Programmatic has a personal side

incite“It’s not a technology revolution, it’s a mind-set revolution,” said Jeremy Hlavacek, VP for Programmatic at the Weather Channel. It’s about building data around customers to target relevant ads: the right message in the right place at the right time. It’s called programmatic, and there’s more to it than you might think.

What is it?

It was one of the key buzzwords of 2014, and everyone involved in selling and buying ad inventory seems set to be talking about “programmatic”–and figuring out what it really means–for years to come. Still young, and increasingly disruptive, it’s both a set of technologies and a mind-set, and it could change marketing and advertising in ways hardly yet foreseen.

Perhaps the simplest way to think of it is by analogy with the modern stock market. Where traders once walked the floor (yes, some still do), shaking hands on deals, most stock transactions these days take placeat lightning speed on automated markets. The programmatic market for digital ad inventory is similar, leveraging software to purchase inventory in a way which also automates pricing–and it’s extending its reach to traditional (TV and billboard) ads too. Essentially, it’s about machines buying ads, thus setting the market price, with humans removed from the process as much as possible.

But is that all it is? Just a way of doing what ad tech already does, but ever faster, and on an ever larger scale? From what I heard at the Incite Programmatic Summit in New York this week, it has the potential to be much more than that.

Putting it Together

The Incite Summit audience might not have been huge, but the concentration of major brands, as speakers or audience members, was impressive: Jaguar, Stolichnaya, ESPN, Sega, Fox News, Wells Fargo. Speaking with attendees between sessions or over lunch, I was surprised to hear no skepticism about programmatic at all. People I met were either completely new to programmatic, or had been using it in some form or other for no more than a couple of years–but everyone thought the potential for business transformation was huge.

Fertile ground for disruption.

Early days, then. As Chris O’Hara of Krux said, the programmatic market is so crowded–there are so many possible choices of vendor or approach–that it’s “fertile ground for disruption; for someone to just come in and change the model.” In other words, we may not even be looking at the true shape of programmatic yet.

Krux is one of the major players in the data management platform segment, sitting between publishers, agencies and brands to optimize the value of inventories and marketing budgets. O’Hara’s breakdown of the data universe helps show both the potential of programmatic, and the challenges facing it, when it comes to delivering personalized messages at blinding speed. There are three kinds of data:

  • First party data: a brand’s own data about their customers based on purchase behavior and other touch-points. Easy to access, in some cases (financial services, for example), very rich indeed, but not usually very extensive.
  • Second party data: the data readers choose to give to publishers and social media platforms. Also very rich, and large in scale, but–like Facebook data–generally in walled gardens, and can be expensive.
  • Third party data: available from data vendors in huge quantities, but the third party providers have incentives to sell as much of it as they can. and it’s regarded as highly unreliable.

If collecting good data is the first challenge, the second lies in identifying customers, especially across multiple channels and devices. As Hlavacek pointed out, with imperfect data sets one can’t expect perfect customer identification. But probabilistic identification can be enough. Even bad data is better than no data, and results which are only ten percent accurate can be very valuable.

If that’s what you want to do, you don’t need all of this.

Programmatic can be used, of course, just to firehose customers with content, but Hlavacek would say, “If that’s what you want to do, you don’t need all of this.” For those customers accurately identified, algorithms can be leveraged to dynamically model the messages they should be receiving. Isn’t that what marketers have always done, with or without the algorithms?  Yes, but programmatic means automating the process on a large scale, at very high speed, and integrating it directly with the purchase of ad inventory, and across multiple channels.

Speakers admitted there’s a still a big gap between the concept of personalized programmatic, and what the creative side–accustomed to developing one compelling message for a large market–is geared up to provide.

Even relevant messaging can be intrusive, of course. Jim Caruso, VP of product strategy at Varick Media Management, a programmatic vendor, had it about right: “Customers are everywhere, but don’t want to be reached everywhere.” But if customer identities can be established and centralized, automated frequency management should be able to cap repeat messaging just at the sweet-spot of providing enough reinforcement without becoming an annoyance.

A Programmatic Future

If you want to take a deeper dive into programmatic, you could do much worse than check outProgrammaticAdvertising.Org. It’s sponsored by the B2B digital marketing company Multiview, but far from being a market-place for the sponsor, it carries wide-ranging and clear-eyed commentary on all things programmatic, from analytics to standards. I spoke with publisher Nicholas Henderson about where programmatic is now–and where it’s going.

“Right now it’s all very high-level and jargony,” he said. “For stakeholders that’s fine, but it can tend towards increasing confusion for marketers.” Henderson emphasizes the human size of programmatic. That’s almost counter-intuitive, given its proffer of large scale automation, but Henderson insists that people aren’t buying mechanication and algorithms, but human creative thinking.

Imagine how it would revolutionize a consumer’s experience.

“There’s a lot of buzz around dynamic creative,” he told me. “Imagine how it would revolutionize a consumer’s experience.” Mobile has all but made the website cookie extinct, but collecting contextual and behavioral data via logins or unique device IDs should make it even more possible to tailor unique and relevant experiences. “Done properly it can be very subtle.” Right now, the real-time analytics involved probably need to be outsourced to something like a data management platform vendor, but there are so many in the space that the skill-sets seem ripe for purchase and integration by brands or large agencies.

