Digital advertising is allowing marketers to not only reach customers and prospects in the multiple channels they are using, but with the help of data, brands can tailor their messages to individual customers, providing an extremely personalized experience.
But in a world where the old adage "you snooze, you lose" is a stark reality, marketers need to do the above in the blink of an eye. The trick is capturing the attention of that individual prospect at the very moment when there is already interest (even if a subconscious one) in or need for a product or service. For example, a customer looking for a new phone might find information about the available data plans useful.
This reality is leading to a vast increase in the popularity of programmatic advertising campaigns, which allow marketers to set the parameters determining who they want to show particular digital ads. They also allow the algorithm to work in real time to serve these messages at the most opportune moments. Almost 20 years after the birth of online banner ads on the then called HotWired.com, display advertisements have become as native to Web pages as links.
According to Programmatic Everywhere? Data, Technology and the Future of Audience Engagement, published in late 2013 by Winterberry Group and the Interactive Advertising Bureau, 85 percent of advertisers are using automated real-time bidding practices, with 64 percent saying they're doing so "aggressively," while 72 percent of publishers voiced their support for real-time bidding approaches. For more than half of advertisers, the move to programmatic advertising has been fueled by their desire to "effectively engage" with their target audiences across digital media.
Further, this is not a dying trend. In fact, according to IDC, the global spend on real-time bidding display advertising is expected to increase to $20.8 billion by 2017. In the United States alone, real-time bidding will account for 80 percent of display advertising spend by 2022. This shouldn't be surprising. As Michael Walsh, director of research marketing at Vocus, the promise made by programmatic advertisements to deliver the right message, to the right prospect, at the right time, and on the right device is "the dream" for digital marketers. Avi Spivack, director of product marketing at Adroit, agrees. "Programmatic is empowering brands in ways that haven't existed in the past because the new technologies are so powerful and scalable, enabling the powerful fusion of data and media to achieve cross channel success," he notes.
The push for automation
The move for programmatic advertising has its roots in necessity. As Eric Bader, CMO at RadiumOne explains, in the past marketers would analyze data about customer and prospect activity on a number of sites and use that insight to send them relevant information by email. But aside from the need for real-time interactions that make messages sent days later largely irrelevant, organizations found that scaling this model was next to impossible. "We went from a few websites on our list to millions," he notes. In addition, customers at various stages of the buying journey were not only visiting commercial sites, but also gathering information from blogs and review aggregators.
This growth clearly spelled the end of manual message sending and raised the need for complex algorithms that would immediately send a targeted message to that customer on that same Web page. "The success of programmatic buying hinges on real-time interactions," Bader explains.
Or Shani, founder and CEO of Adgorithms, agrees. The reasons behind the use of programmatic display are two-fold-increased efficiency and the ability to scale due to machines' intelligence. Further, algorithms can become more effective over time by identifying trends and best practices and learning the best ways to address a specific audience. Like Bader, Shani notes that manual management of such granular campaigns would be impossible to scale. "Technology allows brands to do more and perform better with less people and lower overheads," he says. Less dependence on individuals also reduces the risks of human error. For example, if a particular campaign wasn't effective in the past, the same tactic won't be used again because of a new marketing team that didn't perform the necessary due diligence. "One of the biggest expenses in marketing is repeating mistakes because of human error," he notes.
Aside from its ability to engage prospects at the right moment, programmatic buying has another extremely important benefit-it is hyper-efficient in targeting only the people who have somehow expressed interest in a particular product and service. "You are cutting out the waste," notes Bader. For example, while television ads can be effective, especially when it comes to brand recognition, the ability to target these advertisements beyond geographical boundaries is limited at best. Even addressable television has its limitations, especially if more than one person watches television in a particular household, making it difficult to determine the different personas, identify who is watching at a particular moment, and showing ads that are relevant to that individual.
