Digital marketing has come a long way in the past decade, with some truly exciting developments in the past few years alone. Programmatic buying is, arguably, the most impressive with projected UK growth of 55% per year between 2011 and 2016 (IDC).

So – what is programmatic buying? How does it work and why is it so exciting? At Rocket Fuel, we define it as ‘the act of bidding on an advertising inventory source in real time for the opportunity to show one specific ad to one consumer, in one specific context’.

This means that marketers pay only for the exact consumers they want to reach, in the most effective contexts. They can also measure results in real time – making it very simple to set a clear campaign goal and optimise the campaign as it is running. Measuring against a control group not exposed to the campaign, they can also verify what effect brand marketing has on awareness, favourability or purchase intent.

This approach has delivered ROI results that are up to six times better than traditional methods – an impressive improvement that every aspiring marketer today should be aware of. It is the ideal technique to move marketing away from a fragmented campaign-by-campaign approach towards a full-cycle paradigm.

It is perhaps unsurprising then that Forrester predicts that programmatic buying will ultimately capture the bulk of all digital advertising spend.

Change the channel

Display (banner) advertising is programmatic buying’s traditional home, but virtually all channels have inventory that can be bought this way through ad marketplaces. As digital advertising evolves, these marketplaces are developing more advanced models that include private exchanges.

Programmatic buying may be relatively new, but thousands of successful campaigns speak louder than words.

For example, YouTube enabled the bulk of its video inventory for programmatic buying in 2011 and marketers now routinely purchase video this way. Inventory from social networks has also been available for some time, but Facebook’s FBX exchange gave this area a welcome boost in 2012.

The best programmatic buying solutions integrate silo campaigns into a single cross-campaign solution that is able to apply learnings from one channel to another.

One-to-one

To me, the most revolutionary aspect of programmatic buying is that advertisers can now buy impressions individually, rather than grouped by the thousands or millions.

With traditional segment-based buying, advertisers can only serve their ad to a large and diverse segment, with no reference to the context in which the ad is consumed.

This type of buying defines consumers based on approximately ten attributes such as age, gender, income, geography, education and interests. In dramatic contrast, the best programmatic-buying systems can evaluate millions of data features – and do so in real time.

This approach allows marketers to pay only for the consumers that they want to reach, in contexts that generate the most impact. They can avoid targeting (and paying for) the wrong kind of consumer who might just happen to be visiting a certain content property and the right kind of consumer who happens to be visiting in the wrong context.

Insightful data

Using intelligent dashboards, marketers are able to gain many compelling insights from the vast quantities of data that programmatic buying generates.

These may include campaign insights such as: comparative performance of the different aspects of the campaign including creative messaging, best performance times, comparison between channels; and key metric trends such as clicks and conversions.

Consumer insights may also be gained, including: what characteristics make a consumer more likely to perform a given campaign objective and which attributes are the most important in defining best segments.

Keep it clean

Of course, taking such an automated approach does require campaign managers to be able to step back and ‘trust the black box’. But it’s not such a big leap of faith – most programmatic buying companies have a great number of safeguards in place to ensure that ads are positioned only in brand-safe environments, by blocking objectionable inventory. This is achieved by both human and digital monitoring.

Every programmatic buying company maintains a blacklist of inappropriate content properties, which is then tailored per client to include specific properties that might be inappropriate to the specific campaign.

Next steps

This new era of one-to-one marketing is hugely exciting and gathering pace. Programmatic buying may be relatively new, but thousands of successful campaigns speak louder than words. As digital marketing continues to gravitate towards artificial intelligence, marketers must grasp the possibilities, update their strategies and develop the key skills needed to reap the benefits of programmatic buying.

Dominic Trigg

Dominic Trigg

Contributor


Dominic Trigg is MD Europe at Rocket Fuel.