Top 10 Things You Need to Know about Programmatic but Were too Afraid to Ask

On October 23rd, thinkLA and IAB were thrilled to host a Programmatic Summit in Los Angeles, in association with eMarketer. Our first ever collaboration focused on the rising tide of programmatic within digital media. Over 500 brand marketers, media buyers, online publishers, ad networks, ad exchanges, and other solution providers came together to discuss and debate the next evolution of programmatic.    Here are the top 10 takeaways from the event about programmatic:

1. Programmatic is more than RTB. There is a lot of confusion over the term programmatic, which many people mistakenly believe is only real-time bidding (RTB) or used only for remnant inventory. Ultimately programmatic is the process of buying and selling media in an automated fashion. This includes four main types of transactions – open auctions, invitation-only/private auctions, unreserved fixed rate/preferred deals, and automated guaranteed/programmatic guaranteed deals. Every time someone says the word “programmatic” make sure you ask what exactly they mean. Watch this Digital Simplified video that explains how one part of programmatic, RTB, works step by step.
2. Lots of challenges still exist to enable programmatic to work. Concerns that were addressed throughout the event included transparency, fraud, and trust; limited understanding and knowledge; confusion over terminology; moving from direct response to branding dollars, moving from mostly standard banners to native, video, rising stars, and audio ad formats; internal organizational challenges for brands and publishers; and delivering different creative through programmatic.
3. Programmatic is big and getting bigger. The programmatic market (including auction, and direct deals) is expected to top $10B in 2014 and grow to $20B by 2016. For now, RTB remains the dominant part of programmatic spending (92% in 2014), but is expected to fall to under 60% of total programmatic spend by 2016 as programmatic direct increases. Within RTB, open auctions account for 88% of total RTB spend, though this is changing with private marketplaces growing significantly faster. While display is still dominant for now, mobile and video programmatic are growing fast.
4. Fraud and trust are big issues, but are being tackled by the industry. Bots and fraud have become a big issue mainly due to the large sums of money involved. The IAB and the industry are building a trust stack to tackle fraud, malware, piracy, and transparency and include these in a joint cross-industry accountability program) building on the existing Quality Assurance Guidelines. Advertisers and buyers should make sure they know their supply sources, choose their vendors carefully, and always remember “If it’s too good to be true, it probably is!” Publishers need to ensure they are coordinating between sales, marketing, operations, and analytics to identify any strange traffic patterns and remember if they are doing audience extension they need to apply the same controls as buyers should.
5. Publishers can hit a home run with programmatic video. The concern that programmatic has been perceived as a “race to the bottom” for rates and yield has not been the case in video due to restricted supply. Publishers can use programmatic to fund the creation of quality video content particularly by helping to monetize traffic spikes. Ultimately efficiency doesn’t have to mean lower CPMs; it can also mean more effective engagement.
6. Measurement matters even more in a programmatic world. Brand marketers are looking for transparency, inventory quality, and technology simplicity. Buyers should ensure they are reaching the right audience, use a consistent, comparable metric to plan, buy, and sell audiences, use brand data to ensure advertising resonates, and ultimately ensure that the campaign drives the desired action.
7. Attribution is essential to effective programmatic spend. Last touch attribution is outdated and is like giving all the credit in a relay race to the last runner. Attribution models should incorporate the “first site visit” separating the funnel into prospecting and retargeting, and set the right incentives to each part.
8. Brands in automotive are leveraging programmatic. Leading brands are looking beyond the simple retargeting of ads and embracing programmatic across the consumer path to purchase from unaware to loyal purchasers. The agency automation “stack” includes four layers – unified data platform, open access to media inventory, single metrics regime, and dynamic ad creation/production/serving platform. Brands are finally learning from programmatic media to employ new tactics in automated creative—not creating by machines, but optimizing ad variables based on real-time, impression level data.
9. Publishers need to re-org to capture the value of programmatic. Publishers are adopting programmatic as a core part of their monetization strategy. However, this can pose internal challenges. The top five ways to build a successful programmatic publisher organization were the following: align incentives and compensation; educate direct sellers and have them attend Programmatic 101 training; programmatic team to focus on supporting direct sales (agencies) and covering programmatic buying entities (DSPs, trading desks, retargeters); establish a programmatic rate card; and have internal and external quarterly budget reviews.
10. Creativity and programmatic are not enemies. Every ad should be dynamic and leverage the same audience signals used in programmatic media buying to make the creative relevant. This can be done by infusing first or third-party data on demographics, location, and previous website behavior to alter the headline call to action, image, or assets of the ad unit to ensure the message resonates with the user. Doing this can double yield on interaction rates and increase engagement by 50%.