Bader notes that 80 percent of conversions from programmatic display ads-which range from engaging with the advertisement and visiting the brand's website to making a purchase-tend to happen within the same hour. This, he notes, is also true for more expensive items which tend to be considered purchases, for example a car or an appliance. "Programmatic advertising is giving us the ability to reach people when they're the most receptive," he notes. "If a customer is talking about a car today, he's likely in the market and the recent exposure is extremely important."
It's all about the data
Data plays a crucial element in programmatic display advertising. In fact, as Bader notes, marketers are often combining information from multiple datasets to take the next-best action. First, there's the company's own CRM data which gives essential information about previous purchases as well as activity on the brand's own online properties. Marketers also tend to purchase cookie data that provides a better understanding of an individual's journey outside of the brand's online properties. This is combined with second party data that provides more detailed profile information about individuals, for example demographic data. The more active a person is online, the more information is available. For example, Bader notes, a person who is sharing articles about a particular BMW model on social channels is indicating that he is either interested in that particular model, a BMW vehicle, or any car.
Aside from this information, brands can add data that's most relevant to their products. Spivack uses the example of Kimberly-Clark which incorporated a National Weather Service data feed into its recent Little Swimmers campaign, allowing the brand to target consumers in locations where the weather was amenable to swimming. "It seems too simple, but because they took the time to sort out and refine the data based on certain criteria, they were able to better target a more responsive audience," he explains.
Once all this data is available, it is fed into a system that uses an algorithm to identify hand-raisers and targets them immediately with the most relevant message. "The strength of this approach is the software's ability to make sense of and take action on the massive amounts of data available during an online experience," Walsh says. "It's more data than a human could make sense of as quickly as necessary.
Spivack agrees. "Programmatic not only gives marketers an enormous reach across all media inventory, but it does so with maximum efficiency," he says. "It enables the ingestion of massive and various data sets to create the best personas and targeting parameters for potential buyers." Further, the campaigns can be monitored and adjusted in real time based on their performance against established metrics.
For Crystal Light, one of Kraft's brands, a robust data strategy that combines both first-party data attributes, including the websites visited by customers, email addresses, and purchase behavior, with third-party data sources, is allowing for very personalized messages. During Forrester's Forum for Marketing Leaders, Bob Rupczynski, Kraft Foods' vice president for media, data, and CRM, explained that the brand is trying to target a very diverse customer base. "We are getting more targeted as we find more information about our customers," he noted. For example, a customer who is predominantly health conscious will be presented with a message highlighting the low calorie content. However, a customer who is both health-conscious and fashion-obsessed will see a different message that points out both the low calorie content and the vibrant colors of the water flavoring.
Overcoming the hurdles to effective programmatic advertising
Embarking on an effective programmatic advertising strategy is neither simple nor can it happen overnight. "There needs to be a lot of work up front to design a well-planned strategy that will work for [the brand's] particular needs," Walsh stresses. Spivack explains that one of the biggest concerns is a relative lack of understanding of what programmatic means and how it works. "Many marketers are unsure how to fold programmatic into their overall media strategy," he notes.
One of the challenges impacting marketers' ability to provide extremely targeted display messages is customers' use of different devices across their purchase journey. This problem, Bader explains, is often resolved through the effective use of cookie data that provides marketers with the ability to bridge channels by leveraging demographic data across the different devices.
Another challenge lies in the substantial investment required to see any ROI. Understandably, many brands want to test the waters and start with minor investments in programmatic display. But caution can be a problem, Bader notes. "They're investing too little to get meaningful results," he explains.
Further, in order for programmatic display advertising to be effective, brands need to have the necessary creative assets to show to the right individuals. Unless the brand invests in a creative portfolio, it will be delivering the same message to its entire audience and not making the most of the benefits of real-time bidding.
Finally, while programmatic display advertising is today's trend, organizations should make sure they're ready to make the investment before embarking on such projects. "Try to avoid doing it just because it's today's buzzword," Shani stresses. "Understand both what programmatic buying means and what it will do for you specifically and then determine the ROI for your company."