Programmatic or Problematic?

Definitely one of the buzz words in South Africa’s digital media landscape in 2015 & 2016: Programmatic media buying. For most SA (digital) media professionals it is like teenage sex: everyone is talking about it but hardly anyone is doing it (right).

Let’s first define Programmatic. Programmatic is widely defined simply as using software to automate ad buying, a process that was previously manual. In years past, programmatic buying was limited to real-time bidding (RTB) and ad exchanges – perilous waters for brand marketers without the right tools. But the tide is turning. More than half of display ads bought programmatically are direct buys, meaning software simply automates a private deal.

For South Africa, a market where Internet advertising only accounts for (less than) 10% of total advertising, it is not a surprise that new techniques and development within the industry are not (always) closely followed and widely spread. Therefore programmatic media buying is still considered an exception or rarity. Because of the early stage of this service in SA there are various suppliers and advertisers that all have their own interpretation and understanding what programmatic is and how it should be applied.

In general the level of knowledge of what programmatic media buying is in SA, is low. The majority of online advertisers buy their digital display media in a traditional (manual) way. There are however some progressive (e-commerce) advertisers that are asking the right questions, are curious and willing to learn. Some of them are instructing their agencies to investigate this way of buying media or are simply starting to buy digital display media via a DSP themselves. It is often the desire to understand their online consumers’ behaviour and gather the data that is driving this decision. Most local agencies that are part of international networks are also receiving guidelines from their (mostly) European head offices to buy more media programmatically.

On the sell side there are two camps. There is hesitancy and resistance against this way of selling media from publishers who see programmatic as a threat and fear losing their premium CPM rates or see it as a channel where only remnant inventory is sold. On the other hand there are media owners and networks that represent publishers and setup their own marketplaces in the ad exchange; representing premium media owners and allowing advertisers to truly assess its value. An essential first step to gather priceless consumer data and engage with the buy side in a programmatic way.

SA and the rest of the world. South Africa is still dealing with many misconceptions and misunderstanding around programmatic. Unfortunately, there are quite a few SA advertisers and marketers that did tap into this new way of buying digital display media but did not receive the results or experience they were hoping for. There are many agencies that operate under the banner ‘Programmatic’ but lack all the insights, deliverables and, more importantly, transparency that should come with it. Fixed (and still high) CPM models, CPC deals or the non-disclosure of domain lists are still common practice here in SA. These short term, high profit models practiced by agencies are extinct (since non-sustainable) in mature online markets overseas.

As a result you will often hear advertisers in SA talk about programmatic followed by the words ’fraud’, ‘viewability’ or ‘transparency concerns’. This has however nothing to do with the automated way of buying media that programmatic is. In some cases, agencies are protecting legacy business models by spreading the idea that programmatic is just a tactic to be used to scale audience buys or achieve performance objectives, while ‘premium’ inventory should be bought and negotiated through media buyers and the tired I/O process.

In other cases, programmatic is leveraged as a tactic to create new revenue streams by steering spending toward preferred – though not necessarily the most premium – publishers via private marketplaces. Either way, the thinking is often short-term when we should be rebuilding legacy models and retaining talent for the long-term.

As a result, brands in SA are discouraged from fully leveraging technology across the largest component of their ad buys, their private deals with premium publishers. That is unfortunate, because the infrastructure is in place to make all ad buys more effective – not just RTB or preferred private marketplaces.

The benefits of consolidating all ad budgets through software are clear: streamlined planning and execution, the ability to control reach and frequency across publishers and improved campaign performance from automated optimization and unified reporting.

These benefits do not need to end with digital advertising – eventually, software may even be used for upfront TV buys. Overseas breakthroughs in the past year in extending automated buying to traditional formats – out-of-home, print and TV – point to a future where any media channel can be bought through software.

The main drivers of programmatic in SA are e-commerce advertisers who need to understand the behaviour of online consumers in order to survive. This is where data driven advertising (bought programmatically) comes into play. If you can measure how an online awareness campaign has attributed to your monthly online sales on your website, it is hard to go back to the old way of online media buying (where tracking and buying was not integrated and not automated).  Examples of innovative advertisers in this space are NetFlorist and sportscene (TFG).

Also on the sell side there are progressive publishers who understand the need to invest and understand how programmatic is going to change their industry. They are able to see beyond the fear of lower (initial) CPM rates and are rather focusing on a sustainable and true attribution model of their inventory. They understand (i.e.) that selling 100 000 impressions at R350 CPM makes less money than selling 1 000 000 impressions at R50 CPM. Currently it is still only publishers who are continuously and completely sold out that want to hold on to the R350 CPM. However, over time as more and more advertisers (and as a result agencies) will move to buying programmatically (in USA in 2016 67% of all digital display media will be bought programmatically*) (*source Emarketer), the publishers who hold on to the direct way of selling media will no longer be sold out and eventually have to move to an auction model as well. By then the early movers on the sell side have built up so much audience data in their platforms that it will be hard for other publishers to catch up. No longer it is about the website you buy your media on, but the audience you reach via this website. And because browsers visit many websites on a daily basis and you can target them at any given time, you just optimise towards the most cost efficient placement, with the right message, at the right time, for the right price.

At Sprout Performance we service one of the largest and most progressive online  financial services' advertisers in the country and we have managed to convince them to ONLY buy their digital media programmatically and completely track all their digital media channels both post impression and post click. This has accelerated some of the conversations we were having with publishers and media networks to open up their inventory in the exchange.

Some of the pioneers in South Africa that are launching exchange networks with premium inventory are Dimpl, SouthernAdx and ACME.

