Managing Marketing – Programmatic media buying, the opportunities and the considerations

Managing Marketing is a podcast hosted by TrinityP3 Founder and Global CEO, Darren Woolley. Each podcast is a conversation with a thought-leader, professional or practitioner of marketing and communications on the issues, insights and opportunities in the marketing management category. Ideal for marketers, advertisers, media and commercial communications professionals.

Gil Snir, Chief Marketing Officer at Benchmarketing talks about the opportunities, considerations and challenges of programmatic media buying with Darren and they explore what marketers and advertisers should do when considering adding programmatic buying to their media strategy.

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Transcription:

Darren:

Welcome to Managing Marketing and today I’m speaking about all things programmatic with a friend of mine, Gil Snir, CMO of Benchmarketing. Hi Gil.

Gil:

Hi, how are you doing?

Darren:

Working at Benchmarketing, you must be so aware of all the hype and discussion happening about programmatic buying?

Gil:

Yeah, it’s been a topic in advertising for a long time so there is much more hype now, but programmatic’s been around for at least ten, eleven years. So it started in 2005 with the right media exchange and even before that with Google around 2000 allowing advertisers to have ads appear within the search engines.

So it’s been around for a long time but I think there’s definitely been a lot more hype in the last few years and I attribute that to the topic becoming a bit more mainstream with advertisers. So traditionally, programmatic was something used more heavily by the more hardcore online focused verticals, so gaming, dating, travel, these type of spaces.

Darren:

Yes.

Gil:

But of late, it’s really kind of come to the forefront and a lot of marketers are putting a lot more attention and effort into it and seeing what it can do for their media budgets.

Technology or strategy?

Darren:

A lot of that’s been driven by the improved technology and the ability to very specifically deliver advertising or messages to a particular audience, isn’t it?

Gil:

It’s a lot about technology but one of the things that we try and emphasise with the marketers we speak to is that technology will amplify core marketing principles. So if you hold a strong understanding in terms of why consumers buy your products and when they’re most likely to buy them, then using data driven algorithms and real-time bidding platforms can definitely amplify that and bring that to a much higher scale.

But it does always come down to a real understanding of why consumers are interested in your particular product.

Darren:

So you still need the smarts to make the technology work.

Gil:

Definitely, you still need the smarts. It’s very people driven so often times you’ll have great technologies which are very dependent on their operator. But you also have a space where there’s so much noise that you need to really find out why you’re doing it in the first place.

So for instance, when we hear about the fuss in programmatic, what we attribute that to is how advertisers get excited when they find a way to disrupt a consumer’s day with something meaningful.

So with programmatic, you’re able to use a huge section of data to actually apply ads to people based on reasons why they would be interested in that ad in the first place and so that gets really exciting, but it also adds a lot of fragmentation in the market so as you know, there’s a lot of different players doing different pieces of the pie and it can become quite difficult for everyday advertisers to understand.

Darren:

Yeah, look ’cause you know, wouldn’t it be great if email could be programmatic because, I don’t know about you but my inbox gets full of spam email because people are just there pumping it out.

So what you’re saying is that the promise of programmatic is actually to deliver the right messages to the right people at the right time, rather than just spamming a whole lot of people with advertising.

Gil:

That’s exactly right. The programmatic space really is about using automation and algorithms to predict where a potential customer is going to be. So that definitely is taking place in the email and owned media space, you know with different automation platforms like Marketo and Eloqua.

In programmatic it’s a little bit different because you’re not optimising owned media. Usually you’re trying to optimise paid media or media within large open networks. So it does become a much more difficult space and that is one of the reasons why a lot of advertisers are starting to see this as the holy grail because if you can crack it, then you’ve got a big competitive advantage.

Defining programmatic buying

Darren:

So let’s go back to basics. From your perspective and at Benchmarketing, when you talk about programmatic, define for me what that means in the offering to your customers.

Gil:

Sure. So maybe to start with a definition; programmatic marketing is really about the use of automation and data driven algorithms to optimise the serving and placement of ads within networks and exchanges.

So basically what that means is that unlike the traditional forms of advertising where a deal is done directly between a publisher or a media owner and an advertiser, now, a advertiser can buy this inventory in real-time based on a huge number of parameters that they feel are important in targeting their customers and the process is one that’s constantly iterating so that whenever a conversion happens, that feeds back to the ad engine, the result, and therefore the ad engine can continually hone down and optimise towards the specific customer they’re looking for.

