Unlocking the success of programmatic trading

Programmatic trading has exploded over the last few years, but there are bumps in the road that must be ironed out before it can reach full throttle and unleash its potential as a branding medium. Jessica Davies takes a look at the issues of brand safety, viewability and education, all key to unlocking the success of the channel.

It may still only account for a small proportion of the majority of brands’ total media spend, but advertisers are increasingly viewing programmatic as the future for all media trading. This method of automated trading is essential if advertisers are to keep pace with the myriad of routes to content that consumers can now enjoy online and via mobile devices – trading billions of advertising impressions to the right audience, at the right time, for the right price is just not possible manually.Of course this supply and demand dynamic, so different from the TV market where inventory remains more scarce, has in turn made it difficult for publishers to maintain high prices, with both mobile and automation eroding yields. Many believe this has shifted the balance of power from the sellers (publishers) to the buyers (marketers), with the result that higher volumes of inventory are being bought for lower prices via the open marketplace.This approach, although highly effective, has led many advertisers to view programmatically traded advertising as suitable for remnant inventory alone, rather than premium – an image it needs to shed if the market is to advance to the next stage and assert itself as a branding medium. Chris Dobson, the former executive vice president and general manager of advertising for BBC Worldwide who recently became chairman of The Exchange Lab, believes programmatic trading is an “unstoppable force” in the media market. “During my time at BBC Worldwide I focused very hard on branded content as that is still the centre of the universe for consumers. But the next revolution is programmatic. “It’s so dynamic and so not quite nailed down yet that we are in an interesting time of market making. But it’s a wave that is unstoppable in this space and it will sort itself out and go beyond early adopter into the mainstream in the next 24 months,” he says. Yet he believes the market must shed its image of being effective mainly for remnant inventory for it to entice more advertisers to part with their brand spend. “Brand investment is the holy grail and it’s less long tail and more premium. At the BBC we used to think of our inventory as ‘first class, business class and economy’ – programmatic started in economy and has started to move into business, and as systems develop it will be across the board.“It still has that image of ‘remnant’ though, which it must shed. That was a fair image to begin with, but it’s up to the market to change that image. It’s a bit like mobile, which was just thrown to the networks, and it’s only now really that it is starting to be seen as a branding medium,” says Dobson. In a world where the most important currency is audience, third and first-party data is what can unlock the true value of inventory for advertisers. And in doing so, this can help publishers offer exclusive insight on their audiences to advertisers, which can in turn help them maintain better yields, and that is what programmatic trading can provide, according to Dobson. Former BSkyB online marketing controller Joel Christie, who recently joined Rocket Fuel as client strategy director, agrees that 2014 will be the year of “programmatic branding”. He says: “While some brands have already started implementing programmatic branding campaigns, I think 2014 will be the year we see marketers really start to understand the power of programmatic to drive branding objectives. Used intelligently, real-time branding will enable marketers to scale their activities and engage with a wider audience.”Much of the early programmatic branding will be heavily driven by pre-roll video, according to Christie. “Since YouTube enabled the bulk of its video inventory for programmatic buying in 2011, online video has become one of the most important and profitable channels of digital advertising. The development of engaging video advertisements that work well on mobile will play a huge part in continued growth of the advertising medium. And as more and more advertisers begin using programmatic buying for mobile video, the user experience will continue to improve,” he adds. Brand safetyTo date the majority of investment in the programmatic market has come from direct-response budgets, but for the market to continue to grow it must attain a bigger slice of the brand budget pie. Google has recognised this, having launched ‘custom brand exchanges’ in the US – putting its own spin on a private exchange which begins with specific publishers, and instead agreeing large ad budgets with brands like Cadillac and Burberry and then matching that to premium publishers’ inventory. This controlled environment, similar to that of a private exchange, means brands can dip their toes in the programmatic waters without having to worry about the risk of ad misplacement, which can occasionally occur on open exchanges. Companies that spend millions on their brand are fiercely protective of their online reputations and abhor any kind of online ad misplacement – and rightly so. In the UK the