Time To Shift Programmatic Into High Gear

Programmatic methods have already had a major influence on advertising, and it’s still the early days.

Marketers and media executives love to talk “programmatic.” But it’s one of the most misused words in the field. People might mean anything from automatically purchased display advertising (the correct definition) to dynamic insertion of ads on TV (not quite right).

There’s no question that programmatic methods have dramatically changed both digital and traditional advertising. The cost benefits of less waste and a higher ROI come first: By more carefully targeting the viewers or readers you want to reach, in real time, you can spend marketing dollars on an audience that is more likely to convert to buyers. To be sure, efficiency doesn’t necessarily mean programmatic advertising will come cheap in the form of lower cost per impression. If you target a highly coveted group, you and everyone else may need to pay more for that access.

Beyond the cost benefits, programmatic advertising can become a powerful strategic tool as well. Yet it’s easy to stumble along for a while before you start to realize big benefits from programmatic advertising. Take a shortcut by heeding the following lessons from the experiences of leading marketers.

Tuning The Programmatic Engine

• Choose platform partners carefully: If you’ve seen the LUMA sector landscape depictions, you know that the number of potential programmatic platforms has grown exponentially over the past few years. Many marketers are using a dozen or more platforms to place their ads. That makes no sense. You should be selective in platform partners and choose just a few. Better to build depth of insight and repeated success with one trusted platform than spread resources thinly across many partners that happen to be en vogue.
• Shore up a leaky funnel: Marketing has many objectives, from awareness at the top of the funnel through conversion at the bottom. As you build programmatic prowess, start at the bottom. If your search and retargeting ads (to reach consumers based on their previous Internet actions) do not work well, then awareness efforts will lead to fewer sales. So fix the leaks. Once your conversion rate ratchets up, take a hard look at the audience that is responding; they could be the perfect basis for campaigns to generate awareness with “lookalikes”—prospects similar to your current customers.
• Treasure your own proprietary data and insights: Only you know what you possess. Treat that data like gold, using it heavily (even if augmented with third-party data) to improve your bid parameters.
• Fuel online programmatic buying with offline data: Using enterprise sales data to calculate true advertising ROI may not be a new idea, but it remains a powerful one. Other novel ways to use your own enterprise data to improve online targeting and ring the cash register include call center logs to generate retargeting ads, real-time retail inventory data to raise sales of slow-moving products (improving inventory turns and capital efficiency), and automotive data to transform, say, the customer’s “oil change” dashboard light into a perfectly timed ad from the local dealership. Great things can happen when offline and online collide**.**

Mastering The Open Road

• Keep your hands on the wheel because there’s no automatic pilot: As with all advertising, what works with a customer today may not work tomorrow. Invest in the team and tools that allow you to design and implement tests on all the variables in your programmatic advertising—copy, visuals, design, frequency, bids, target audience, and so on. Not all tests will be successful; if they are, you’re not being aggressive enough.
• You have a right to know how your money is being spent: With all programmatic partners, insist on accounting for how they spend every cent so that you can eliminate duplicative steps or mark-ups. Programmatic partners need to be true partners, and transparency engenders trust.
• No amount of marketing science can replace good art: Even the most precisely targeted ad will miss the mark if it lacks compelling, creative, and relevant content. In a recent study of marketing leaders, Bain & Company found that marketers who were growing sales and market share were three times more likely to perform in-house the creative activities that kept the magic in their marketing than those marketers with declining performance. Use testing to find the images and messages that strike sparks with customers and build from there.

Programmatic methods have already had a major influence on advertising, and it’s still the early days. For example, IDC forecasts that programmatic TV spending, which includes digital display and video ad spending, will total $988 million in 2016 and increase to $11.5 billion in 2019, which will account for 13% of the total U.S. TV ad market. Over the next few years, keep your foot on the gas and hand on the wheel, and enjoy the ride.