In their recent report on the profitability of programmatic advertising sales, Boston Consulting Group identified four ways in which the publishers are outperforming all rivals. The most successful publishers:
- Use cross-channel, data-driven strategies
- Segment and match inventory with the right buyers
- Assemble the right technology
- Build strong go-to-market and analytic capabilities.
The report argues that many publishers fail to incorporate programmatic sales as a core element of their strategy, or to properly manage their programmatic teams. In the worst cases, programmatic specialists are spending less than a quarter of their time creating value. As the programmatic market continues to grow, these firms risk eroding their market share, thus revenue, thus long-term profitability.
According to BCG, programmatic advertising is a $9 billion market and growing rapidly. Programmatic buying automates the process of identifying where you want to advertise (based on consumer traffic, browsing preferences and network reach) and buying advertising space at auction (up to a set maximum bid).
It’s the optimal way to keep pace when opportunities to advertise and consumer behavioural trends are emerging and being sold in real time, and shifts some of the data management burden from human staff onto automated systems. However, the systems need to be properly selected, constructed and deployed in order to achieve their full potential. BCG identified the following key elements in doing so..
Cross-channel, data-driven strategy
Successful publishers have a cohesive and well-formed data strategy. Their management and monetisation of first-party (i.e. data about their own audiences) governs the strategic choices these publishers make. Marketing strategies and pricing structures are based on concrete successes evidenced and supported by data.
A data-centric approach demands rigorous and clear planning, establishing the extent to which programmatic advertising will supplement or replace direct sales. Take eBay’s recent ‘Programmatic Only Week’ for instance. The experiment—where 100% of the online giant’s UK advertising was booked and executed programmatically— was opened to all media buying outlets and allowed the team to collect vital data for future campaigns.
Anna Stoyanova, head of programmatic EMEA for Essence said:
eBay’s ‘programmatic-only week’ focused on buying through auction. During the week we saw a massive increase in supply relevant to demand, but we haven’t seen a devaluation of the inventory, which is really encouraging for publishers and brands.
This is the kind of data that only comes through planning and testing.
Right inventory, right buyer
Building a body of reliable data also means that publishers can match advertisers more accurately with the audiences they want to reach. A publisher who knows their advertisers’ needs in great detail, and who can refresh and extend their inventory when an opportunity arises, can provide accurate targeting of consumers.
Staying close to buyers and customising programmatic sales of targeted inventory can yield six times the CPM of conventional direct sales.
Assembling the technology
The technology involved in programmatic buying requires careful choices to create the right ‘stack’ of software and user choices. The stack is based on ad-serving technology which delivers the sales. Decisions in which sales to deliver are supported by programmatic demand sources and tools. Both delivery and decision-making software must be configured to maximise CPM and fill rates, and these configurations must be specific to each channel and platform in which the publisher operates; one size does not fit all.
Finally, the stack is topped off by data management/output tools which check the effectiveness of the stack as a whole. In general, discrete stacks will need to be built for each area of a publisher’s inventory, although some ad servers and programmatic buying tools work across platforms and provide integrated input and output for different stacks.
Technology is useless without the skills to configure it, assess its output and make the decisions it recommends. Hiring programmatic sales specialists and data scientists is a start; integrating them into an existing team is better, since it gives the specialists access to your existing client relationships and thus offers more developed insights into your advertisers’ needs. The human factor is vital: data will not analyse itself, nor will new methods sell themselves to advertisers.
The bottom line
As trends emerge and platforms proliferate, automated identification and selling of advertising opportunities will become essential to keep track of opportunities and trends, and therefore compete in the market. The gap between direct and programmatic sales will gradually close, and publishers who want to stay in the game will be well-positioned for the predicted explosion in programmatic sales – up to 83% of the online market over the next two years.