The bottom line? Caruso summed it up: “Programmatic is not about pricing and buying ads. It’s about building data around customers to target relevant ads.” We may not be seeing quite the right business model yet, or clean enough data–and creative may not yet realize what’s possible–but once those pieces fall into place, hold tight for a programmatic future.

DMP 4-5-6

NEXTLEVELAs I’ve previously discussed, there are several basic use cases of the modern data management platform (DMP) for marketers. They include getting “people data” from addressable devices into a single system, controlling how it’s matched with different execution platforms and managing the frequency of messaging across devices.

In a world of ultra-fragmented device identity and multiple addressable media channels, you should be able to tie them together and make sure consumers get the optimal amount of messages. Big marketers use these tactics to save tons of money by chopping off the “long tail” of impressions, such when marketers deliver more than 30 impressions per user each month, and reinvesting to find more deduplicated reach.

There is so much more to the successful application of a DMP, though. The most cutting-edge marketers are taking DMPs to the next level, after investing the time in building consumer identity graphs and getting their match rates with execution platforms as high as possible.

There are several plays you can run when you start to dig in and put the data to work. 

Supercharge The Bidding Strategy

After identifying the long tail of impression frequency and diverting that investment into reach, where users are served up to three impressions per month, the key is driving users down into the sweet spot of frequency. This is where users are more likely to download more coupons, for example, or complete more video views.

If that sweet spot is between four and 20 impressions, marketers can adjust their strategy in biddable environments to ensure they are willing to pay more to “win” users who have only been exposed to three impressions so far. DMPs can match users with fidelity and deliver in near real time these types of targeting sets to multiple execution platforms, including those for display, video and search.

Optimize Partner Investment Through Reach Analysis  

It’s a great start to manage addressable media delivery on a global basis, but what happens after you have identified all of those wasted impressions?

Naturally, the money marketers are spending reaching consumers for the 100th time can be better spent looking for net new consumers. But how do you get them?

For a diaper manufacturer that wants to reach the estimated 6 million new mothers in market every year, it’s critically important to get to 100% reach against that audience. Many marketers start with a single, broad reach partner, such as Yahoo, and see how close they can get to total reach.

It’s fantastic to leverage big spending power to drive down prices and get massive customer service attention to spread a message to as many unique users as possible. But no single partner can get a marketer to 100%. That’s where the DMP comes in.

It’s not just about filling in the missing 25% of an audience that matters; the diaper manufacturer wants to hit those incremental moms across quality, well-lit sites. Determining where you can get a few more million deduplicated moms is the first step. The key is to then decide where to find them more effectively from an investment standpoint, which requires an overlap analysis.

Enhance Partner Selection Through Overlap Analysis 

Say our diapers manufacturer found 4 million new moms on Yahoo at a reasonable CPM. The DMP can then look across all addressable media investments and run a “Where are my people?” type of analysis.

Maybe this advertiser has another 20 partners on the plan after getting the bulk of unique reach from a single partner. How many more unique moms were found on Meredith? Moreover, how about finding moms on classic news and entertainment sites, such as NBC or Turner properties, or even non-endemic sites? Maybe there is an incremental 500,000 first-party “diaper moms” on a particular site, but now the advertiser can decide, based on performance KPIs and price, how valuable those particular moms are.

If those moms on a popular news site can be had for $5 CPM, maybe they are a more valuable reach vehicle than those found on the obvious “Moms.com” site. Without the DMP, they’ll never know.

Plus, marketers are also starting to optimize the way they procure such audiences, by leapfrogging over the existing ad tech ecosystem and doing audience-based programmatic direct buying using their new DMP pipes.

Understand KPIs Drivers Through Journey Building

Marketers that have deduplicated their audience and built an effective reach strategy can now go to the next level and start finding how those diaper moms moved from their first touch point in the customer journey to an actual action, such as downloading a retail coupon or requesting a sample package. When an audience is unified through a DMP, it’s possible to see the channels through which people move across their “customer journey” from awareness to action.

As an example, more large CPG companies are putting more investment into online video and, in fact, one of the world’s largest marketers has embraced a “ban the banner” approach and values engagement more than any other KPI – a metric more easily understood with video. With that in mind, a journey analysis can show marketers if seeing a few search impressions helped drive more completed views on (expensive) video and drive more brand engagement.

Did consumers download more coupons after viewing two equity (branding) impressions or before seeing the “buy now” (direct-response) message? The ability to understand how messages work together sequentially is the ultimate guide to being able to inform media investment strategy.

These are just a few of the next-level media use cases that can be accomplished once DMP fundamentals are put in place. DMPs are starting to shine a light on the “people data” that will drive the next decade of smart media investment. I think we will look back on the last 15 years of addressable marketing and wonder how we ever made such decisions without a clear view of audience first.

DMPs are starting to shine a light on the effectiveness of marketing, and giving marketers lots of new knobs and levers to pull.

It’s a great time to be a data-driven marketer.

Follow Chris O’Hara (@chrisohara) and AdExchanger (@adexchanger) on Twitter