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The 5 Myths of PMB, Dispelled

August 1, 2014

Still in the fog over programmatic media buying? Here’s the reality behind some common misconceptions

By David Ward

Buzz has been building around programmatic media buying (PMB) for several years now — and its advent has triggered almost as much confusion as it has hype. There’s even some debate over what actually constitutes PMB. For the most part, however, there’s general agreement that programmatic buying uses software layered over data to automate the ad buying process in order to ensure the right message is delivered to the right target consumer in the most cost effective way possible.

The one thing that has become clear over the past 12 to 18 months is that the use of programmatic software and algorithms to guide media buying decisions is gaining momentum in the advertising community. According to the ANA/Forrester Survey Report “Media Buying’s Evolution Challenges Marketers,” released earlier this year, 54 percent of the client-side marketers surveyed said they have used PMB, with an additional 18 percent planning to add programmatic buying in the next year. Perhaps just as important is that 25 percent of the marketers in the survey said they had expanded their in-house capabilities to manage and implement programmatic buying, with another 13 percent considering such a move.

Brands large and small have figured out that by embracing programmatic strategies and combining them with big data and big analytics, they have a potent combination that not only cuts costs and drives ROI but can provide better ways to deliver precise messaging at the perfect moment.

“Programmatic, for us, is about leveraging the tools that are available today and putting them together in interesting ways,” explains Thomas Hoehn, senior director of digital marketing and social media at Walmart. “The customer is at the center of everything that we do and their shopping choice is important to us. Our programmatic efforts help us provide relevant messaging to our customers at scale.”

While a few companies like Walmart appear to have PMB well figured out, many marketers and agency professionals are still on a learning curve to get a sophisticated understanding of what PMB is all about, and grasp how it can help their branding and messaging efforts.

Here, we dispel five common myths and misconceptions surrounding programmatic media buying.

1. Programmatic Doesn’t Work as a Brand Awareness Tool

While not every brand is using programmatic as part of their traditional brand enhancement/awareness efforts, an increasing number of marketers are discovering that PMB presents a valuable opportunity to do just that, especially as more premium content sites open their ad inventory for PMB.

Ron Amram, senior media director at Heineken USA, notes that, as an alcohol advertiser, he has to be very careful about where he advertises and who interacts with his brand. As a result, Heineken is almost exclusively focused on targeted messaging — but has found that PMB can play a positive role in its marketing.

“From a premium brand or upscale brand, programmatic was initially either not very effective or not an allowable way to spend your dollars,” Amram says. “But now that more inventory from premium content sites have become available on programmatic platforms and the exchanges, we’re now able to buy regular or even highly desired media space in the programmatic world.”

Amram adds the ability to integrate data analytics into these PMB strategies is giving brands more ways to gauge how they and their messages are being perceived by consumers. “When you layer in data stacks on top of [PMB] — everything from brand awareness to intent-to-purchase data, even sales data — you can now measure how media are being effective in very specific KPIs,” he says. “It’s not just clicks or likes anymore.”

The move toward using PMB for brand awareness is already being felt at the agency level, adds David Staas, president of San Francisco–based NinthDecimal, which provides audience-targeting tools for traditional mobile and mobile video advertising campaigns. “Until recently programmatic was definitely in the realm of direct response,” he says. “But we’re hearing there’s a lot of pent-up demand on the branding side, not only with the agency trading desks but with the brand teams we work with. Many agencies are beginning to have that programmatic expert embedded with their branding teams.”

2. Programmatic Is a Digital Display Phenomenon

This myth may have actually been true as recently as mid-2013. But since that time PMB has migrated quickly to other ad platforms, including mobile, social media, and more traditional ad venues.

Even traditional brands like Walmart are finding creative ways to leverage PMB to build a sophisticated presence on social media and search platforms.

“We use programmatic approaches to deliver messages beyond display,” says Walmart’s Hoehn. “We find that it is the most effective way to message at the scale we require. For example, we have more than 4,000 Facebook pages — one for each store — and we augment messaging that comes directly from the store itself with automation. These can drive locally relevant product messaging based on location, weather, inventory levels, and more. Search is another area where we have very sophisticated methods, developed by our Walmart Labs team, to optimize our spend in real time.”

