Has Your Brand Gone Programmatic?

“What is Programmatic?”

You know "programmatic" is one of those marketing terms everyone talks about. But it seems confusing. People use the term in many different ways, and when you ask about programmatic, it sounds like an alphabet soup of acronyms—DSP, DMP, DCO, etc.

So let’s simplify. You can think of programmatic as something that started as a way that websites (“publishers”) developed to sell their display ads (aka “banner ads”) more effectively. After all, there are way too many websites and ad spots to sell them all individually so how can you get someone to pay to fill those ad spaces, and how much should they pay?

And while programmatic started as a way to sell online display ads, it is expanding to basically everything—video, radio, TV, even outdoor digital billboards. The world is becoming programmatic. Things aren't going back. Remember when you walked past that clothing store and the next ad you saw on your smartphone was for that store, and the ad featured shirts in your favorite color? Was that a coincidence? There’s more detail below, but suffice to say that programmatic is a fast-rising and fast-developing area for all things digital. Digital drives data, and data-driven marketing drives successful brands.

So what is this mysterious way that publishers found to fill their ad inventory? Allow real-time bidding for those spaces. That way brands could compete against each other and push up the price for high-value ads while lower value ad space could still generate some money too. Publishers win because they sell their ad inventory and brands win because they don't overpay for low-value inventory.

And while programmatic started as a way to sell online display ads, it is expanding to basically everything—video, radio, TV, even outdoor billboards.

“But wait,” you say, “what do you mean real-time bidding—like someone bumping up the bid on ebay?” Not exactly. This bidding is automated and takes place in milliseconds. Imagine you are typing in a URL in your browser, you hit enter, and a few milliseconds later your page loads. So what happens in that interim, those milliseconds? Most people would say, “nothing happens, I just wait,” but actually, in those milliseconds there’s a whole world of Advertising Technology (“Ad Tech”) happening.

Just imagine that while your page is loading many different brands are bidding for the right to show you the ads on that page. The brands are deciding whether and how much to bid based on info they believe about you, and the winning bidder may then be customizing the ad, just for you, in real-time.

How is this possible? There’s a group of technologies that power this. Below is the so-called golden triangle of “Ad Tech.” No marketing article could be complete without jargon and acronyms so I’ve got them for you here too.

Publisher-based vs Profile-based

Before I explain how this triangle works, let’s look at how things work in the traditional, digital world. In the old days (of just a few years ago) brands would pay just a few publishers to run ads on their website and then show those ads to everyone who showed up. Let's called this method of digital advertising "publisher-based." This was nice for the brand because it was relatively straightforward to set up. This was nice for the publisher because it was guaranteed money no matter who showed up to their site.

So imagine you are a brand, and you want an audience of Business Decision Makers (BDMs) to buy your enterprise technology products. You know many of these people read Forbes and other business-centric sites. So you give Forbes a bag of money and tell them to run your ads to everyone who shows up this month. While it is true many BDMs go to Forbes, so do lots and lots of other people, but you’re spending money showing ads to all of them. Showing millions of ads to people who will never buy your products is waste!

One alternative to this waste is programmatic. Programmatic is "profile-based," meaning that you only show ads to people that match the profile you want. You also can show them ads wherever they are rather than choosing only a few publishers to host your ads.

DSP

This is where the first piece of the Golden Triangle comes in—the DSP.  The DSP (Demand-Side Platform) gives you access to ad inventory all across the web and can execute the real-time bidding to determine who to show ads to based on cookies or other info. So rather than blasting ads at everyone in order to reach your intended targets, you could choose to only bid and show ads to those people you want to. And here’s the key, the DSP can locate the people across the web, rather than being limited to just a few sites, like in the old days.

Rather than making your media spend publisher-based, it’s now profile-based. You show ads to only the people you want to. Not only is that way more efficient but you’re avoiding annoying people who will definitely never buy your product or service. When people say, “I’m going programmatic,” this is what they mean. You can also add on the other Golden Triangle pieces below--and they will improve your results!—but a DSP is the keystone.

Ok, programmatic sounds great, but then how do I know who I should be bidding on?

DMP

This is where the DMP comes in. The DMP (Data Management Platform) allows you to combine all your company’s first-party data with data from other sources in very sophisticated ways. This can then help you know who to target, or create look alike models of cookies that look like your best customers. From the example above, imagine that you want to build an audience of Business Decision Makers “BDMs.” You have your company’s data of current customers and prospects, and you can buy data from, let’s say, 5 different sources also offering BDMs.

The DMP allows you to combine all these audiences to eliminate duplicates and then build even more precisely by layering on geographic data or other factors that could be important when deciding who to show ads to. All these audiences can then be given to a DSP to say, “Go show ads to these people and find them wherever they are across the web.”

So now I know who to bid on and where to find them and how much to pay, but what should I actually show them? I’m glad you asked…

DCO

The 3rd side of the triangle is DCO. DCO (Dynamic Creative Optimization) can be thought of as “Programmatic Creative”. So after the DSP has won the bid for your brand, the DCO can then customize the ad in real-time. So imagine again that example above of a brand selling enterprise technology products to BDMs.

You built audiences in your DMP, send them to your DSP, which then bid on those customers, and your brand won the bid. Now, instead of just showing a generic ad for your enterprise technology brand, or a random best-selling product, the DCO could recognize that while this person is a good target for your brand, they are specifically interested in Cloud solutions, so the DCO them customizes the ad in real time. Voila! you targeted the right person, wherever they were on the web, and showed them a customized ad relevant to their interests.

This kind of targeted creative drives much better results that generic creative. This result intuitively makes sense but can’t be overstated. If you reach the right customer but show them the wrong thing, you missed a golden opportunity.

This is just a very high-level overview but you can probably imagine how these three technologies working together can deliver powerful results in both B2B and B2C contexts. Also, because all of these are machine learning technologies you can continue optimizing over time rather than the traditional approach of running a campaign, evaluate it once per quarter, then try to find meaningful lessons to apply to other similar campaigns.

Welcome to the Golden Triangle. Once you start thinking about marketing in this data-driven way you’ll never be able to go back to guessing or living by “your gut.” I still use my gut plenty but now it makes much more informed choices, which is better for the bottom line. I’ll be writing more about these and other technologies in upcoming posts but if you have specific Ad Tech questions feel free to post them below.

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Shaune Kolber writes about marketing and marketing technology, often in relation to pop culture. Shaune currently works as a marketing technology consultant at Dell.