A Marketing Manager's Guide to Programmatic Advertising

Programmatic advertising is a “catch-all” term for the process of automating the buying and selling of desktop display, video, Facebook exchange ads (FBX) and mobile ads using real-time bidding. Programmatic advertising is quicker, more efficient – and most importantly – scalable. According to eMarketer, more than $9.8 billion ad dollars will be spent on programmatic advertising by the end of 2014, up from $2 billion in 2012, making programmatic advertising the fastest growing method for buying and selling ads. Australia is currently leading the world in mobile programmatic growth, even passing up the U.S. for quarter-on-quarter mobile ad programmatic sales growth. Now, more than ever, it’s critical to understanding the growth opportunities available in the mobile programmatic ad space so you can position your business to capitalise on these opportunities.

If your business is not currently using programmatic advertising, then perhaps it's time to start investigating. Are you new to programmatic advertising and not sure the best way to get started? No worries – we’ve got you covered! As a marketing manager, here’s what you need to know about programmatic advertising.

What is programmatic advertising?

Traditionally, marketers have been very dependent upon publishers and ad networks for data when forming their advertising strategies. A decade ago, sellers and buyers used to spend all day faxing change orders back and forth on deals in an effort to maximise ad performance. Just a few years ago, sellers and buyers were still going back and forth on ad deals – they were just using PDFs. And while PDFs are slightly more efficient than faxes, insertion and change orders by their very nature are still time consuming and inefficient.

Programmatic advertising has turned this status-quo upside by empowering marketers to own their data and attribution models. By using real-time data to make decisions about what ads to buy, marketers are able to hyper target their ads, improving ROI. The best part? This entire process is completely automated.

Automating ad buying is the only way to realistically survive today’s continued onslaught of ad data. Today’s media buying process has completely outstripped human capabilities. At its core, programmatic takes multiple data points and decides what is the most effective advertising strategy at any point in time, including what screen an ad should appear on.

What’s the difference between programmatic advertising and real-time bidding?

As technologies improved over the last decade, real-time bidding (RTB) became popular with marketers. Real-time bidding allows marketers to make smarter decisions about which sites they should purchase an ad on or which audiences may be most receptive to an ad. RTB is simply a new way to think about ad bidding and exchanges; it doesn’t take into account the value added by using data, tech and software to maximize every dollar spent. Programmatic advertising combines real-time bidding with layers of data, tech and software to truly maximize the ROI for every advertising dollar spent.

Just how popular is programmatic advertising?

Programmatic advertising is more than just a trendy marketing buzzword, it’s quickly become a sought-after marketing strategy for businesses of all sizes. Programmatic advertising reduces transaction costs for buyers and sellers while making it easy to monetise a broader spectrum of digital medium impressions. Early estimates predict that programmatic advertising will account for 48 percent of all display advertising purchased in 2015. Australia has firmly established itself as a leader in digital video programmatic advertising – even beating out the U.S. market – and analysts predict growth will continue at a rapid rate. IPG Mediabrands, for example, announced that it was committing to conducting at least half of its media buying programmatically by 2015, according to AdNews.

While the pace of programmatic adoption varies by country, Australia has already established itself as a global leader in programmatic ad buys. Australia is one of the top five markets in the world for programmatic spending, coming in just behind the US, the UK, China and Japan. And while markets like the Netherlands, France and Spain have robust programmatic advertising capabilities, the total expenditures for these countries significantly lag behind the “big five” (US, UK, China, Japan and Australia). For example, combined expenditures for the US, UK and Australia represent 70 percent of total display-related ad expenditures, according to a new Magna Global survey reported by Which-50. Here in Australia, the Magna Global study found that programmatic buying already accounts for 60 to 70 percent of total display-related expenditures.

Australia’s programmatic video advertising marketing is leading the world in quarter-over-quarter expenditures according to enterprise software company TubeMogul. Australia led the world in percentage mobile growth, increasing from an average of 16 million programmatic auctions in the first quarter to more than 86 million auctions in the second quarter of 2014, according to the TubeMogul Australia State of Programmatic Video report. Australia also had the largest percentage growth in available desktop programmatic video pre-roll inventory, jumping 101% over the previous quarter, to more than 232 million auctions.

According to TubeMogul Quarterly Report, video ad inventory purchased directly from publishers through programmatic channels reached 79 million impressions in Australia in the second quarter of 2014. This exceeded the 72 million impressions reached within the U.S. market. While Australia may have had a slower start in programmatic advertising, its clear that when it comes to mobile ads, our country is leading the way. Some 70 percent of Australians watch video online, spending on average of 5.5 hours each week watching television online, according to Exchange Wire. Online video is more than just mainstream; it’s a prime target for advertising dollars.

How does my business get started with programmatic advertising?

Under the programmatic model, advertisers and brands (like your business) retain ownership of their first-party audience data while publishers/media outlets retain control over inventory pricing – and everything is updated in real time. So, what exactly does that mean? Let’s say your business wants to run a video ad on mobile devices. To do this, your business will need to use a third-party agency to place the video ad. When you work with this agency, you’ll have access to video ad inventory in real-time across all devices, also receive ad serving, targeting, optimisation and brand measurement data.

Major players in the Australia programmatic advertising space include TubeMogul, which recently announced a new partnership with Foxtel. Under the partnership terms, the digital media team at Foxtel will use TubeMogul’s video advertising platform to support brand, customer and acquisition marketing efforts. This includes exclusive access to BrandPoint, a tool for accurately buying digital video on a target audience rating point (TARP) basis, according to a recent TubeMogul announcement.

So, where will your programmatic ads be placed? Here in Australia, popular targeting destinations include "multi-player word game Words With Friends, video-sharing website Dailymotion, live streaming video platform Twitch.tv, mobile app Draw Something, Android Video Player, Solebon Solitaire, Music Download Paradise and the official game for the TV show The Voice, The Voice: On Stage", according to AdNews. Mobile ads are especially effective since that the majority of Australian mobile device users spend considerable time using games, social applications and video-focused applications. According to Antoine Barbier, TubeMogul’s global head of mobile product, 85 percent of mobile video programmatic ads are placed inside these apps. Mobile users spend 10 percent of their time watching these mobile advertising videos.

Currently, programmatic advertising is easiest for major companies; small businesses may find it more challenging to use some of the current platforms in place. However, continued platform improvement will lower these barriers to access for smaller businesses. Cost is a big factor too when deciding whether your business is ready to jump into the programmatic advertising world. For example, premium programmatic advertising can run $15 for display ads (cost-per-thousand) and up to $25 for video ads. Premium ad inventory is generally on homepages or next to highly contextualised content, such as financial content targeted at CFOs. As more premium ad inventory becomes available, however, costs may drop – making these ads more accessible for smaller businesses on tighter marketing budgets.

What’s the future of programmatic advertising?

As programmatic advertising continues to gain a strong foothold, agencies are searching for new ways to target consumers across multiple platforms. With users migrating from smartphones to tablets to computers and back again multiple times each day, mastering targeting in the multi-device landscape is the next big frontier for programmatic advertising, according to AdWeek. Improving inventory quality is also important; after all, no one wants to make a big ad buy only to find out the ads are being displayed next to controversial or low quality content. Increased inventory quality transparency, combined with a better approach to multi-platform advertising, will continue to drive programmatic advertising growth.

In Australia, it’s clear that programmatic advertising, especially for mobile video, is exploding. Identifying the best ways for your business to leverage mobile video advertising may not be easy at first, but stick with it. Making programmatic mobile video advertising work for your business is an important piece of a successful marketing program.