Programmatic Buying for mass media – threat or opportunity?

Even now new algorithms and approaches to advertising change the principles of publishing sales departments’ performance in the west. In Russia this buying system has just started developing. However, there is already a large number of companies working in RTB (real time bidding) sphere and telling about the advantages of this technology. They allow to make buying advertisement automatic and to segment the audience.

There were quite a lot of publications lately about what the ecosystem of these purchases is and how it works, as well as about the SSP-platform which is created specifically for trading platforms (or by trading platforms) to sell their products by means of real time bidding advertising. 

In few words, the real time bidding system is about selling advertisement at more profit and make it more targeted, which on the one side is supposed to help advertiser. On the other side, this forms a new market of separate elements (data supply, trading platforms), and finally – this is supposed to let publishers sell traffic they have left after the direct sales.

The point is that these are still the same banners or video ads we had previously, but it became more efficient due to being shown target audience in accordance with many various parameters.

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Advertisers offer price for every user and in the split second the platform determines whose bid was higher and sells the traffic.

In America the ecosystem was developed for about three years already, and it is still unclear what is the influence of programmatic buying on display advertisings marketing. Is it actually worth being brought to notice?

Advertising networks and retargeting

USA ad networks market began developing in 2007. It historically happened that advertisers addressed ad networks when it mattered whom to be guided by, but not where to be hosted. Networks gathered visitors from all over the Internet and segmented them by certain parameters and targeting the advertisements in accordance with brands needs. The status of a trading platform didn’t matter at all and within network it is impossible to find out to whom a certain user belongs.

After a while retargeting (also called remarketing) technology appeared. This technology was especially popular with online shops: a user chooses a product, puts it into a basket, but for some reason doesn’t make a purchase. In cases like this a picture of this product will be on the track of a visitor. There are a lot of examples when customers complained about remarketing being way too bothering. However, remarketing became an important stage in measured advertising development and is still regularly used by advertisers.    

All new technologies enthuse agencies but more and more seldom they enthuse platforms. On experienced American market which we have to look up to they are more and more far away from end customers. For example, lately The New York Times has told about losing out on potential digital ad revenues (decrease by 2,2%), and they considered this was caused by real time bidding ad exchange development.

When selling by real time bidding publishers are not able to control the price for their traffic (except of indicating minimal CPM, which is probably supposed to be lower than for direct sales).

Data rules

he more information you have about users – the more relevant will be advertisement and so you are able to optimize the budget. How one can gather that data? In America there is a separate DMP stage (data management platform) – companies that collect the data in any possible way.

In Russia and Ukraine it is customary to talk about data selling. It is quite clear that Facebook, Google, vk.com, or Yandex have managed to collect huge amount of data they are able to use now for their purposes (all of them but vk.com in one way or another are involved, e.g. Google real time bidding). At the same time, free products such as Li.ru statistics or Rambler top 100 which ask to place a code into your web page are the greatest suppliers for programmatic market. They are able to gather the data about users: what they are engaged with, what they like and share, what products they check in online shops, etc. But even now not all publishers understand that placing the code and participating in ratings they give away the cookies and information about their users.  

In America publishers more and more often create in-house ecosystems. For example, AOL has its own Ad.com network and this network on top of everything else sells traffic (The Huffington post and TechCrunch).

But not many platforms are able to exist by themselves, while the sector becomes smarter and advertisers require relevant traffic. Guardian has also written about their concerns («problematic programmatic buying») coming from platforms loosing control under their ads – there are more and more intermediaries appearing, although pretending to not much yet.

Quantity and Quality

The trend suggests that quantitative indicators (clicks) will be handled by machine. But there are also qualitative indicators – special projects, native advertising, and content stories – which are hard to replace with technologies. Those premium mass media that care about their reputation and image, still offer unique products for specific brands.

It is important to understand that in programmatic a price is built without qualitative indicators being taken into account – media status. Only different auditory factors and their quantity matter.

In the West it is discussed that publishers must learn how to create new opportunities to become stronger than those companies offering programmatic to brands. For example, platforms may exchange auditory with relevant publishing. Media are going to learn to think like buyers and consider cookies they give away. At the same time, it is important to understand the difference between the image component and efficiency, which can be measured in numbers.

Talking about confrontation or, more likely, the merger of the premium and sales data will continue. Chances are high that when the market is formed we will be able to see what it’s worth.

Adrian Tompsett, VP of Business Development at DataXu, expressed the opinion that in the end all media would be sold by means of real time bidding, but it was supposed to be the addition to current projects and opportunities.

Data protection

With reference of data collection one more question arises – data protection. Companies buy startups altogether with their data basis, leak of data occurs, users’ trust level continues to decrease from year to year. Sooner or later users will start thinking about what data they are ready to share and moreover, what data they are ready to pass to intermediaries. Few people are willing to see annoying ads. Perhaps, the systems insuring safety of personal data and secure transmission of that data over the Internet will become even more popular in the nearest future, and this will influence the industry as well.  

To sum up, here are some Western experts’ opinions that are provided by Digiday portal:

Jason Pontin, editor in chief and publisher of MIT Technology Review:

The publisher in me says “programmatic buying” will have a larger impact on digital media, but the editor-in-chief of a technology publication says, “native ad formats.” In truth, both will have an impact…programmatic buying will continue to drive down the price of digital advertising…but in the longer term, native ad formats will offer advertisers better engagement with publishers’ audiences.

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