Benefits of programmatic media buying. Marketers and media buyers that operate across digital I would advise to become more aware that there is technology available that allows you to optimise your media campaigns beyond the last click. For many years both advertisers and publishers have concentrated on last click attribution in their digital campaigns. This simply means that we assessed the performance of our campaigns (often poorly defined in CTR or number of clicks) based on the last interaction that we could measure. This was mostly done in Google Analytics and showed which channel delivered the converting customer. 9 Times out of 10 this was paid (Brand) Search (Adwords). As a result thereof we all invested heavily in this channel and focused on a lowest CPC. This is where all your competitors were operating as well.

At the same time we kind of knew that there was a brand building or awareness exercise that needed to be done. This often resulted in an online display or video campaign. The difficulty was, however, how to establish a good performance indicator (of its attribution) of this channel. For years we focused on the only thing we could measure (again): the last click. And because all we could measure was the last click, often the display channel was doomed to fail: no one clicked a banner and instantly converted (purchased a product, downloaded an application or applied for a test drive) after seeing a banner (once). It was like we judged the defender on the football field (or the prop on a rugby pitch) by the number of goals (or tries) he scored in a match since that was the only thing we could track!

Nowadays, since technology allows us to connect all channels in the digital mix, we look at the customer journey as a whole (across channel and across device even!) and go all the way back to the first interaction. If we know where a converting customer got in contact with your campaign for the first time, surely we want to be there more often?

Technology and best practices. Do you need to know how a car engine works in order to drive it? Probably not. But the fact is that most award winning racing drivers do know how to take a car engine apart and put it back together. Digital marketing has definitely changed and is requiring a new skill set. Sprout Performance employs data analysts over marketers and we hire mathematicians before we look at media planners and web developers and programmers are the new media strategists. Correct data interpretation is the modern agency’s new strategy. So it definitely helps if you are familiar or are interested in the technology that provides this data. But the basics will do: if you understand that you can only get insights across the full customer journey of your (online) clients by tracking ALL your digital channels (display, rich media, paid search, direct traffic, email newsletters, affiliate clicks, video, etc) and how to value the role each channel plays, you will likely be willing to make sure you have all these channels tracked and connected. This happens through an ad server. That is where you start. You can no longer be dependent on the monthly reports of your agency or media suppliers you work with. You need to get your own ad server license in which you save your online campaign data. The next step is to connect your media buying platforms (Demand Side Platform or DSP) to this ad server. That way you enable your campaign optimisation to be led by the data that comes out of your campaign reporting. A good set of tools that, for example, de-duplicates your conversions across your channels and allows you to customise your attribution models (display should be assessed on the number of first interactions it delivered that lead to a sale, same as the prop should be judged by the number of tackles he made), is a condition for a winning strategy. Knowledge of how to interpret the reporting data is a far more important skill to have though.   

In short. After years of operating in the dark, which we still do in many traditional media channels (do we really know which billboard between OR Tambo and Sandton performed best?), we can finally get our hands on data that allows us to report and draw conclusions but also immediately (real time, no need to wait 4 weeks for a manual report) optimise our current campaigns. This has changed online media buying for good. As with most things, there are pros and cons:

Pros

• Finally the ability to allocate the correct budgets to the relevant (online) marketing channels to achieve the optimal result;
• Less waste as you buy only impressions that fit your audience targeting (avg CPMs around R50!);
• Full transparency of online media spend;
• Leveraging your data to increase your marketing performance;
• Increases the efficiency of your (online) marketing operations;
• Opportunity to leverage and/or protect your brand effectively;
• Becoming a driver instead of a passenger.

Cons

• Requires internal alignment of channels and budgets;
• Requires ability to adjust campaigns, budgets and deliverables;
• Technology needs to be implemented on websites (security / development resources);
• Knowledge of programmatic in SA limited (still);
• Resources not widely available;
• Not all publishers in SA are on the exchange (yet). Most traffic in SA comes from international sites.

If you are a media planner  or buyer: programmatic media buying will deliver full insights and transparency as to what the return on investment is of the media budget (if tagged correctly and campaigns can be optimised to actual sales. For lead generation there is always an open end the media buyer cannot control). Get involved and learn learn learn! Back to school it is.

For publishers: finally the opportunity to assess the real value of your inventory and justify the right CPM rate. Think in optimising yield rather than CPM and start building online audiences. The new gold dust for online media.

Enjoy the digital ride,

Stijn

Sprout Performance Partners, founded in 2013,  is a performance media buying specialist agency that exists out of 25 (inter)national digital media specialists, operating from its head office in Cape Town, with an accounts team office in Johannesburg. It services e-commerce advertisers and buys programmatically across various (private) ad exchanges in order to assess the true attribution value of the inventory on the total online conversions for its clients. Sprout Performance operates across paid search (SEA), performance display and offers SEO consultancy services. It currently services about 20 advertisers in South Africa. Some of Sprout’s employees have been working in UK, The Netherlands, Brazil and USA in Programmatic for over 6 years.

Stijn Smolders, who joined Sprout Performance in November 2014, graduated a BCom in Marketing and Media from the University of Eindhoven (The Netherlands) in 2002. Before joining Sprout Performance he held the position of MD Benelux at DQ&A Media Group in The Netherlands (2011-2013). He came to South Africa first in 2008 where he headed up Habari Media as a GM Media Sales until 2010. He is married to his South African wife Linda, father of 2 sons Benjamin and Tobi. Lives in Claremont, Cape Town. Passionate about anything digital and road cycling.

Source: certain information referenced from http://adexchanger.com/