Everything you need to know about: Programmatic

It can be hard to keep pace in this fast moving industry, which is where we come in. The Drum has teamed with the Trade Desk for a series of short video primers and accompanying features in print to tell agencies and brands everything they need to know about complex issues. First up is programmatic trading.

We’re a long way from where the industry was less than a decade ago. Programmatic advertising looked very different then – heavily stigmatised with low quality inventory and either little or no optimisation in the few toolsets available.

The breakneck speed of technological development that followed made it incredibly hard to keep up and contributed to the rash of hysterical media coverage that was often either over-hyped or misinformed scaremongering.

From its beginnings as a solution for unsold inventory, programmatic is now big business for brand as well as direct response advertising.

IAB figures released this summer show that programmatic accounted for almost £1bn (£960m) of UK spend in 2014 – 45 per cent of the online and mobile display total. It’s a similar story in the States: IAB (US) figures put 2014 spend at $10.1bn – 52 per cent of display related advertising and 20 per cent of total internet advertising revenue.

And it’s growing fast. With the rise of video and mobile ad spend the UK IAB estimates 70 to 80 per cent of digital ad spend will use programmatic technologies by 2018. Add to that the digitalisation of broadcast and outdoor delivery and, says the Trade Desk’s UK general manager James Patterson (pictured), we’re looking at an entirely programmatic future.

“In the long-term we won’t even talk ‘programmatic’ at all,” he says, “because before too long everything will be sold programmatically”.

The future of programmatic will simply be the future of advertising, adds Patterson, and ad technology, far from being a job loss threat, will free minds to focus on delivering better and more informed insights.

Despite great strides in understanding and education, this is one myth that persists, but just as the calculator never took away jobs, this won’t either. The man v machine debate will be explored in more depth later in the series.

What is beyond doubt is that programmatic offers real advantages in granularity and scale. Historically, advertising was divided into two categories – brand and direct response. Advertisers who expected the utmost accountability at the bottom of the funnel accepted waste at the top.

That’s the past. Today, brand advertising is in the midst of a media buying revolution.

Innovations such as real-time bidding (RTB) and programmatic direct make it possible for brand advertisers to automate and target their ad buys at scale.

With RTB, ad inventory is bought and sold on a per-impression basis, via a programmatic instantaneous auction. If a bid is successful, the buyer’s ad is instantaneously displayed on the publisher’s site. 30.6 per cent of total digital ad spend will go to programmatic RTB platforms in 2015, according to BI Intelligence.

What this means is that an online rugby apparel retailer, for example, can take the guesswork out of targeting. Rather than simply making an educated guess which websites fans frequent – such as sports sites – a marketer can use data to target fans on any site that they’re browsing. And by targeting users on a one to one basis, a brand can build a real relationship – integrating relevant ads into a person’s overall web browsing experience.

Brands can take that a step further. ‘Rugby lovers’ alone can be a small audience so that pot can be expanded by finding new people who behave like current customers. Are rugby fans more likely to be pet owners? Do they live in the city or suburbs? Known as lookalike modelling, it is the methodology advertisers use to define the users they are after on ad exchanges.

Such data-driven insights can help marketers influence the message of a campaign, change its targeting and measure what is working. Evolving from standard digital advertising, programmatic allows marketers to reach very focused audiences – and also to expand to find new customers.

“The power of programmatic is real-time,” says Patterson. A marketer can both gather data and bid at an individual user level, which makes it much more targeted. It is accountable – every single opportunity can be assigned a value. And it efficiently delivers media planning and buying at scale.

“It’s how programmatic is empowering the media buyer to be a true marketer.”

Everything you need to know about programmatic is the first in a new EYNTK series designed to help viewers quickly get up to speed with some of the most important issues in today’s marketing industry.

From debunking common myths to explaining the intricacies of private market places (PMP) and the forward market plus exploring the agency of the future, EYNTK about programmatic aims to give you the knowledge you need to engage intelligently with programmatic advertising.

The EYNTK video series has now launched – the first video can now be viewed above.

More information can be found in the EYNTK hub.

For more insights into programmatic advertising and data come to The Drum's Programmatic Punch event in London on 8 December.