Programmatic Buying and the Evolution of Ad Tech
It was 20 years ago when a now-defunct Silicon Valley law firm placed the first clickable banner ad on Global Network Navigator (an early publisher sold to AOL in 1995). In these last 20 years, we’ve seen big changes in ad technology, fueled by a combination of visionary marketers and advancing technical capabilities. Some of these advances are shown on the accompanying timeline.
These various innovations are driven by the desire to make digital advertising more effective, more efficient, or both. Consider a semi-fictional example of a media planner, Roger, from as little as five years ago.
Roger has spent the last few weeks reviewing his clients marketing goals. The client targets young, affluent couples with discretionary income for a non-essential technology purchase. Roger uses tools like Nielsen and comScore to find major sites his target consumers frequent. Armed with this data, Roger sends out RFP’s to the top 20 publishers, as well as a few ad networks that he’s used many times in the past and that have good reputations. Then Roger works with the search team, where half of the client’s budget is spent because they feel like the need both search and display but aren’t sure which is more valuable. The search team says they need to buy the brand terms and some industry terms based on the click-through rate of previous campaigns. Roger chooses publisher inventory based on the lowest RFP CPMs, sends out creatives and tags, and the campaign is under way. Afterwards, every week or two Roger checks his display clicks and search clicks to measure campaign effectiveness and builds a spreadsheet to provide his client complete explanations for why the display campaign click rates are so low.
Fast forward five years. A new media planner, Sarah, is kicking off a fresh campaign. Sarah still uses a few direct publishers, but is increasingly buying inventory through a demand side platform (DSP). She configured the DSP with initial target, but has also integrated that DSP with a centralized platform that measures performance across channels to automatically optimize inventory purchases. Sarah also uses a search bid management tool, integrated with the same centralized platform, to automatically generate bid prices for the highest-performing search terms. Whenever she needs it, Sarah can generate a report for her client showing the real performance of the media as well as an increasing return on ad spend.
If only Roger had the benefit of the tools Sarah has at her disposal today.
Looking at current trends and enabling technologies, the one the gets people excited is “Big Data.” This isn’t just about collecting billions of data points, we’ve been doing that all along. Big Data is about the computing power to efficiently process those large amounts of data and make decisions based on them. In practical terms, that ability is still relatively new. Five years ago, computing power was too expensive to do the required number crunching, but with recent advances in hardware, cloud computing, and data processing frameworks there are new opportunities to refine and drive advertising efficiencies. The most interesting of these are programmatic buying and multi-touch attribution. Both are particularly exciting because they leverage recent advances in technology and represent a tangible opportunity to reimagine a segment of ad campaign management, throwing out prior practices in favor of modern and more efficient techniques.
As you know, “programmatic buying” encapsulates a number of growing platforms, including DSPs, performance ad networks, and search bid management. These platforms allow marketers to make quick decisions about media buying, leveraging behavioral targeting, context, multiple inventory sources, multiple creatives or keywords, and automating that buying process to generate the best results. While programmatic buying may never completely replace direct buys, brand association, sponsorships and the like, it does provide a very effective way to improve performance across a sizable portion of specific inventory. Combining the ability to process large data sets in near real time and access to multiple sources of inventory with detailed targeting data, these platforms can be instrumental in getting the right message to the right consumer at the right time.
Combining these programmatic buying platforms with modern, multi-touch attribution systems offers even more opportunity to marketers. Good attribution platforms access data across multiple channels for the advertiser and model interaction behavior that drives a consumer to make a decision at multiple points in a sales funnel – showing how search interacts with display for example, or how different sites interact with each other for a given audience. Again, this is enabled both by the availability of large data processing systems as well as by looking at multiple dimensions of advertising delivery.
Individually, programmatic buying platforms and multi-touch attribution systems will improve marketing results, but combined these advancements set a new standard for performance in advertising technology.
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Thanks John for writing this thoughtful piece on a complex topic. I thought the timeline was great. It is true though that the technology behind programmatic buying and audience targeting has a long way to go. While I was reading this article, I was shown ads about my arrest record, and when I refreshed the page, I got shown ads to “meet pretty thai girls”. This ad network must be confusing me for someone else, I hope! Real life example here!….I just love this space because of the gnarly problems we are challenged to solve.
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