This approach to media buying promises brands and agencies more efficient ways to improve customer engagement, enhance media buying efficiency, and achieve better performance from their digital campaigns.
Some publishers wonder where the benefit lies for them. With most struggling to grow digital revenues as quickly as they'd like to, they are fiercely protective of the revenue streams they do have. They are wondering whether the shift towards programmatic will mean that they need to give up a bigger slice of the pie to third-party exchanges. I think not, for reasons I'll outline later in this piece.
Programmatic buying is about automating the purchase of ads to create efficiencies in the media buying process. It involves using consumer data to provide targeted messaging in real-time. Real-time bidding for ads is one example of programmatic buying.
On the international front, the concept of programmatic buying is rapidly reshaping the media and advertising industries. One report by Magna Global forecasts that the global programmatic ad market will grow from $12bn in 2013 to more than $32bn in 2017. Many big brands worldwide are shifting towards programmatic buys, and now it is starting to take off in South Africa.
The reasons South African brands and agencies are excited about programmatic buys include its operational efficiencies and accurate targeting.
Programmatic fits in perfectly with most marketers' growing focus on making their advertising spending work harder and on data-driven, customer-centric marketing.
Programmatic buying also benefits brands by allowing them to centralise media purchases across multiple channels to improve media efficiency. And it clears the way for companies to use integrated solutions across their media, data and technology environments.
This helps them to improve reach and scalability across display, video, social and mobile, for example. As importantly, programmatic buying can tap into rich veins of customer data so that brands can better understand consumers and what drives their purchasing decisions.
This means that brands can advertise in more effective ways by targeting messages with a higher level of relevance to consumers, dependent on who they are, their behaviour and where they are in the purchase funnel.
These highly targeted campaigns reduce wastage for the brand. They also give brands the ability to optimise spending across different channels according to their goals and budgets.
And as for publishers, should they be panicking? The industry consensus is that they don't need to worry and that they may actually benefit from a more efficient way of selling unused inventory. At heart, programmatic is simply changing the ways that marketers make media buys rather than undermining established relationships between publishers and their advertisers.
As such, premium inventory will always command a premium price, and publishers will also be able to use mechanisms such as private exchanges to control their pricing.
What's more, savvy publishers are already starting to move towards long-term brand partnerships, sponsorships, native advertising and other tactics to better monetise their audiences.
In a tough advertising market, publishers should be looking at programmatic as simply one item in their inventory and find ways to use it as part of a wider monetisation strategy. It's a great way to sell off undersold inventory and to efficiently sell commodity placements so that they can focus on the long-term advertiser partnerships that yield the best returns.
