Introducing ‘programmatic buying’: What is it and why does it matter?

By Chris Lee

“Every marketing executive today needs a good understanding of programmatic buying to run successful digital marketing programmes and advance their career,” is the advice of programmatic media-buying platform Rocket Fuel.

But just what is “programmatic buying” and why should digital marketers care? Rocket Fuel describes programmatic buying as “the act of bidding for an advertising inventory source in real-time for the opportunity to show one specific ad to one consumer in one specific context”. Programmatic buying therefore enables marketers to move from broad, segment-based buys to honed individual purchases.

According to Rocket Fuel’s Roland Siebelink and Eshwar Belani, authors of a white paper on programmatic buying, this system ensures that marketers only pay for the customers they want in the context that generates the most impact.

“[Marketers] can avoid payment for the wrong kind of consumer that happens to be visiting a certain content property, or even the right kind of consumer when they are visiting in the wrong context,” Siebelink and Belani argued. “With programmatic buying, marketers can reach the right individual consumers with the right message in the right context. This also fundamentally shifts communications planning recommendations from ones based on panel-based composition indices and audience proxies to planning in real time for true audience delivery.”

Traditionally, programmatic buying is used in online display ads. YouTube, for example, opened up its content for programmatic buying in 2010, enabling marketers to utilise pre-roll and in-video banner adverts. Facebook also enabled programmatic buying when it launched its Facebook Exchange (FBX) ad platform in late 2012.

Programmatic buying is also becoming available on mobile platforms.

Utilising big data to target customers

Programmatic buying utilises more data points about the customer to hone ad relevance, the report authors argue. This could include clickstream data, demographic and behavioural data, and other third party data points to build up a picture of the customer, whereas the traditional segment-based ad model can only target certain aspects like gender, income, geography and so forth.

“The best programmatic buying systems can evaluate millions of data features, all in real time,” Siebelink and Belani said.

Measuring programmatic buying

Rocket Fuel says that programmatic buying is measurable because it can log every individual impression, click and conversion in real time, which brand managers can then map against campaign goals.

Siebelink and Belani believe that programmatic buying can be used right across the sales funnel, from branding to conversions, from new customer acquisition to loyalty campaigns, and that the smartest users could see return on investment of “five or six times” over traditional ad buying as they will only be targeting relevant consumers in the right context. Blockers and pre-screen inventories can be used to ensure that ads do not appear in inappropriate contexts or websites.

“Driving success in programmatic buying means taking advantage of the ability to optimise a campaign to learn and improve on results in real time,” Rocket Fuel advised. “We can classify different forms of optimisation along a spectrum ranging from the most sophisticated and effective of methods – automated, progressive, optimised – to manual, cross-tactic optimisation.”

With an increased emphasis on “one-to-one” marketing, the increased personalisation of ads should improve the relevance of ads for Web users and marketers alike, Rocket Fuel argues.

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