To show just how creative companies can get with PMB, Hoehn adds that Walmart is doing some very interesting programmatic buying based on weather triggers. “This effort spans media channels that include display but also social, mobile, and cable TV,” he says. “We can be extremely precise in the delivery of messaging based on the analysis of weather patterns combined with our historical sales data.”

To their credit, many of the leading social media sites and search engines have welcomed programmatic, says Heineken’s Amram, citing heavyweights such as Facebook, Google, and Twitter, which are now using PMB as a way to prove their worth as advertising platforms.

“Though they try to control it, they have completely embraced programmatic — and the data stack,” Amram explains. “They’re almost fearless in how they allow advertisers to measure the effectiveness of the advertising on their platforms, where traditional media companies would be scared out of their minds to do what these companies are doing. You can get a report that shows you how your media is doing on their platform and you have the ability to immediately turn it on or off — but more and more advertisers end up spending money on these platforms because they can prove their effectiveness.”

David Jakubowski, the new head of Facebook’s advertising divisions, adtech and Atlas, agrees, noting, “Programmatic is leveling the playing field, but most importantly, it drives efficiency and performance regardless of budget size. It lets advertisers iterate much faster, within seconds, ending campaigns that aren’t performing and doubling down on ones that are. With programmatic, measuring ROI is real time and actionable. These are all things that make advertisers’ jobs easier and their marketing more effective.”

And it isn’t just digital. PMB, combined with data, is already pushing its way into traditional ad venues and is expected to affect the advertising landscape in TV, radio, and even print.

“The obvious one is TV,” Amram says. “Because if you have excess supply and you go down the programmatic route you can potentially find a way to benefit and get advertisers on board and potentially measure the effectiveness of your ads and show you’re very valuable. Programmatic does give you a better understanding of where your advertising should go and whether that should be a digital stream or a television stream. So we’ll quickly learn what stream is effective and where we want to spend more of our money.”

3. Programmatic Is Only About Cost Savings

This myth also may have had some truth initially, as marketers found that using PMB cut their media buying expenses, which ended up boosting the ROI of their ad spends and making their bosses happy.

But as an added bonus, many marketers are finding that PMB along with data analytics is helping them better reach the exact target audience they want. As Florian Gmeiner, head of marketing for the Americas at Lufthansa, notes, “Ultimately, programmatic will increase the effectiveness of Lufthansa’s digital efforts because the use of the technology and data allows us to target the audience we want to hit. I see programmatic as an important piece of the mix but feel it needs to earn its way into truly and effectively delivering against actual audiences, not only computer reported ones.”

Hoehn of Walmart agrees that PMB can’t simply be judged by its ability to reduce media buying costs. “As we optimize we may actually spend more, not less, to reach the right audience. It is no longer about large-number impressions — it is about the right impressions,” he says. “We are in an age where we can absolutely optimize our spend, but, more importantly, deliver messages that are relevant and helpful to our customers.”

4. Programmatic Will Mark the End of the Traditional Ad Agency

Earlier this year reports began circulating that CPG heavyweight Procter & Gamble (P&G) would begin to make upwards of 75 percent of its digital display buying through programmatic channels.

While P&G did not confirm or deny the reports, the rumors alone — combined with news that both Kellogg and Apple would bring more of their advertising in-house — triggered real concern that programmatic would end up reducing the role traditionally played by media buyers and ad execs.

Some of those worries are valid, but most are premature in that they ignore the resiliency of advertising agencies and media buying firms, which have long proven they are capable of adapting to changes in the ad ecosystem.

“The industry is at an interesting juncture,” Hoehn says. “The media landscape is evolving in this age of big data and those that don’t change and adapt, well ... let’s just say they won’t be sustainable.”

Hoehn goes on to say there is plenty of room for all kinds of new professionals in this industry and that even with PMB, brands will continue to need and seek out great marketing insight. “If you aren’t dealing with capable people, processes, agencies, creatives, analysts, etc.,” he says, “‘programmatic’ can also mean that you deliver the wrong message to the wrong people at scale and, before you know it, your campaign budget is gone.”

