Kellogg’s spoon-feeds its secret recipe for programmatic prowess

Kellogg’s is further than most advertisers in its programmatic play though it has yet to fully translate its mastery of buying display inventory to premium video.

The cereal maker first began experimenting with automated advertising in 2011 and admits it is still learning at a “tremendous pace”. Unlike other advertisers that only see programmatic through a real-time bidding lens, Kellogg’s is mindful that it touches everything from private exchanges to open exchanges.

This knowledge has pushed it to pump more than half its US digital advertising budget into programmatic, spurred by the belief that automation can usher in effective rather than efficient advertising. Creativity not cost is the priority for Kellogg’s programmatic with it willing to pay more to get better results at a time when its marketers are being asked to push budgets harder.

The cereal company’s efforts to date have seen it engineer a 24 per cent year-on-year increase in targeting efficiencies and a six per cent decline in the cost per thousand impressions (CPM). It’s an impressive return on performance, one that is matched by the gains it has made on the efficiency side. Request for proposals (RFPs), long seen as a cumbersome process in the high-speed world of automated trading, are being slashed from its media planning with 0 submitted for 93 campaigns in 2013 compared to 100 for 44 campaigns a year earlier.

Speaking at Advertising Week yesterday (25 March), Kellogg’s associate director for media Amaya Garbayo said transparency of both cost and inventory plus the right metrics are key to a successful programmatic strategy. From establishing an in-house programmatic team to building out a roster of trusted third-party partners, the company has realised it has to “create white space internally” to nurture the expertise needed for a discipline that differs vastly in various markets, she added.

These principles have guided Kellogg’s charge on display over the last four years and are helping it move into the more complex video space. The issue it faces is that CPMs on video inventory are inflated, compounded by a greater pressure from the advertiser side for videos to be viewable and appear on premium sites. This wasn’t so much an issue for advertisers with display and so Kellogg’s is investing time to analyse the value of those CPMs.

“When you start demanding that impressions go against the brand target, that [the ads] are viewable and that you have the right figures, then you inflate on CPMs,” added Garbayo. “Generally you’re paying more for what you need [when it comes to video] but as long as you know how much more that it is then you can work out the benefit to your advertising.”

It could mean Kellogg’s heeding the advice of video advertising partner Brightroll and optimising just the CPMs it pays for, a dynamic that is counterintuitive to display. Trials with other advertisers have seen them secure more viewable inventory, albeit at a higher gross cost for CPMs, according to Brightroll.

Creating these strategies is taxing due to the differences between the US and Europe. Kellogg’s video efforts are being stifled by the differences in “inventory levels” between the two regions as well as the “relationship between programmatic video versus TV” and the CPMs it has to pay on both those channels, admitted Garbayo.

Kellogg's sees video as a way to turn programmatic into a brand building technique rather than just a performance play. However, its path is littered with challenges, from viewability to fraud, which will need to be swept aside if it is to exploit the premium inventory.

For Kellogg's, the issue of non-human traffic is smaller compared to viewability, despite doing a major study into the science of the former in the second half of 2014.

“Video is a lot more problematic than display when it comes to non-human traffic because there is more desirable inventory and the CPM is higher. There are tools on the marketplace to avoid some of that,” said Garbayo. “[The issue of] Non-human traffic may have been in the news lately and is very important but viewability is a lot larger for Kellogg’s.”

Video is the latest chapter in the rise and rise of programmatic. It promises to let advertisers reach multiple screens with a single transaction, backed by the guarantees of TV buying – inventory guarantees, premium ad placements and brand safe environments.

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