Three reasons why programmatic media buying is effective for marketers

The performance driven use of programmatic media buying will even be more effective in the foreseeable future due to higher reach, more effective audience targeting and re-targeting which will bring high levels of cost efficiencies for marketers.

As marketers of ecommerce companies are pressured to meet KPIs questions arise on how can programmatic media buying be used more effectively within a digital media strategy to achieve the set KPI’s? Below I explore three reasons why programmatic media buying is effective for marketers.

According to InternetLiveStats, the number of websites has increased from one in August 1991 (the founding website) to over 1.8 billion as of June 2018; 75% of the total 1.8 billion websites are thought to be inactive parked domains. InternetLiveStats found over 32 million registered IP addresses of all types in South Africa.

According to the latest We are Social Digital 2018 Report, internet access in South Africa is growing at an annualised rate of 7%. If things remain constant by 2020 internet penetration in South Africa would be around 63-65%, thus making digital media even more important than it already is in 2018.

As the number of active websites increases and more people gain internet access it becomes much harder to buy media effectively with a naked eye hence the need for algorithmic media procurement through programmatic media buying.

What is programmatic media buying?

Programmatic media buying essentially is the algorithmic procurement of digital media inventory in real time. This process is done by using software that automates the buying, placement and optimization of digital media inventory through a trading system.

Programmatic media buying is not limited to display or premium display. All digital media types can be purchased programmatically. The most common types are programmatic audio, video and the famous display as well as but still in the infancy phase programmatic TV media buying.

Programmatic terms

What is a DSP?

A demand-side platform is a tool that allows advertisers and or buyers of digital media inventory to manage multiple ad exchanges through a single interface. In simple terms it is the tool that facilitates the buying of digital media inventory. They are many DSP’s which a marketer can use. Here are a few:

Adobe Media Optimiser
Adform
AppNexus
DoubleClick Bid Manager (DBM)
TubeMogul

What is a SSP?

A supply-side platform or sell-side platform is a technology platform that enables publishers to manage and monetize their inventory. A SSP supplies a DSP with inventory. It allows publishers to push their unsold inventory to a DSP to allow advertisers to purchase the inventory in real-time. Supply-side platforms also provide publishers with ad serving services. Below are a few examples of SSP’s

Adform
AppNexus
OpenX
DoubleClick Ad Exchange
Rubicon Project

What is a RTB?

Real-time bidding is an algorithmic process by which media inventory is traded on a per-impression basis in real-time. This process is similar to how shares are traded on the stock exchange. Real-time bidding allows advertisers to bid for impressions and if the bid is won the buyer’s ad is instantly displayed on the publisher’s site.

What is a DMP?

A data management platform is an algorithmic tool that enables the creation of target audiences based on a combination of in-depth first-party and third party audience data. Some DMPs also use second party data to effectively build audience segments. DMPs are essential and critical to programmatic media buying.

First party data?

Econsultancy describes first party data as the most powerful data because it is information about an organization’s customers and it’s therefore the most relevant and accurate.

Second party data?

Econsultancy also defines second party data as another company’s first-party data that is collected and sold on to the company it has a partnership with. This type of data is relatively new.

Third party data?

Third party data is data that is acquired from a variety of external sources. This is mainly used to create consumer segments for targeting ads and the data sits in DMPs and Data warehouse platforms.

(Source: IAB)

Why programmatic media buying is effective for marketers

#1 Reach and frequency

Programmatic media buying is effective for advertisers and marketers because it offers extensive reach as impressions are purchased on a discounted rate due to trading on unsold inventory. For instance direct IO buys on premium sites for premium display, CPM (Cost Per Thousand) on average costs around R250-R350 or even R400 on some very premium sites where else through programmatic average CPM is around R150-R100 or even R50.

This means a digital media campaign with a budget of R100 000 scheduled for programmatic will generate around two to three million impressions. This high reach & frequency provides awareness and consideration benefits and thus programmatic plays an important part in the awareness & consideration phase of a digital media strategy.

#2 Audience targeting

Another big plus for marketers using programmatic in their digital media strategies, is the ability to target specific audiences and segments accurately. The accuracy in targeting and audience segment clustering minimizes media wastage as impressions will only be served to that specific target audience selected.

The accuracy in audience targeting is made possible and enabled by DMPs which use first and third party data, sometimes second party data. For instance a men’s lotion brand can target men between the age 25-50 and impressions will only be served to men that fall within that age group.

The accuracy in audience targeting is not limited to demographics. For instance, an airline brand can specifically target an audience segment that is interested in travelling overseas. A health and fitness brand can target an audience segment of internet users that live a healthy lifestyle and interested in exercising. A vehicle brand can target internet users that are interested in purchasing a new car.

#3 Retargeting

Programmatic site retargeting is known as the go to strategy and this tactic is highly effective in the acquisition phase of a digital media strategy. Programmatic retargeting enables targeting to previous visitors of a website with display ads as they browse the internet.

How does retargeting work? A retargeting pixel is placed on each page of the website or an individual landing page and each time a new visitor visits the landing page or website, the pixel sets a ‘cookie’ in the user’s browser.

Another effective method of retargeting is using list-based retargeting. List-based retargeting works by uploading an email list of current and interested customers or uploading internal CRM data into the remarketing platform. The CRM data can include loyal frequent customers, non-customers and or less frequent customers. List-based retargeting allows marketing to create segments of customers with similar interests or customers that are in the same phase of the sales funnel.

List-based retargeting is tactical way to re-engage with past customers to inform them of upcoming sales or promotions. Retargeting makes programmatic media buying immensely effective as it moves users from awareness to consideration and finally to conversion.

Nkateko Mongwe (@datainsights88) is a consumer, media, marketing and digital data analyst, and data strategist by profession. He has been at leading media owner companies in South Africa, accumulating experience in data, research and in-depth understanding of media and marketing strategy, planning, and insights. He is passionate about the quantifiable detail in decision making. Currently he is the Digital Data Analyst at one of the biggest media buying and investment companies in sub Saharan Africa.

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