Programmatic buying is the latest media buying strategy to set the online marketing world buzzing. In 2013, revenues derived directly from real-time bidding (an integral part of programmatic buying) hit $1.6 billion and it is estimated that by 2017 34% of display advertising revenue will come from RTB. Programmatic buying is set to become an essential mainstay of all media buyers’ online strategy.
What is Programmatic Buying?
Essentially, programmatic buying automates much of the traditional advertising process. With real time bidding, the media buyer can set parameters as he wishes; bid price and network reach for example. Programmatic buying then layers these parameters with other relevant audience targeting data across the same platform adjusting dozens of variables in real time in order to determine the correct campaign settings to achieve the desired result.
The time-gained advantage of algorithms that filter impressions based on behavioural data cannot be overstressed. Advertisers will be able to spend less time crunching numbers and poring over spreadsheets and more time doing what they do best; being creative.
The Value of Programmatic Buying
The gains to be made through utilising automated media planning are enormous. The pricing model is totally transparent. Buyers are able to use third party data to choose the impressions for optimizing at impression level. The placement process is in effect automated with the target audience being selected based on data considered to be applicable to a particular campaign.
There have been concerns expressed that programmatic buying will merely provide low quality or ‘remnant’ inventory, although this has been disproved. Many premium websites which are accessed through ad exchanges do not classify any of their inventory as ‘remnant’. This is because all the space they have is high quality.
Buying media works best if an integrated approach is adopted and programmatic buying is a vital element of that strategy.
Excessive Programmatic Buying Can Reduce Viewability
In the ever-evolving world of technology, plenty of companies are looking to take advantage of the latest advancements in order to get ahead of their competition. Programmatic buying is a common technique employed online, allowing the increasingly complex process of digital marketing to become completely automated and making things much simpler for all parties concerned in the advertising process. However, using programmatic buying in excess can actually reduce the viewability of individual advertisements. This is according to results obtained from three different European countries.
The three countries involved in the discovery of this phenomenon were France, Germany and the United Kingdom. In the UK, a higher percentage of ads are purchased via programmatic methods than in Germany or France. In fact, 45% of ads were bought this way in 2014 in the UK, but only 49% of all ads were actually viewable in the second quarter of 2015, according to technical solutions company Meetrics. Meanwhile, over in Germany and France, 64% and 62% of ads were viewable. Companies throughout the latter two countries do not use programmatic buying as commonly as in the UK, and so the obvious conclusion to draw is that increased levels of programmatic buying can lead to reduced viewability rates.
It’s worth noting that an ad qualifies as viewable if 50% or more of its pixels are visible on a user’s screen for one second or longer. Therefore, with 51% of ads in the UK not qualifying as viewable, these findings represent a big issue for marketers and programmatic media providers. These techniques were created in order to improve the efficiency levels of marketing, but it seems as though the algorithms and systems in place are flawed, leading to huge wastes of time and money. In fact, over $750 million was wasted in 2014 on ads that were not viewable in the UK alone, at least according to Anant Joshi, Direct of International Business at Meetrics.
Joshi questioned the viability of systems that are compromising viewability in such a serious way. He claims that programmatic media is designed to offer a better value alternative to traditional methods of advertising, hence the rapid growth of this relatively new industry. Indeed, these figures are apparently not a major concern for companies in the UK as experts at the Interactive Advertising Bureau estimates that over 70% of UK ads will be purchased via programmatic means in the year 2018.
Evidently, improvements are needed in programmatic media systems. Google research has even managed to identify the top culprits of ads that regularly do not qualify as viewable, with large “leaderboard” images covering each end of a webpage being among the main offenders. More research obviously needs to be done in this field in order to provide accurate results for companies to analyze before investing in programmatic buying. This technology offers plenty of benefits and helps to streamline the marketing process, but just like with any other technology, optimization is needed.
The Future of Programmatic Advertising
With the continual advance of technology, programmatic buying can only become more sophisticated and it is pretty much a given that it will eventually have the lion’s share of online display buying. Specialised providers and some of the larger media buying agencies are building in-house platforms to meet the growing demand.
It’s interesting to note that RTB has also been added to social networking sites and new strategies will surely follow that were previously only imagined.
Programmatic buying is certainly the way forward; embrace the change, ignore the skeptics and catch the wave.