Buying

  • by , Op-Ed Contributor, November 21, 2013
Remember last year how “big data” took over the digital scene as everyone’s favorite buzzword? This year we’re all adding “programmatic” to our mainstay vernacular. Like “big data,” programmatic is often times used as a catch-all. For starters, this term should not be used interchangeably with real-time buying (RTB). While it can encompass RTB, “programmatic” also refers to other automatic methodologies employed for buying media.

The IAB recently released a report defining ways to buy and sell programmatically: automated guaranteed, unreserved fix-rate, invite-only auction and open auction. There is no doubt that the next phase is upon us. There has been a clear transformation in the industry, which is evident in the shift from buying content as a proxy for audiences to using programmatic channels to buy audiences directly.



The ability to make media transactions in real time has been our growth story over the past five years. According to eMarketer, advertisers will spend more than $3.36 billion for display ads through RTB (73% growth for 2013). By  2017, RTB is expected to account for nearly a third of all digital display spending, while programmatic buying globally is expected to triple to $33 billion. A large driver of that growth is site retargeting, or clients buying media aimed at customers who have already bought their product or at least visited their website. From this emerges the mantra: “Cookie is the new email.” As we get spammed more and more in our email and via direct mail, media increasingly becomes the most cost-effective way to remind people of your brand and persuade them to purchase again.

The ability to retarget your audience has always been there. DoubleClick released its "boomerang" product in the last century, but it was too complicated to close enough deals and to cover enough of the Internet to reach your intended audience. For example, if one million people visit your site and there are 300 million people in the U.S., then you should expect about a 0.33% overlap with any individual publisher. With access to the entire market via a RTB exchange, you can now reach almost all of your one million visitors.

Today, marketers are mastering the state of the art retargeting by using auctioned-based media to remind people to repurchase if it's been a while since they shopped, offer upsells, or deploy the classic "abandoned shopping cart" strategy.

But what happens after everyone has mastered this type of strategic technology? Site retargeting is only good for existing customers or people who have expressed enough interest to visit a website. This is great for squeezing every dollar out of your existing customer base, but most companies want to grow their reach, especially with access to so many consumers via the web, and with multiple ways to buy audiences programmatically.

The next big growth phase will be in mid- and upper-funnel targeting strategies (search retargeting is one of them). Not only will marketers look to ways to expand reach, but also I suspect more of them will begin to tap into the multiple ways to buy programmatically, whether that is on an open auction, private marketplace or a programmatic direct channel. Search retargeting offers marketers the ability to reach customers who are searching for a product, but who may have not been aware of your brand or offering. A lot of companies offer similar alternatives for reach extension. For example, MasterCard sells data based on people who have purchased other products. Other companies offer "look-alike-modeling" where you describe your intended audience and they use mathematical models to extend your reach.

This year, more data will enable you to reach different kinds of people at different points in the purchasing and consideration phases – many more possibilities than just those offered by your own customer database. And, on the media side, programmatic buying will emerge as a highly popular mechanism for buyers and sellers when it comes to making transactions to buy audiences directly. In this next phase, marketers have clear choices about data and the ways in which they choose to buy programmatically.

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