Programmatic tsunami: adapt or drown

Automation of media buying will have far-reaching effects for businesses, says Starcom's Kevin Malloy.

Humanity’s fascination and fear of automation dates back as far as Homer’s Iliad, in which he writes of the Olympian blacksmith Hephaestus constructing metal maidens who think and talk. Today, media is filled with dire warnings about the redundancy of human labour, wrongly I believe, in the face of the robotic onslaught.

But when I think about programmatic media buying (PMB), I know that there will be significant job losses across a vast range of industries that employ sales staff.

Programmatic simply refers to the automation of the buying and placement of advertising and, most importantly, the enhancement of business communication to consumers through digital channels.

Programmatic is here, although its growth has yet to hit the point of inflection because it is still accelerating. We can see it coming and I assure you that its impact will be like a tsunami in terms of how everyone conducts business in our industry.

It will be a case of adapt or drown. Anything that is digital will be affected by PMB. It changes the way businesses communicate with audiences, hands even more power to the consumer and increases everyone’s reliance on data.

In the US this year, 70%+ of display advertising will be purchased through PMB, posting year on year growth of 74% to $US3.2 billion and more than 80% of advertisers are buying PMB networks or using an auction system.

The world’s biggest advertiser, Proctor & Gamble, has publicly stated that within five years, 70% of all its advertising will be programmatic.

Programmatic is the logical response to the explosion and splintering of media outlets and publications. It was becoming too difficult to manage all the niche providers of content and it was only a matter of time before the process was automated.

At its most basic, programmatic is anodyne: we’ve automated media buying. We still need to strategically plan and do all the clever stuff that informs a communication campaign. But the actual transaction can be and is conducted in nano-seconds.

I’ve included a chart (below), which sets out the basic elements of the process. There is an agency trading desk (ATD), through which we manage the process. A data management platform (DMP) is first, second and third party client information. A demand side platform is third party data to help with the bidding process and provides consumer information.

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Those acronyms are problematic. It makes it sound overly complicated, something that’s solely the provenance of tech geeks. In fact, it’s relatively simple, even if its effects are far-reaching. PMB requires data, technology and media inventory (ad space) to create an online auction platform for buyers and sellers for real-time transactions.

The Ad Exchange platform handles the online bidding process with businesses or media buyers buying from the sellers, the publishers of content who have ad space to sell. It’s automated and commoditises the process.

There are some on-going issues: advertising fraud and transparency around the transactions are concerns. And there are those “oops” moments that can result from automation. For instance, once your ad is out there it can end up anywhere and I’m aware of several companies who found their brand gracing the pages of pornography, which is not where you want to be.

These issues are being addressed through the creation of private market places, where people like me select the key media channels we want for our clients’ campaign, which gives us more control over the automated process and reduces the opportunity for ad fraud and, God forbid, appearing in porno.

Any company that advertises will benefit through better, tailored, flexible, more accurate and connective communication to its audiences. And the results can be measured more accurately, building market confidence in the efficacy of PMB.

It does turn publishers into a traded commodity but it also presents them with greater opportunities to increase revenue, even if there is downward pressure on prices. They can set parameters around what they are offering, so PMB is not a race to the bottom.

It completely changes the business communication dynamic because, in theory, we will be able to connect the right message to the right consumer at the right time and place. It’s about having conversations with individuals but at scale. To put it another way, it’s personalised mass-market communication, so that businesses can intimately interconnect with a person but that person is multiplied across the vast array of media channels.

The big discussion now is when television advertising will become programmatic. There are some complications compared to online publications and my best guess is we’re about three to five years away. But a fully programmatic media buying world is coming, so best for advertisers to get their minds around it now.

Kevin Malloy is Starcom global director, Coca-Cola.