All of the above is probably partly true. What is definitely true is that even though 2014 is not over yet, for me “programmatic” is the marketing word of the year.
This also seems to be true for marketers, who commissioned several studies and work groups this year to examine the programmatic space. And given that they are the ones who ultimately hold the purse strings, we’d better pay attention to what they are saying.
The World Federation of Advertisers published a document last week called “The WFA guide to Programmatic Media: What Every Advertiser Should Know about Media Markets.” The WFA pulled together feedback from 43 members, representing $35 billion of global ad spend. The WFA programmatic taskforce included representatives from Coca-Cola, MasterCard, Deutsche Telekom, Johnson & Johnson, GlaxoSmithKline, Philips Electronics and Boehringer Ingelheim.
The document is, actually, quite positive about the concept of programmatic, which is hardly surprising. Advertisers are always interested in new ways to increase the efficiency of their marketing dollars. In fact, the WFA reports that its members doubled their programmatic investment share within total digital dollars, and that growth is expected to continue.
With the WFA’s permission, I am sharing a few of its key recommendations, to some of which I have added a personal comment:
1. Gaining ownership of media investment data and its byproducts -- such as audience data and key insights about ROI -- is critical.
Data (and its management) is the lifeblood of programmatic trading. Insights from investment and audience data lead to better marketing outcomes. The ownership of data is critical to improve performance and protect competitive advantage.
2. Asking the right questions of your Agency Trading Desk can help clarify your position in the market, and establish direction for next steps.
For example, “Are any arbitrage activities engaged with?” “Is data from my media investment used to benefit other advertisers?” “Outside of the Agency trading Desk commission, what other parties charge commissions, and what benefit do they deliver against that?”
(COMMENT: half of the WFA members reported they were unhappy with how data from their programmatic campaigns was captured, stored and utilized).
3. Obtaining visibility of all the suppliers in the programmatic “stack” through individual contractual terms is the most effective way to limit “arbitrage” and wasted commissions.
Although requiring thought leadership, resource and reorganization, the “Brand Trading Desk” model promises much in terms of visibility, control and ease of switching, while maximizing “working media” budgets and limiting exposure to “arbitrage.”
(COMMENT: the document includes a handy graphic that is actually quite shocking because it shows how much of a marketer’s programmatic budget reaches actual consumers. Worst-case scenario, it is only 40%. And that’s before deducting bot traffic and ad fraud).
4. Marketers need to approach programmatic media with a financial investor philosophy, creating a media investment strategy based on understanding of the media asset and the psychology of the other investors.
(COMMENT: as opposed to treating programmatic inventory as a utility purchase).
Your move, programmatic industry!