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CRACKING THE PROGRAMMATIC CODE

March 31, 2015

 
 

2014 is widely regarded as the year that programmatic became one of the most widely referenced terms in the Irish media industry. Largely fuelled by its phenomenal growth in other markets, 2014 saw the Irish industry as a whole conclusively decide that programmatic wasn’t going to go away.

The reality is, programmatic isn’t just a buzzword or short-term digital trend….. but arguably the most fundamental shift in media trading since the advent of the internet.

However, despite the general acknowledgement that programmatic is here to stay- there is still a significant lack of knowledge about this space among many brands, publishers and (dare I say) agencies.

So what is Programmatic Media?

The first thing to remember is programmatic is not a new channel- but a ‘new’ way to trade media. I say ‘new’ but in reality programmatic trading has been around for several years. The term programmatic encompasses any use of technology which automates processes, generally through the utilisation of data and code-written algorithms. When defining this specifically for media buying- programmatic becomes a data-driven approach which utilises demand-side interfaces and software systems to automate the aggregation, booking, flighting, analysing and real-time optimisation of media.

Essentially, programmatic trading is a smarter way to buy media and whether you are a brand, publisher or agency- programmatic will not be an option for your business…… but an evolution.

Ok, what’s so great about it?

In short, programmatic is a more efficient and effective way of trading media. While the use of auto-mated systems naturally cuts down on the ‘man-hours’ required for campaign implementation and optimisation, the real gem in the programmatic crown is… data. Data and the correct use of data is really what sets programmatic trading apart. Essentially, programmatic enables artificial intelligence to store, analyse and deduce data to make informed real-time buying decisions.  It allows for a more efficient, structured and accurate approach to managing media campaigns and ultimately uses data science to ensure brands are reaching the right user, with the right message, at the right time.

Programmatic doesn’t just replace media people with machines, it removes the ‘manual’ element of planning and buying- allowing these people to spend more time implementing better informed strategies.

But isn’t this just DR and Real-Time Bidding?

This question is generally where the majority of confusion around programmatic media lies. The reality is real-time bidding is a method of programmatic media, not its definition. However RTB display is currently the most advanced strand of programmatic and has largely been the reason for its recent dramatic growth, leading to a parallel correlation. As programmatic media allows for more efficient and stringent targeting, and RTB enables advertisers to adjust their bid based on the perceived importance of each auction- DR advertisers are able to implement more targeted strategies at a lower cost. This ultimately achieves significant drops in campaign CPA’s and increases in conversion volumes and ROI ratios- which has led to mass investment in RTB across all industries and a considerable rise in the word on everyone’s lips…. programmatic.

However the utilisation of RTB Display is just one success story of the wider programmatic sphere. In fact programmatic doesn’t always mean cheaper media. The majority of programmatic display in the UK is bought on fixed price CPM’s as opposed to real-time bidding via ad exchanges. More and more premium inventory is becoming available and the largest growth in programmatic across the US and UK markets lies in ‘brand media’.

It’s just digital though, yeah?

Again this misconception is largely fuelled by the connexion of programmatic with RTB Display. Programmatic isn’t just display banners. Video, social, mobile and even non-standard formats such as page skins and ‘native’ placements are all being traded programmatically. Again this dispels the myth of programmatic just being about DR or remnant inventory.

Taking a step out of the online bubble- programmatic isn’t just about digital. TV in particular seems to be the next conquering ground for programmatic. This has already started with numerous providers testing the waters. In fact two of the richest TV advertising spots in the world were traded programmatically this year, with the Super Bowl and the Oscars getting on board. The TV industry as a whole is going through significant evolution and as the usage of Smart TV’s and introduction of more sophisticated targeting techniques (e.g. Sky AdSmart) become the norm, the measurement of TV will also change- emphasising the importance of programmatic trading.

However programmatic is also rapidly moving in to other areas of traditional media. Radio, Outdoor, Print and Cinema have all started to trade programmatically. The rise of digital screens has mainly fuelled programmatic’s out-of-home growth, with digital screens in Times Square increasingly trading media through this method. For all of these mediums, technology fuels evolution and programmatic means using this technology more effectively.

The reality is, whether its’ 5, 10 or 15 years’ time- the vast majority of all media will be traded programmatically.

Ok, so what do I do?

As an industry- it is important for brands, media suppliers and agencies to fully understand programmatic trading and what this means for their business. Programmatic is not just the future…. it’s the now! The more advanced and upskilled we can get in programmatic, the better positioned we will be versus other markets. From an advertiser and media supplier perspective- there is already pressure being placed on local offices from multi-nationals to start incorporating programmatic trading on plans in line with US, UK and other EU markets. While these MNC’s are leading the way, it is important that indigenous Irish brands and suppliers don’t get left behind.

We at Starcom and Core Media are always happy to help, so if you would like to discuss the above or request more information- please do get in touch.

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