By David Ward
Currently the results are a bit mixed: Programmatic is making strong gains in out-of-home (OOH), direct mail, and radio, but has yet to gain much traction in the all-important world of television advertising. But there is optimism that the more digitized the ad creative and ad units for these platforms get, the greater the role software-based media buying and audience targeting will play. "Eventually all ad space will become digital and will be traded programmatically," predicts Jack Smith, chief product officer at GroupM North America, parent company to WPP media agencies including Mindshare, MediaCom, Wavemaker, Essence, and m/SIX, as well as the programmatic digital media platform Xaxis. "That is a process that is occurring over time across all media."
"I truly believe the boundaries of where programmatic can be applied will expand and that it will someday be used wherever media has been made addressable — that is, where data can influence a decision, and where data can flow out to influence the next decision," adds Joanna O'Connell, CMO at New York–based programmatic marketing technology company MediaMath. "There's much more work to do on a lot of fronts — infrastructure, business relationships, organizational make up, planning/buying practices, and measurement — just to name a few, but things are definitely moving in a more data-driven direction."
One reason why advocates like Smith and O'Connell are so bullish is that even the word programmatic is no longer narrowly defined as a software-based method for purchasing ad space. "Many mistake 'programmatic' as simply 'automation' — and many of the so-called programmatic tools focus exclusively on that piece," explains Lewis Gersh, founder and CEO at PebblePost, which claims to have invented programmatic direct mail. "But true programmatic tools give marketers incredible targeting power and precise reach to a vast array of audiences. If the balance between efficiency and efficacy is right, marketers gain efficiencies and effectiveness in not only their ad spend but also in the time and resources put toward these activities. And yes, response rates and [returns] are significantly higher."
Programmatic for social, mobile, and online is now such a part of the advertising world that brand managers are not only comfortable with automated media buying, they have come to rely on the near real-time metrics and analytics that programmatic tools provide. In fact, in an April 2017 report, eMarketer estimates that 78 percent of this year's U.S. digital display advertising — representing $32.56 billion — will be done programmatically.
That makes selling programmatic for traditional platforms a much easier process, Gersh says, noting PebblePost has signed on hundreds of brands in less than two years out of beta testing. "We're building richer analytics and performance measurement tools to empower marketers to change their digital ways — for their sake and for consumers," he says, adding, "PebblePost is based on interest and data, meaning an octogenarian in Kansas City is just as likely a target for programmatic direct mail as a millennial hipster in Brooklyn."
The Broadcast Conundrum
For all the success programmatic is making, linear television advertising remains one area where growth has been considerably slower — and is likely to remain so for the near future, says David Morgan, CEO at Simulmedia, the New York–based technology company that applies digital marketing's best practices for audience targeting and campaign measurement to the world of linear TV. "Programmatic is not going to happen on TV anytime soon for several reasons," he says. "TV is a supply constrained market. That is why advertisers buy the bulk of their spots a year in advance at the Upfront. "The custodial systems that run the scheduling for the vast majority of TV networks and distributors were built more than a decade ago. They are incapable of dealing with dynamic ad insertion."In addition, the custodial systems that run the scheduling for the vast majority of TV networks and distributors were built more than a decade ago. They are incapable of dealing with dynamic ad insertion. Lastly, TV networks can make more money using data to drive better pricing and yield for their inventory via audience-based selling. They have no reason to add 'programmatic' just because it's possible." Morgan says programmatic ad buying may be able to make some progress on the periphery of television advertising, especially with the growth of smart TVs, although he doesn't see a significant programmatic TV market forming any time soon.
Smart TVs, which will enable the delivery of banners and overlays through the internet, will trigger a bigger impact as a result of the amount of new, faster, and more robust viewing and behavioral data that they will produce. Today, most of the data for audience-based selling on TV comes from cable set-top boxes. In the future, Morgan expects that more and more will come from automatic content-recognition technology on smart TVs. The major TV network companies and cable operators, he says, are currently investing heavily in data-driven audience targeting, with initiatives like Linda Yaccarino's $1 billion audience-based commitment at NBCU, and Fox, Turner, and Viacom collaborating on OpenAP, which allows brands to define an audience segment once, and then buy it across all three networks in the partnership.
But these types of audience-targeting technology are not the same as addressable TV ads inserted by a cable or satellite provider via set-top boxes programmatically, which a recent eMarketer report estimates will only be about 1.7 percent of the nearly $73 billion total spent on U.S. TV advertising this year.
By 2019, that proportion will grow to 4 percent, eMarketer predicts, leaving the vast majority of TV ad inventory to be sold manually, which is exactly the way television industry executives want it. "They have not invested significantly in programmatic TV because it's not a good way to make more money on their inventory," Morgan says.
Getting Airtime Programmatically
Despite being an older technology, radio is proving to be fertile ground for programmatic ad buying, says Mike Dougherty, co-founder and CEO at Jelli, with brands increasingly looking to execute targeted national ad buys by working with large radio groups such as iHeartMedia that control hundreds of stations across the country. After launching in 2009 as a social radio platform that brought listeners into the decision making on what songs played on their favorite radio stations, Jelli pivoted in 2012 with the launch of its first programmatic advertising platform, RadioSpot.