advertising trade bodies are working hard to set up a policing framework for brand safety, establishing auditing standards which all in the digital ad ecosystem must adhere to. The Digital Trading Standards Group (DTSG) has been revived by the Internet Advertising Bureau (IAB), the IPA, ISBA and the AOP, with the view to cracking down on ad misplacement. In doing so the group hopes to boost the confidence of marketers still reluctant to spend heavily in digital, particularly in the open exchange programmatic market, where the visibility of where the ads are appearing is opaque.The DTSG has now established Good Practice Principles in the UK, which set new industry-wide standards, and will see committed businesses have their advertising misplacement policies and processes verified by an independent third party, which will lead to a ‘seal of compliance’.At the time of the launch the IPA’s head of digital, Nigel Gwilliam, said: "Misplaced advertising affects the whole online industry, so it is only right that we are addressing this from a cross-industry standpoint. These principles will increase the transparency, accountability, trust and safety that our advertisers and agencies so rightly deserve when placing ads online. Any business keen to demonstrate its responsibility and commitment to brand safety has nothing to lose by signing up to them, and everything to gain."Viewability With marketers continuously under pressure to cut out waste in their spend, the arrival of viewability metrics – where an advertiser can be billed according to whether its brand has been seen – has naturally become a hot topic. Google has made swift strides into the space having revealed plans to bill advertisers based on viewability, giving them the option to pay for only those impressions where their ad has a chance to be seen.Meanwhile AOL is also strongly backing the IAB-led movement to establish common metrics. The multinational mass media company has been ramping up its programmatic strategy, operating its own marketplace, and last year acquired programmatic video advertising platform Adap.tv for $405m, which helped it achieve its most successful year for a decade. AOL UK managing director Noel Penzer believes viewability is a core development across the industry, not just for programmatic. He says there is “consistent pressure” from the advertising industry regarding the percentage of viewability. “The industry is at the stage where we cannot afford to ignore it. We must have commonality and consistency in how we all measure and by later this year the IAB will have a clearer position on what the percentage of viewability should be,” he adds. Education The fast-paced nature of the programmatic space, and the explosion of companies that offer various parts of the supply process, have led to widespread confusion in the space, with many mainstream marketers put off by the strings of acronyms and jargon surrounding the sector. Confusion has arisen regarding the transparency and visibility of programmatic, and most are in agreement there is a major education job still to be done here on behalf of the industry. World Federation of Advertisers’ head of marketing capabilities Robert Dreblow says there is widespread concern among its member base as to what the return on investment is for programmatic. Meanwhile he says there is confusion regarding the arbitrage in the programmatic value chain, leading to a lot of incremental costs, leaving brands unsure as to how much of their spend is ending up as media investment. He also said the rise of agency trading desks, which pump through huge volumes of programmatic inventory, has clouded the issue for some clients, given that agencies essentially now act as buyers and sellers. “Clients want agencies to have their interests at heart but it sometimes feels like, when it starts becoming a bit like a resellers market, that perhaps they are not being represented as well as they might. Is it an agency discussion or a reseller’s discussion, as that’s a very different conversation to be having. “Client agency relationships have to be based on trust and that the agency is working on your behalf, but if you become a reseller and your interests start to be both on the sell side as well as the buy side then your recommendations aren’t going to be as neutral as they otherwise may have been – that dynamic has changed. As an agency I’m more likely to suggest a channel that will benefit my own bottom line rather than one that won’t. Clients always want a platform or channel neutral recommendation,” says Dreblow. Others meanwhile believe the very definition of programmatic isn’t always clear for advertisers. Addressable video audience platform Videology’s senior vice president of global accounts Jana Eisenstein says there is confusion over the terms programmatic and real-time bidding (RTB), with many seeing the two as the same thing. “Lots of people think programmatic means RTB which is actually not entirely true – programmatic is using data to automate advertising through ‘decisioning’ and algorithms. It’s the ability to make real-time decisions using different commercial models, of which RTB is one type. In 2014 that will become better understood,” she says. This article was first published s part of The Drum's digital trading feature in the 19 February issue.

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