So what we try and do is take into account the media placement and targeting of course, but we also look at a very important element which is about segmenting a customer or an advertiser’s first party data and that’s a really important view because it looks at the DNA of any brand’s customers.

And understands how to communicate with them in the most relevant and meaningful way. So as long as a advertiser or an agency is utilising programmatic with checks and measures in place to ensure that it’s justified by some kind of conversion metric, then they’ll continue to optimise and get better.

Darren:

That’s a really important point, isn’t it? That your existing customers and their behaviours, because they’re already doing business with you, is the primary starting point for working out where to find more people like your customers.

Gil:

Yeah.

Darren:

Which is why your first party data, your customer database and everything you know about them is so important as a way of informing the strategy.

Gil:

Correct. I think it has a lot of similarities to any other scientific field where you start with the research and findings that have already been established and then you build on those.

So unlike traditional advertising which has been primarily reliant on a very experienced media planner who presents a plan which has a range of different mediums both above the line and you know, online and then they launch it and deliver out on what they said they would do and that’s done.

In this space, it’s actually a lot about collaboration, iteration and being able to pivot the importance of listening to the data signals and being agile enough to move when they tell you to and when you’ve tested assumptions and they’ve either failed or succeeded, that is really critical to the success of the campaign.

Darren:

Well, just to challenge you a bit there, the other thing about traditional is it’s really been largely based on demographic, right?

Gil:

Yep.

Darren:

And mass. Getting as many of those types of people as possible. Isn’t the big opportunity here that beyond demographic, there’s also behavioural data and behavioural insights and that mass is achieved by cherry picking as many of the people that fit your profile as possible and doesn’t that make the whole process potentially more efficient and effective?

The difference between traditional and programmatic media buying

Gil:

You actually touched on an interesting point. One of the biggest misconceptions about programmatic marketing is that because it contains the word, “automation”, it’s meant to make everything easier.

But with traditional advertising, most advertisers had to only think about two data points; age and gender, maybe location. And now, you’ve got hundreds of different data points to analyse, whether they be browser or as you said, behavioural information.

Darren:

Yeah, what have they been looking at, what sites do they typically go to?

Gil:

And a lot of the time, what’s coming up now is psychographic information. You know, Facebook is a great example. It’s where consumers voluntarily submit their consumer DNA so advertisers can have a field day with just targeting specifically people based on behaviour.

But then we can create associations about what else they might be interested in and find more people like that user. So it’s getting progressively more and more complex but to the goal of becoming more targeted as well.

Darren:

And I like what you said before which is see, in traditional media, it’s about which, right? How many thousands of people and what’s my cost per thousand? Whereas you said the important thing in programmatic is actually getting some sort of conversion.

It shouldn’t be about reaching thousands and thousands of people, it should be about getting thousands and thousands of responses or even hundreds of responses or even ten responses, as long as they’re the right responses.

Gil:

Yeah, correct. I always compare it to where advertising was and you know, years and years ago, it was much easier to promote yourself. There were only a small handful of broadcasting channels and you could basically promote yourself on there and go strong and have a huge amount of reach and probably have some wins from it because there wasn’t so much competition.

Now there are so many places where potential customers are going, that you have to have a really targeted approach or you’re going to waste a lot of money. So what we try and do is always implement a strategy around performance based programmatic and that’s not necessarily where the goal is a sale or a lead, it can be an awareness or an engagement campaign, but it has to have some kind of performance element to it so that an advertiser knows whether it was effective or not, so that they have a barometer to say whether you know, one vendor is better than the other or one supply site source is better than the other.

So it’s really the first time in the advertising space where the power is back with the advertiser because traditionally, the supply side, the publishers, told you what you had to pay and they basically ran the roost, controlled the shots. But now advertisers have the ability to swap and change publishers at any signal. So it’s an interesting time.

Benchmarking programmatic media

Darren:

So a lot of what we do for our clients is benchmarking their costs and their performance, okay? And it’s interesting that your company, or the company you’re working for, is called Benchmarketing, okay, because one of the questions I get asked is, “What is the benchmark for programmatic buying?

What should people be paying to have their ad served?” And I say, “Look, this is my perspective; it’s an open trading environment and that the cost is actually going to depend on a whole lot of factors such as the type of audience you’re trying to deliver into and the environment and that sort of thing”, but do you believe there’s a benchmark for programmatic buying?

Gil:

The great thing about what programmatic buying allows you to do is it allows you to be accountable to things that you care about as an advertiser. So in the past you had to pretend you cared about TARPs and reach and CPM, that are publisher terms.