Today Jelli provides programmatic technology so brands can buy premium inventory with sophisticated targeting on iHeartMedia's private marketplace, Sound Point, which reaches 848 stations. The San Mateo, Calif.–based company also provides the backend to enable programmatic buying on Katz Media Group's Expressway, the nation's largest industrywide radio ad marketplace, which reaches thousands of stations. On Jelli, advertisers can buy radio advertising in the same way they buy Google, Facebook, or digital advertising, Dougherty explains, adding, "Campaigns that used to take days or weeks to negotiate as part of the normal RFP process can now be done in a few minutes." Brands are using Jelli technology to deliver campaigns with targeted market-by-market strategy with the ease of a national execution. "But we can also enable a local advertiser who might be working with a group of stations in a market to use the platform and get real-time reporting that is very similar to how they get reports from Google advertising," Dougherty says. Programmatic radio ad buying also enables brand managers to quickly change the creative that loaded into the system, giving them the flexibility to, for example, provide different ads for a drive-time audience depending on whether it's sunny, rainy, or snowy in that market. "It is true that on a broadcast platform you don't have that natural feedback, but any ad agency will be able to match that up against other data sets, store purchases, or website visits," Dougherty adds. "But brands are finding it effective to align their radio advertising to their digital targeting strategies, for example taking the same strategies and messaging that are effective on Facebook and then using them on radio."
Digital OOH Fertile Ground for Programmatic
Out-of-home advertising has already undergone a tremendous transformation in the past 15 years, not only with digital screens replacing what had been static signage, but also with technology such as geo-fences that enable brands to target consumers with specific location-based messaging. Now the introduction of programmatic demand-side buying platforms is enabling brand managers to tap into high-quality audience-driven data and buy OOH in the same way they purchase online ad space. "As a result, this ends up being a more efficient buying solution all the way around," explains Wade Rifken, SVP of programmatic at Clear Channel Outdoor Americas. "Because it's the same interface advertisers and agencies use today, they don't have to learn a completely new dashboard. This allows us to spend more time with advertisers, helping them craft even more targeted and measurable programmatic OOH campaigns. And we can work with them to sequence their message to consumers across the programmatic channels they're buying, lending more credence to the omnichannel approach advertisers seek."
The technology behind modern digital signage can also deliver location-based messages to a consumer's smartphone, providing, in essence, the two-way engagement that brands want. "I expect to see a further confluence of mobile and OOH with a larger roster of companies that use mobile data and mobile media in more sophisticated ways alongside OOH campaigns," Rifken says, noting this was the impetus behind Clear Channel Outdoor RADAR research, data, and analytics tools, which help advertisers and advertising agencies more effectively connect with target audiences through OOH. With improved screen resolutions, OOH can now also provide a new way to give consumers, regardless of age, what they all seem to want: compelling video content, says Smith of GroupM North America. He adds, "The screens get better and cheaper to produce and that changes the economics of the outdoor business while also providing a delivery system that is centrally managed."
There is such a thing as being too cautious, especially when it comes to OOH.
According to Smith, programmatic OOH makes it possible for brands to begin conversations in a physical location and then automatically track and tailor additional messaging and engagement through the user's smartphone. "Instead of going digital to offline, you take the opposite approach and connect with them through a geo-fence," he explains. By doing so, brands get a better feel for not only how many people are coming through that geo-fence but also what kind of lift a brand gets from that kind of OOH traffic.
Programmatic Offline Going Forward
If nothing else, the expansion of programmatic into traditional advertising platforms should get brand managers to rethink how they measure and evaluate radio, television, OOH, and direct mail campaigns.
"The biggest mistake is treating these channels as too unique," says O'Connell of MediaMath. "They all do, of course, have their unique properties and purposes, but getting too siloed means a disjointed strategy and fractured experience for the user. Marketers should start steering away from allocating specific budgets by channel, moving instead toward a more audience-first approach that lets them execute marketing based on where they can find their target user, what they know about the user, and how they hope to influence that user. Focus on your goal — more in-store traffic, brand lift, sign-ups."
Even though many of these programs are still in their infancy, Rifken suggests there is such a thing as being too cautious, especially when it comes to OOH. "Don't be too narrow in your geographic footprint," he says. "Add on mobile geo-fencing and retargeting to campaigns wherever applicable to drive consumers further down the funnel, which also provides measurable ad response rates for optimization."
The presence of a programmatic dashboard on an office PC also doesn't mean a brand manager's role has gotten easier or that they're no longer required to do basic blocking and tackling of advertising, including minimizing ad fraud. "Advertisers should seek transparency in the results of their campaigns," says Morgan of Simulmedia. That should include metrics on reach and granular audience delivery, he says, adding, "When it comes to advanced advertising, advertisers should demand a lot because they can get a lot."