Programmatic Taking Over
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The document traces the evolution of programmatic advertising from the early 2000s focus on clicks and page views to the current data-driven programmatic model. It discusses key developments like the rise of ad networks and exchanges that consolidated inventory and used data to fuel audience segments. This led to the launch of demand-side platforms and agency trading desks, and the growth of programmatic buying using real-time bidding. The document argues that data and RTB have helped reverse declines in digital display advertising and enabled better targeting across channels. It predicts continued growth and consolidation in the programmatic industry.
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Programmatic Taking Over
- 1. PROGRAMMATIC TAKING OVER Marco Bertozzi, President Audience On Demand EMEA & North America Client Services @m_bertozzi WTF Happened? THE WORLD
- 2. A JOURNEY AWAY FROM CLICKS TO AUDIENCE WTF Happened? 2
- 3. RECESSION OF 2001 SHAPED THE DIRECTION OF INTERNET ADVERTISING WTF Happened? 3
- 4. Nothing important A RECESSION THAT MADE THE INTERNET PIVOT has ever been built without irrational WTF Happened? 4 exuberance – Fred Wilson | VC
- 5. SUCCESS DRIVEN BY CLICKS AND PAGE VIEWS ► Created a direct response WTF Happened? 5 offering from the web ► Every sales pitch was about delivering clicks and performance ► Google launched in UK to further amplify the sentiment ► Branding was ditched in favour of impressions and clicks ► Adserving was born to count
- 6. WITH REVENUE CAME WEBSITES AND LOTS OF THEM… WTF Happened? 6 Number of websites 2000-2014
- 7. THE RISE OF THE AD NETWORK WTF Happened? 7 Advertisers purchase majority of inventory through publishers directly Networks begin to purchase and package premium placements 2001 2003 2005 Ad networks consolidate longtail and remnant inventory Advanced data begins to fuel networks’ audience segments Ad networks procure large volumes of bulk inventory, apply unique insights & data, and resell impressions at a premium rate ► Take on media risk for potential upside of 80-90% profit margins ► Advertisers have little insight regarding where placements run or what is successful
- 8. BEHIND THE SCENES CAME THE EXCHANGES WTF Happened? 8 Technology platforms where buyers and sellers directly transact, using auction-based pricing to determine inventory distribution Ad exchanges emerge to address marketplace inefficiencies 2005 Started to power the Ad Network model – fuelling cheap, non transparent selling to agencies
- 9. ►Agencies being pushed harder for sales at reduced price ► Publishers and Adnets challenged to deliver more for less ► Turned to adexchanges and use of advertiser and publisher first party data ►Quality of impressions less of concern ► Margin first and foremost WTF Happened? 9
- 10. A SHIFT FROM SALES REPRESENTATION TO AGGREGATOR OF IMPRESSIONS WTF Happened? 10
- 11. FRUSTRATION BUILDING ON BUY AND SELL SIDE WTF Happened? 11 Publisher frustration ► Low cpms achieved ► Valuable data leakage ► Value created in Ad Net ► Commoditisation of sites Buy side frustration ► Lack of visibility ► Transparency issues ► Advertiser data abuse ► Need to drive efficiency ► Data sophistication
- 12. BUY SIDE TOOLS UP – 2007 SEES MULTIPLE LAUNCHES Demand Side Platforms (DSPs) ► Media buying tools that allow active optimisation and dynamic bidding across multiple ad exchanges & data inventory sources ► Enhanced technologies integrate media, data, and learning algorithms which allow more complicated executions WTF Happened? 12 Demand Side Platforms (DSPs) expose exchange inventory in single environment ► Started to power the Ad Network model – fuelling cheap, non transparent selling to agencies 2007 Agency Trading Desks (ATDs) grow into centers of audience-buying expertise
- 13. PROGRAMMATIC INDUSTRY LAUNCHES ON 3 INGREDIENTS WTF Happened? 13 Data Technology Media Programmatic ingredients
- 14. LAUNCH OF TRADING DESKS AND NEW PUBLISHER RULES SAW AN INDUSTRY REVOLUTIONISED WTF Happened? 14
- 15. LET’S AGREE SOME TERMINOLOGY WTF Happened? 15 Programmatic Buying Leveraging data driven technology to automate media buying in real time to maximise efficiency. Real Time Bidding (RTB) Buying and selling digital ad impressions via real-time auctions. Ad buyers can differentially value each individual opportunity to buy an ad impression in real time. Addressable Media Leveraging data to deliver messaging based on known insights about individuals. A channel or device is addressable when there is specific data available to target specific users.