In reality, brands care about sales, revenue and things that will affect it or that you can attribute to affecting it. So that’s kind of the focus of everything really and if you can show that, and have accountable metrics to it, you’re going to get a much stronger campaign as a result.

Darren:

And their benchmark should be their own benchmarks, shouldn’t it? If it’s cost per acquisition across other channels, then that should be the benchmark if their objective of doing programmatic buying is to get acquisition, right?

Gil:

I think there’s a phenomenon that as humans we like to try and simplify everything. So when people ask for a benchmark, they just want to know what’s the rate card? They’re still stuck in that mentality of saying, “So how much is it going to cost?” What I would consider to be a better principle around benchmarking is to understand the principles of defining the correct goal.

Darren:

The objective?

Gil:

Yeah, yeah. Defining the correct objective and understanding what funnel is going to make sense for a consumer to reach that objective. And once you get that, then I believe that you can get a bespoke and really a proprietary understanding of what your benchmark is in your industry and also what attribution model is right for your product and your industry.

There are ways that you can do competitive research and there’s a lot of great companies out there like Ad Clarity and What Runs Where that you can collect business intelligence, understanding of programmatic buying and so on, but ultimately, the results are going to come from clinical testing.

You’re going to have to be in market with funnels and goals and really test how audiences are interacting with ads and use all of those capabilities to optimise.

Darren:

And multi variants testing and that type of thing so that you’re looking not just at the delivery of the message but the different messages and what’s more effective.

The opportunity to optimise performance

Gil:

Exactly. It’s really about finding out what is the magic formula for you as the particular advertiser. And that does come with a lot of testing and it breaks a lot of the moulds that advertisers have traditionally thought of which is, “You give me the media plan, I’ll sign off on it and then we’ll talk at the end”.

Darren:

Now, we’ve got quite a lot of large multinational and largely consumer goods companies that we work with that have made a global decision not to do any programmatic buying because, and this is their typical quote, “We’re not convinced it delivers results”, okay?

Now, are there times – I’m not going to get you to justify whether that’s right or wrong – but are there times that marketers should not be using programmatic buying? What are the times that you know, it’s not right to consider?

Gil:

Look, the times when they should not be using programmatic buying are when they have trialled it with a vendor that’s not fit and capable of delivering it properly.

I think one of the big problems in the industry is that the term programmatic is thrown around so much but often times there’s vendors that will tick the box of programmatic by just buying it like a traditional buy, within one network like GBN for instance, and say, “We’re doing programmatic, we have a conversion pixel and we’re in GBN”, ticked.

But ultimately what happens is the results aren’t there because it’s not a set and forget approach. It’s one that requires understanding of what metrics to listen to and then a system for checking whether you’re on the right path and whether your tests are actually working.

Darren:

And optimising.

Gil:

Exactly. So I’d say if that’s the case then it’s better not to do it at all than to do it in a set and forget type of way.

Darren:

Well let me put this; do you think programmatic stacks up well with building mass awareness for instance? Because there are a lot of mediums that will deliver mass awareness.

Gil:

Sure. I mean, look, there are so many programmatic channels whether it be Adwords, VBN, Yahoo, AppNexus, Facebook that I think every, or most advertisers, understand that consumers are online and spending a lot of time online whether it be desktop, mobile, tablet.

So to be able to interact with them in a meaningful way needs to consist of an online component and I think everyone agrees with that. And then one thing I would hope that most people agree with is that the most efficient way of interacting with people online is through programmatic technology because unlike the abilities of a human to select where an ad is placed, we’re talking about billions of impressions and millions of data points and it’s more and more important to use technology to actually scale that.

So if you want to speak to a large audience, if you’re a large advertiser, then you can do that but it’s as important to be in those places as it is to assign the right metrics so that you know you’re doing it properly.

Darren:

I had a very senior CMO for a large company contact me suggesting that he needed a new media agency because he never saw any of his ads online.

Gil:

Right.

Darren:

Okay. And I suggested to him that would be because they’re using a programmatic platform that they’d blocked the IP address for the company and I said to him, “When do you go online?” and he goes, “Oh, at work” and I said, “Well, it could be that they’re not serving ads to you”. And he was visibly shocked that you could actually do that.

Gil:

Yeah.

Darren:

So what other filters are there that people can use? Because in the old days, the first thing you did was make sure there was an outdoor ad on the route for the CEO from his home to his office so he could see the new campaign or that it was run on Sunday night at 7.30 or 8.30 on television so that it was guaranteed that the CEO or the board would see the new campaign.

