The Drum Awards for Marketing - Extended Deadline

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By Angela Haggerty, Reporter

April 2, 2014 | 3 min read

Programmatic trading is shaping the future of media buying and is likely to fundamentally alter the industry business model, according to Mark Butterfield, head of global media at Boehringer Ingelheim.

As the industry moves further towards programmatic buying and selling, however, agencies must define their places more clearly in the market, Butterfield told The Drum at the recent Digital Convergence conference.

“I think the future for agencies is programmatic, it’s where their business base is going to be,” he said. “I think what they have to decide is if they are brokerage houses or agencies working behalf of the client, and it’s a question of who is paying them. Is it the media owner or is it the client?

“I think at a certain point this will have to be decided one way or the other. If they all become brokerages it leaves the whole fee issue in debate. I think then the whole business model will need to be completely reviewed and it will become a complex process, but I think it will evolve over the coming years. What we see as a business model today won’t be in place in the near future.”

Also speaking at the event in London was Andy Mihalop, industry head of insurance at Google, who added that clearing up transparency was vital as the industry moved forward with programmatic.

“I think for many brands it’s very important to understand what they’re paying either to their agency or via a trading desk,” he said. “I think there are a couple of factors. I think transparency on things like data ownership, transparency on the commercial terms, and the operating model is going to be critical going forward, and I think the industry needs to work together to be able to move beyond this.”

The adoption of programmatic trading is rising throughout industry, throwing up a range of issues for brands, agencies and publishers.

Speaking elsewhere at the conference CEO of Nugg.ad - Karim Attia - said that performance metrics are "not accurate enough" to measure the effectiveness of advertisers branding campaigns, which is in turn pushing them increasingly looking for more "holistic metrics" to gauge their success.

"If advertisers are provided with brand-relevant measurement such as brand awareness, brand affinity and purchase intention as well as the opportunity to optimise their campaigns accordingly, a larger share of today’s big branding budgets will be allocated to programmatic solutions," he said.

However, he agreed with the other speakers that more needs to be done to increase both education on programmatic trading and increasing transparency regarding the use of data, pricing and fees.

"There is still significant confusion among sellers, buyers and brands over terminology, technological standards as well as interopability across different platforms, which is still an issue.

"On the other hand, as programmatic is increasingly being used to transact premium inventory, the digital advertsing industry needs to increase transparency regarding the usage of data, pricing and fees, net CPMs and the bidding process itself. Only then will programmatic help deliver on the promise to offer the right message, to the right person, at the right time, at scale."

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