- 16. SO THAT TAKES US UP TO TODAY AND TOMORROW Demand Side Platforms (DSPs) expose exchange inventory in single environment 2001 2003 2005 2007 2009 2011 Today WTF Happened? 16 Advertisers purchase majority of inventory through publishers directly Networks begin to purchase and package premium placements Ad exchanges emerge to address marketplace inefficiencies Agency Trading Desks (ATDs) grow into centres of audience-buying expertise Ad networks consolidate longtail and remnant inventory Advanced data begins to fuel networks’ audience segments Technology & data convergence leads to Real Time Bidding/Buying Data Management Platforms (DMPs) evolve to manage data
- 17. AND TOMORROW BRINGS INCREDIBLE GROWTH WTF Happened? 17 50-60% of all digital will be programmatic in 2yrs
- 18. SO WHY HAS IT TAKEN OFF? WTF Happened? 18
- 19. DATA AND RTB HAVE SAVED DIGITAL ADVERTISING Reversed declines in display Industry growing innovation, investment and moving upscale WTF Happened? 19
- 20. ONLINE DISPLAY HID SERIOUS INEFFICIENCIES WTF Happened? 20
- 21. PUBLISHERS HAVE ALLOWED DISPLAY TO BECOME COMMODITISED WTF Happened? 21
- 22. CLIENT LED GROWTH WTF Happened? 22
- 23. MEDIA PLANNING AND BUYING V3 A NEW CURRENCY WTF Happened? 23
- 24. BETTER TARGETING ACROSS CHANNELS AND DEVICES WTF Happened? 24
- 25. INNOVATIVE PRODUCTS ► Triggering Ads on 2nd Screens based on a TV WTF Happened? 25 Signal Classical ► Brand Spots ► Single Spots ► Special Spots ► Products Spots Competitor ► Brand Spots ► Single Spots ► Special Spots ► Products Spots Contextual ► Verticals ► Individual
- 26. SO WHAT’S COMING DOWN THE ROAD? WTF Happened? 26
- 27. 5 BIG THEMES TO WATCH WTF Happened? 27 The rise of GIANTS One Data Management Platform to rule them all ENTER the non media company Consolidation is accelerating Cross channel expertise
- 28. PROGRAMMATIC FOR YOU WTF Happened? 28 ► Be open minded ►Be brave – time to revolutionise ► Move fast ► Be inquisitive
Editor's Notes
- Created a direct response offering from the web Every sales pitch was about delivering clicks and performance Google launched in UK to further amplify the sentiment Branding was ditched in favour of impressions and clicks Adserving was born to count
- Publishers challenged to sell 100% of inventory direct - initially all impressions were bought directly through publishers, but as impression volumes exploded, this model was too time intensive to scale Pre-2005 Publishers seek out guaranteed revenue streams to offset volatility Risk of unsold inventory shifts from publisher to network, providing publisher yield consistency Buyers are seeking stronger targeting and lower cost options for achieving scaled reach against specifically defined target audiences vs. direct publisher buys Data Insights: Basic – Geography or Context Advanced – Behavioral or Retarget Complex – Optimization Models
- 2005 – 2010 Ad networks once provided the only reach & efficiency offer; Now ad exchanges provide a larger, safer and far more transparent means to buy audiences Akin to a stock exchange - Significant infrastructure & overhead costs limit the number of exchanges Initially ran as “futures” based - each bidder loaded their rules upfront targeting parameters Bid Maximum Pacing & Frequency Caps Trafficking Instructions The exchange platform processed every impression per these rules & determined a winner Updates were made manually or via an API every 60 minutes In a “real time” exchange, every impression is bidded on individually Each bidder reviews the impression Evaluates against proprietary data Decides optimal bid at that moment Relays bid to exchange (<100ms) Exchange determines winner Private Exchange: Invitation-only marketplace where buyers (advertisers) and sellers (publishers) transact based on a negotiated CPM. The PMP provides preferred access to inventory from Premium Publishers that is not typically made available within the open exchange. In order to connect the buy and sell side, conduits such as AdX (Google’s inventory source), Rubicon