Brian Wieser, senior analyst at New York–based Pivotal Research Group, also cautions against reading too much into some of the moves by individual brands. “Agencies are always trying to take on more analytical and strategic roles, but just because marketers can bring programmatic trading in-house does not mean that it ends up being that way — or that the advertisers who have gone through this process will keep things that way,” Wieser says. “There are still many challenges to be managed, and at the same time, there will be bulk deals for inventory between agencies and publishers which incorporate programmatic execution at lower prices than many of these marketers could get on their own.”

Lufthansa’s Gmeiner suggests that the advent of PMB could even become a catalyst for a new era of collaboration among the players that make up the advertising world. “The media agencies, creative agencies, and technology providers need to sit at the table much more often,” he says, adding that inside the brands, programmatic and data analytics will bring the sales and marketing departments much closer together. “The creation of smart, strategic, well-defined campaigns that live off constant optimization will be every brand’s goal.”

5. Programmatic Damages Premium Publishers the Most

Initially grumbling that PMB was putting downward price pressure on their ad inventory, top-tier media companies — including The New York Times Co. and Washington Post Co. — have all now hired programmatic ad executives to guide their sales staffs in how to take advantage of the rise in brands using PMB.

But several of the brand executives and advertising experts we spoke to suggested that PMB will actually separate out what is truly premium content from the also-rans.

The hard reality, Wieser explains, is that, “some ‘premium’ sites aren’t really that important, and their pricing will be constrained. Others, which are perceived to be premium, will be fine.”

Gmeiner notes that with larger premium ad inventories now available programmatically, more brands are looking to PMB. But, he stresses, that won’t push marketers to completely abandon other programs like sponsorships that partner the right brand with the right top-tier content.

“The proliferation of programmatic offerings from more premium publishers will become a bigger part of the investment strategy, but by no means will this diminish the importance of custom content, high impact executions, and sponsorships,” he says. “So the need for having a brand message in a high-reaching, contextually relevant environment will continue.”

PMB could play an indirect role in improving the content available to consumers or in how that content is presented. “Premium content destinations should certainly be able to continue if they pay attention to the choices their audiences are making. If they can deliver an audience that is well defined and accessible, I don’t see an issue,” Hoehn says. “Great content will always be a draw. Marketers will have interest in that and will want to participate.”

Case Study: Programmatic Is Scary Good

How Universal Pictures used PMB to promote the home release of ParaNorman 

When Universal Pictures sought to generate awareness for the home release of ParaNorman, the critically well-received stop-action animation movie that had generated more than $52 million at the U.S. box office, it turned to London-based Adfonic (which earlier this year changed its name to Byyd) to develop an effective media-buying strategy targeting parents, teens, and fans of horror, comedy, and animation.

“The ParaNorman campaign was a classic example of using programmatic to improve efficiency and therefore boost ROI,” explains Victor Malachard, Byyd’s cofounder and chief executive officer. “Where other models, such as blind ad networks, fail, programmatic can continue to grow because [when plugged into a mobile Demand-side Platform (DSP)] clients gain huge reach instantly by simply plugging into exchanges, at which point they see all requests and can decide which ones to bid on. This transparency means they can be more effective by adapting campaigns in real time.”

Malachard stresses that programmatic buying alone wasn’t responsible for the success of the ParaNorman campaign; great creative in the form of rich media video from Universal Pictures was edited both for mobile and to reduce the time from impression to conversion. Each ad page for ParaNorman provided very clear branding and was designed so that users knew exactly what to do next: either watch the video or visit the iTunes store.

The decision to go with mobile content in a rich media format was crucial in helping consumers quickly grasp why ParaNorman was a movie worth renting or downloading, Malachard points out, adding that superb creative combined with PMB proved to be an explosive mix.

“When we performed post-campaign analysis, it showed we achieved click-through rates of 40 percent, stronger than average for mobile — and that was independently confirmed,” he says. “And our cost-per-engagement figures were less than a quarter of typical desktop campaigns. These are compelling bottom-line figures that prove programmatic mobile buying works.”

Source

"The 5 Myths of PMB, Dispelled." David Ward. ANA Magazine Spotlight. August 2014.

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