If you’re in the neighborhood of Digital Advertising and haven’t heard or seen the term “Programmatic Buying” you should seriously reconsider your news sources!
By Elias Gagas, Executive Director, TailWind
It seems to be showing up everywhere these days, finding its way in all sorts of different topics & articles. It pops up in diverse discussions, yet a proper definition seems elusive. So, what is it and how does it change our lives & business practices?
The current status of affairs brings to mind traditional Super Hero mythologies. Nobody knows exactly what Programmatic Buying (PB) is. Is it technology? Will it Replace everything? Is it going to reduce or increase CPMs? Should publishers be afraid? Agencies worried? Will it bring Advertising Power to the Masses? Is it a Bird? Is it a Plane?
However, everyone has heard stories of its imminent domination, tremendous powers (bordering on, or even surpassing the Super moniker) and – here comes the story twist – it’s not entirely clear whether it falls under the Benevolent or Malevolent league of Digital Advertising Superheroes (the alumni of which includes the likes of Display, Mobile, Video, Social etc.).
Still, the absence of “one definition to rule them all” is actually quite reasonable. The term "Programmatic" is being used to describe an entire Paradigm Shift in the way Digital Media & Advertising are being traded. (See how Wikipedia defines Programmatic Marketing). That being said, a statement I find useful, true & concise is the following:
"Programmatic buying is the process of executing media buys in an automated fashion through digital platforms such as: exchanges, trading desks, and demand-side platforms (DSPs). This method replaces the traditional use of manual RFPs [Requests For Proposal], negotiations and insertion orders to purchase digital media.” (Business Insider, September 2012)
NOTE: If you want to have multiple diverse points of view take a look at this link.
Before moving forward, I feel the need to point out the following two key facts:
1. "The Digital Media Trading Oxymoron": Even though it's called Digital Advertising, we all know that the modus operandi we mostly follow relies heavily on human interactions with the addition of some well-known -if arcane- technologies. Good old fashioned meetings, phone calls (yes, land lines as well), faxes (!!!) and e-mails are intertwined during the process of running a Digital campaign.
2. “RTB is part of Programmatic”. It’s a technology protocol facilitating one of the possible automated trading mechanisms – a real time auction. For the time being it’s the prevailing mechanism to accomplish automated trading and as such it’s commonly used in place of the more general term Programmatic.
From science fiction to reality
This brave new world is not fiction. Regardless of the definition it’s already here and expected to substantially grow in the years to come:
Programmatic allows us to...
At the core of Programmatic lies technology, which in itself has some very interesting properties concerning the changes it creates and the benefits it can bring, regardless of the domain of application. For, it allows us to:
1. Accomplish tasks Faster & Cheaper – which is a commodity usually available to everyone at a certain cost (think of faster processors, cheaper storage for more data etc.)
2. Become Consistent / Reliable / Efficient – this needs more than money to materialize. It involves the proper application of technology in tandem with people & organizational structures and processes.
3. Pursue new or enhanced and more complicated Business models – this is where the true value is created, disruptions take place and competitive advantages gained.
I believe it’s helpful to have this mental image in mind as we embark on our journey to identify the changes Programmatic brings to the Digital Advertising ecosystem. To do so we’ll examine how it affects the two sides of each trade, the demand (Brands and their Advertising Agencies) and the Supply (Publishers, Ad networks etc).
Click here to read the 2nd part about the next Digital Advertising Super Hero, a.k.a. "Programmatic Buying"!
P.S. In case you are wondering what's the relation between TailWind and ThinkDigital, other than the fact that both companies are members of TDG, have a look at this short PR.