Gil:

Yeah.

Darren:

Programmatically, what can be done?

Gil:

It’s funny, I’ve spoken to a lot of agencies and you know, one of the ones last month in Melbourne spoke about how when they have a big production launch, they do a lot of print advertising and they always get one of their managers to run out to the coffee shops around the boss’s house and place all of the magazines there so that she knows they’re doing the work.

So it is sometimes like that, particularly you know with old school execs that want to just see that something’s happening. But in the online space, what we find is just as important as who you show the ad to, is to decide who you don’t show the ad to.

So when I spoke earlier about how we interact with first party data, that’s a really important section because when we segment a customer base, we’re looking at how far you got in the funnel, what products you looked at, the source of traffic you came from and the interest that you might have shown to us based on different publishers that you landed on and if, for instance, you’re selling a product which means that usually a customer won’t buy it more than once, then you really need to tag that particular customer as a negative segment and not show them ads.

The same thing goes with how we target new audiences. You really want to find out where there’s potential pockets of customers by running a sort of open and broad campaign and then narrowing in. But once you narrow in, then it’s about carefully deciding where you serve an impression so that, if I have to compare it with an analogy, it would be more of a sniper approach than a machine gun.

Darren:

Absolutely. But it’s interesting how when you try and take the old world or the traditional media models into this area, a lot of the traditional paradigms immediately fall to bits, don’t they?

Gil:

Well the first shift that we see is that advertisers are used to running a static plan and that’s a real shake up because when we initiate a plan in terms of a media mix, channel selection, ad types and so on, we do it in such a way where we’ve got backup channels and backup ad types and we can constantly be testing both A/B and multivariate on which ones are going to get the most success.

Darren:

Yeah, because it is a constant optimisation. There’s the pool of all people online and what you’re trying to do is what’s the most effective and efficient way to reach the specific people that you want to reach in the way that you get a response.

Gil:

Correct. There’s also another assumption that’s broken and is a point that needs to be looked at differently in that whilst traditional media usually offers advertisers a simplified, flat CPM, so in essence, they know what they will be getting and maybe, you know, the agency over delivers and everyone’s happy.

In programmatic buying, the buying is done in a dynamic framework so when we assess what the likelihood is of you completing a certain conversion goal, we can bid on you differently and with different urgency and show you ads in a different number of touch points and so on.

So it becomes one where you’ve got a lot more flexibility to communicate in a more personalised way and that’s I think what’s getting a lot of marketers quite excited. It means that you can do things like sequencing and really plan the story, which is what ultimately marketers want to do.

Darren:

And it allows you to invest in the high value customers to actually get a conversion there. So there’s that valuation as well as to whether it’s worth – given a particular customer and their behaviour – pursuing them with a say, sequencing event, to actually get them to convert, yeah?

Gil:

Correct, you can adjust the creative to dynamically change based on the value of that particular customer. So for instance, if you know that a section of your customer base is a very high spender, then you may want to bid on them more aggressively or dynamically populate the creative with a better offer.

So for those audiences that say are booking a family trip, say it’s a travel campaign, you may want to give them a higher discount because you know that they’re overall lifetime spend is greater.

So even though the cost of acquiring them is more, the conversion rate is probably going to increase by giving them a more interesting offer because you know, based on CRM data, that they’re a more valuable customer.

So it’s exactly like what a sales person would do when you’re in the shop and they’ve served you multiple times so they know that you’re going to come back so they give you an offer that they wouldn’t give to somebody else. Now you can do that on the fly, with scale and as a result it’s getting a much, much better cut through for brands.

The complexity of the programmatic supply-chain

Darren:

It’s like traditional direct marketing. The Lester Wunderman direct marketing meets direct selling meets media all wrapped up into one. But there’s something that people, many marketers are confused by.

At the ANA advertising financial management conference last year in the US in May, they put up a slide that said, “In one trade, in one serve of one ad, there can be between (I think it was) five and eight different companies involved”, so you know, there’s the publisher, there’s ad exchangers, there’s demand side, there’s sell side, there’s the programmatic platform, there’s the trading desk.

They had this huge eco-system for one trade and all these different people. Why is it so complex? Why are there so many vested interests involved in delivering one trade?

Gil:

Well to the first question, why is it so complex, I think there is a few factors in that. So firstly, it’s new. One of the elements is that TV for instance has been around for sixty odd years and programmatic buying has been around for just over ten but for a lot of companies, within five years.