Project, Pubmatic, etc., provide a Deal ID associated with a specific publisher or area on a publisher’s page, to allow the buyer and seller to transact outside of the open exchange. A Deal ID enables a publisher to give exclusive access or rates for their inventory to a specified buyer. PMP pricing can either be fixed or a floor. Fixed pricing is based on a fixed CPM rather than a dynamic CPM. Audience On Demand® (AOD) still purchases the inventory programmatically, but the price per impression will not fluctuate as it does within the dynamic CPM model that AOD typically employs. Alternatively, there may be a floor CPM, meaning the cost a buyer will pay must be higher than the minimum (floor) set by a publisher. AOD recommends a $60,000 minimum spend per month for client programs that require custom sites and client specific pricing. PMPs are designed to use the same model as the open exchange, layering data to target audiences on a specific site or set of sites. As of May 2014, this is still a future state though, as they are currently operating the same as a direct buy but instead of buying the impressions upfront for a contracted flat CPM, buyers bid on the impressions in real time via a DSP (but only the specific advertiser, has access to the “auction”…hence “Private Marketplace” or “Private Exchange”). Think of it as regular RTB auction but only one buyer and one seller (that’s an oversimplification, but it gives you an idea of how it works). Issues remaining include problems with scale – you limit scale by default when working with a PMP and pricing – prices are higher in a PMP because it is considered “premium” inventory, so adding data costs can be prohibitive.
- Agencies being pushed harder for sales at reduced price Publishers and Adnets challenged to deliver more for less Turned to adexchanges and use of advertiser and publisher first party data Quality of impressions less of concern Margin first and foremost
- 2006 – 2010 Trading desks launched just before DSPs begin appearing and quickly took over this aspect of exchange buying as a specialty area. DSPs: Similar to SEM bid management platforms Benefits: Impression level transparency Control over data, optimization decisions, and ability to integrate into agency workflow Centralization / simplification of access to complex inventory pools Implement Real Time Buying, by integrating with exchanges’ RTB apparatuses Audience targeting – incorporating 3rd & 1st party data to define active targets Predictive modeling – algorithm driven performance engines that drive conversion lift Cons: Managing DSP relationships requires a team of dedicated resources to: oversee technology relationships with the DSPs, data providers and inventory providers; set up, execute and optimize campaigns; and translate the unique data generated by DSPs into an actionable format DSP operation & campaign optimization is complicated and requires specialized departments. Trading desks build or contract DSP technology, and serve as expert users to create value for clients DSP technology requires experienced “traders” to deliver maximum output - The core of the trading desk is its team of experts Benefits: Keep clients’ data secure so it doesn’t become a 3rd party data segment for another advertiser Client investment that historically allowed vendors & competitors to build their businesses, now creates long term value for agency & client simultaneously Cadreon (IPG); Accuen (Omnicom); Xaxis (WPP)
- Addressable Media - Leveraging data to deliver messaging based on known insights about individual users regardless of placement or device. A channel (display, video, social, mobile) or device (smartphone, connected TV) is addressable when there is specific data available to target specific users. RTB - Dynamic process of buying and selling ad impressions via real-time auctions, in which the highest bidder wins the right to place a display ad. An ad buyer can differentially value each individual opportunity to buy an ad impression in real time.