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January 20, 2016

Programmatic 101: What You Need to Know

Last week the IAB UK revealed that over half of all brands are buying mobile inventory using programmatic media buying technologies, but less than half (45 per cent) understand how the technology actually works. Online advertisers spend billions of pounds on programmatic advertising every year, but it seems they understand very little about the programmatic buying process.

Not too long ago, search engine marketing was an “experimental” marketing channel that only a handful of companies were willing to test out with spare marketing budget. However, somewhere around 2007, search became a primary source of revenue for most online businesses and the introduction of Product Listing Ads moved search marketing to the forefront of their online marketing strategy. Today, you’d never meet an e-Commerce company who isn’t deeply invested in their search strategy.

In the same way that search marketing skyrocketed to the top of every online marketer’s priority list, we are now on the cusp of a programmatic revolution. However, many retail brands remain at arm’s length from their programmatic ad strategy, with only a partial understanding of the data that is powering their campaigns. As we enter a major turning point in the world of digital marketing, e-Commerce brands need to understand exactly the why, what and how to programmatic.

Why is “programmatic” so confusing?

Programmatic advertising is simply the automated process of buying and serving of targeted ads, using data-driven systems. The ultimate goal is for the advertiser to reach the perfect shopper, at the right place, at the right time and with the right message.

The programmatic industry is constantly growing and evolving and with it, a slew of confusing advertising tech jargon has emerged and ‘Programmatic Advertising’ has become a catch all phrase for a few different concepts:

‘Real-time bidding: the auction-based system whereby a data-driven software systems bids on advertisements in real-time.
‘Retargeting’: using a pixel or cookie to “follow” someone who visited your site with ads to bring them back (very common in e-Commerce).
‘Programmatic direct’ when a buyer negotiates an ad buy upfront, usually for a set price, but executes the deal with programmatic technology.

The new path to purchase

In the retail world, the path to purchase is becoming increasingly complex, but marketers are now acknowledging the many touch points present in the path to purchase, each of which have their own contributing effect on the consumer’s decision to buy.

However, this process is extremely hard to measure. That is why most major retailers manage their programmatic advertising work with agencies, as they are equipped with the right software, data and experience to provide results without the overhead.

That being said, it’s still crucial that e-Commerce brands understand the data that is powering their programmatic campaigns and whilst for some, search marketing has become part of the company’s marketing DNA, many advertisers are comparatively lagging when it comes to incorporating programmatic into their marketing strategy.

The areas that retailers need to ensure they give enough attention to are:

First-Party Data

Many retail brands recognise the importance of their first party data, but they fail to make the most of it. Your most powerful data is often your own—and best of all, it’s free.

Retailers should be proactive about aligning their marketing teams around data and programmatic initiatives. Consider creating a Data Task Force responsible for locating and consolidating your data stores—such as CRM data, browsing data, email segments, app downloads, conversion data, rewards members etc.—into a DMP so that your agencies and partners are able to utilise it in real-time.

The more your agency knows about your own shoppers and buyers, the more effectively they can retarget them and model new audiences off your most engaged customers. Work with your agency to determine what first-party data is most useful to them.

New or Third Party Data

Most likely, the agency or partner that manages your programmatic media is modelling or purchasing audience data to power their advertising efforts.

If they have a limited amount of data and need to broaden the reach of your campaign, they may “model” an audience from your known buyers (your first-party data). This means that they will find other shoppers with similar attributes or behaviours to people who have purchased from you before.

Modelled audiences are great for targeting shoppers who have not considered you before, but are (hopefully) likely to do so. However, if your goal is to hit shoppers who have previously expressed interest in purchasing a product, then you may want to focus on observed audiences, who consist of people who have actually engaged with a product page or purchased a specific item before.

Another way to think about this data is by looking at shopper interest vs. intent. Interest data may reveal that John read an article about “The Best Golf Clubs of 2015,” but intent data shows that John was shopping for Irons and Drivers this morning.

These distinctions may not be immediately obvious on the platforms where data is bought and sold; it’s important that you ask your agency to elaborate what kind of data they are using, and ensure that it’s aligned with your online marketing goals.

In summary: the 5 simple questions to ask your agency

Source: Where is this data from?
Recency: How often the data sources are updated? Monthly? Weekly? In real-time?
Uniqueness: How much of this data overlaps with other data sets available?
Modelled vs. Observed: How much of this audience is modelled, and how much is based on observed shopping intent?
Interest vs. Intent: Is this data based on consumer interest (i.e. reading relevant content) or purchase intent (i.e. browsing specific products).

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