So it’s a new space and because of that and because that it’s so aligned with trying to use huge sections of data to find your customers, it’s naturally complicated. The other reason I would put to why there are so many companies in the mix is that, because it is online, and because it involves so many data points which more and more advertisers are feeling the need to own and control and be on top of, the industry demands a high level of transparency.

So advertisers want to know exactly which companies are involved in the mix. And understand what their role is. The other thing is as well obviously is that it’s a multi-billion-dollar industry now so because of that, there’s obviously a lot of different companies trying to get a slice of the pie.

So it’s really important for advertisers to decide when selecting vendors, what their role is in the mix and whether it is valid and can be justified by the costs. And then if so, how to use them to the most effective means.

Providing transparency to programmatic

Darren:

Yeah. So Gil, you brought up the big “T” word, transparency because it seems that that’s what the big fear factor is, is this lack of transparency. So as someone that is from Benchmarketing, major players in programmatic buying, what is the way that you position transparency to your customers and do you think it’s as big an issue as perhaps the trade press has blown it up to be?

Gil:

Well, transparency is a large concept and it can refer to a lot of things. It can refer to transparency over the goal, transparency over the media margins and transparency over the attribution model.

So for us, when we hear a lot of the topic around transparency, often it’s advertisers asking about how many companies are in the mix and who’s taking what cut and so on.

But I believe there’s actually a larger issue at hand, before diving into whether the industry is transparent or not, it’s actually; is there transparency over which goal an advertiser should be focused on and holding their vendor or agency accountable to?

I think there’s a big gap often between advertisers receiving reports that show either conversion data or impression data that’s not transparent or accurate. So it is a big word, I think the industry is adding a lot of technology to allow greater transparencies so advertisers can own or be in control of their own data.

But because the space is so complex and there’s so many companies in the mix, it’s going to have that sphere of opacity but you know, I think it’s an area that’s getting a lot better and one where, as long as advertisers understand how to hold their vendors and agencies accountable to what they truly care about, the problem of transparency I think will be minimised because there will actually be true value being delivered.

Darren:

Well look, at least you didn’t answer like the Chairman of Group M who said, “We’re transparent about the fact that we’re not transparent” was his response to that question.

So look, I think the key message that I hear you expressing here is that if you’re going into programmatic buying without a clear objective and a clear understanding of the value of achieving that objective, then you could very quickly end up wasting your time and money.

Gil:

Correct. And you won’t have the tools at your disposal to hold those who are delivering that medium to account. And I think that’s the most important thing. The biggest shift that I’ve seen, the most exciting one for advertisers, is it’s really the first time where the power is in their hands to control the effect and the outcome of their media buying.

That means working closely with your vendor and agency to do that, but it is about making sure that the goals are transparent, that the attribution model is understood and that the media buying is done in a way which is ensuring that you’re continually getting better.

Darren:

So cost per thousand is not a way to buy when you’re doing programmatic buying?

Gil:

Well, it is a way to buy but it should be bought dynamically. So, it is a way to buy.

Darren:

But that’s about impressions.

Gil:

Yeah, well whether you buy on a CPM basis within the ad networks and exchanges or a CPC basis, it doesn’t really matter. It’s ultimately about whether you’re optimising towards another, an effective goal.

So what usually we’ll run with is a dynamic CPM model with an action goal that’s being optimised to and not necessarily leaning on these kind of easier metrics. So even if you’re running a CPM buy, because it’s just an awareness play, there are layers of technology to ensure that that impression is actually seen so you can add a viewability layer on it.

But Google’s definition of viewability is that 50% of the pixels within the banner load for a minimum of half a second. So you have to be a very vigilant consumer to pick that one up.

Darren:

There it was!

Gil:

You know?

Darren:

There’s half of it!

Gil:

Correct. And often times advertisers will be complacent with an agency metric like clicks. But what I say is, clicks with a 95% bounce rate are useless. So you need to start thinking about how you can ensure that your consumers are doing what you want them to, once they actually get to the site. And that might be reading an article, it might be interacting with…

Darren:

Sharing.

Gil:

Sharing, yeah or obviously submitting a lead or buying. But it’s just about giving the advertiser that control to ensure they’re optimising to what’s happening once that person gets to their online asset.

Darren:

Gil, this has been fascinating but unfortunately we’ve run out of time. I’ve just got one last question for you and that is, do you have any ad-blocking software on your browser?

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About Darren Woolley

Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com

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