Bidding high on the agenda: How brands are grasping the opportunity of programmatic buying
Programmatic buying is evolving fast with major brands pushing the real-time bidding agenda, but complexity remains a barrier to take-up. Jessica Davies reports.Rapidly evolving methods of trading display inventory in real-time bidding (RTB) environments have irrevocably changed the face of digital advertising. Today’s marketers are faced with overwhelming inventory volumes and audience fragmentation, with customer touch points spanning multiple devices and media channels.Programmatic buying, with RTB at its heart, has developed to bring order to this fragmentation, letting marketers target specific audiences on a real-time auction basis to enable highly targeted campaigns in which each impression is assigned value, all on an automated rather than manual basis.Revenues attributed to real-time bidding hit $1.6bn last year with experts predicting that over a third of display ad revenues will come from RTB by 2017. Since the advent of RTB many have viewed programmatic advertising as a technique for direct-response, performance-based advertisers, but that’s changing. With more access to premium inventory and the rise of private exchanges which provide more controlled environments, it is rising up the purchase funnel and attracting brand spend.The arrival of Facebook in the exchange space with the launch of FBX has caused a stir. It is now trialling FBX-delivered ads for News Feed, a development many believe will inject further, much- needed premium inventory into the RTB space.In time it is expected to move beyond display into IPTV and outdoor media environments and marketers that adopt early will reap the benefits over their competitors and learn how to extract real value from their data. Yet despite the compelling opportunities RTB offers advertisers and publishers, the sector faces significant challenges which it must address to achieve mass scale. Technological advancement has given rise to a multitude of vendors all jostling to differentiate, resulting in confusion for advertisers. Numerous acronyms have cropped up to describe the environment which only those operating at its heart can truly understand.This complexity is alienating the majority of advertisers from investing and will remain a major barrier to mainstream take-up unless addressed. Virgin Media’s senior online marketing manager Josiah Amartey believes there is an urgent need for simplification. He says for advertisers to manage the current status quo, a formula is needed to determine when the message around RTB is unnecessarily complicated. “Our motto is if someone mentions three acronyms and the word algorithm they are probably bullshitting you,” he says.“Part of the complexity is a result of platform suppliers trying to provide product differentiation – so the more complexity something is given the more it gives rise to more perceived USPs, but really it needn’t be that complicated and unless it is simplified there won’t be the standardisation needed for mass adoption,” he adds.Alex Tait, chair of the Digital Direct & Data Action group at ISBA and soon to be group head of e-commerce at Arcadia, believes the UK RTB industry is one of the most advanced in the world, but to progress further, must focus more on advertiser needs.“There has been relatively low direct engagement between advertisers and the ecosystem to date in the UK, with some notable exceptions driven by a few more innovative and often larger advertisers.“The education therefore needs to be two- way between advertisers and the RTB industry and I think the wider digital industry should look at how it can facilitate this,” he says.Google is among those to stress the need for education in the area and is planning to radically alter its own message to advertisers to help drive mainstream take-up of RTB. Tanzil Bukhari, head of buyer relations EMEA at Google’s DoubleClick ad exchange, says the RTB market has matured to the point it must strip away the jargon and communicate the value of RTB to advertisers in a way that suits their needs and campaign metrics if it is to move forward.“The reality is we have needed to go through this level of education to ensure RTB becomes a standard and something many players are engaged with. We have stepped past that now. The next stage is to engage with the end advertisers and agencies and for them the jargon is not relevant,” says Bukhari.As with most things in digital, data is the backbone of RTB and programmatic trading. Brands including P&G, Unilever and Moneysupermarket are seizing control of their first-party data and RTB activity by developing in-house trading desks via partnerships with independent DMP and DSP providers, instead of putting their data through an agency group trading desk. This means they retain ownership not only of the data, but even more importantly, keep the data insights they learn about digital media trading within their own walls.Some brands feel there are too many grey areas when it comes to required levels of transparency around how agency trading desks operate. This includes uncertainty over whether their data is shared across other clients within an agency group to boost campaigns outside their own.Moneysupermarket has ring-fenced its data by building a private trading desk to ensure it maintains full control of its first-party data and effectively monetises it. It can now offer commercial partners exclusive access to specified audience segments that cannot be bought anywhere else but directly through Moneysupermarket.Moneysupermarket head of digital Andy Mihalop, who led the development, believes brands are increasingly waking up to the value of their first-party data which, in time, will result in agencies needing to re-evaluate their position within the RTB ecosystem.“We are going to see the trading desks becoming less important over the next few years because clients are starting to get wise about the models and the lack of transparency and also data security and protection in general.“Brands are starting to wake up to the importance of data and programmatic and seeing they must be smarter about it. There is still an important opportunity for the group agencies but they must get smarter about programmatic and have a proposition that supports the evolving life cycle of programmatic in the way paid search has evolved,” he says. There’s no question the RTB industry has a way to go to break down some of the barriers to spend. Issues around complexity and transparency must be addressed for it to move forward and tease out more direct-response and brand spend. But what’s clear is that RTB is just at the start of its journey and innovation in the space from major players like Facebook is putting it firmly on the map.This feature was first published in The Drum's Ad Technology supplement on 26 April.