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Making programmatic work

Programmatic buying offers advertisers transparency and pinpoint accuracy to reach more users. So why are they hesitating?

Ankita Rai & Alokananda Chakraborty 

Twenty years ago, advertisers vied for space or time from only a few hundred media platforms. Today the number, thanks to the rise of the online media, has ballooned into a couple of million. This is both good news and bad. Advertisers now have an unprecedented range of options to reach the targeted sets of customers. On the flip side, having millions of media options mean incredible complexity, which, in the absence of new tools and technology, could significantly decrease efficiency. automation seems the inevitable solution.

Enter programmatic buying, which promises to simplify the extraordinarily complex process of media selection. Experts say programmatic can bring efficiency and price parity in media buying. Real-time bidding gives marketers the opportunity to look at hundreds of billions of impressions in a jiffy, and bid only on what they think is relevant. "With programmatic, you can buy just a single impression. Programmatic has replaced site selection (targeting users on various sites) with audience buying," says Anil Pandit, AVP, digital and mobility services, head, Accuen India at Omnicom Media Group.

It is also transparent and measurable. Brands get a clear view of the ad placement, reach and pricing, which was not the case with the earlier input-output or manual buying. "Efficiency means making sure the ads are served in transparent (right price and placement) and measurable manner (ad viewability, audience verification) in real-time," says Preetesh Chouhan, SVP, APAC, Vdopia. Thus, with a layer of third-party data and additional functionalities (such as ad viewability and audience verification), the programmatic environment appears to be a highly robust and efficient way to buy media.

Programmatic buying already big in the US, a $7.4-billion annual business. In India, it is worth around Rs 1,200 crore, about a third of the annual Rs 3,500-crore digital spend. Digital ad spend is growing at 30-35 per cent annually and programmatic buying will account for a large chunk of it sooner than later. With the amount of buzz it has generated, you could be pardoned to think programmatic has already changed advertising the way the mobile phone has transformed communication. Well, it hasn't and is still a tiny part of the overall advertising pie. In India, it is just about catching up with agencies and marketers with networks like GroupM (Xaxix), OMD (Accuen), Dentsu Aegis (Amnet), Publicis (Vivaki) and Komli (RDSP) launching their programmatic trading desks cautiously. "Programmatic is still not big in India because digital is still a very small portion of the overall advertising pie," says Ashish Bhasin, chairman & CEO (South Asia), Dentsu Aegis Network. "But we appreciate the fact that programmatic will play a bigger role in media buying and selling."

Before we proceed, what is programmatic buying and why is everyone in advertising and marketing talking about it?

Simply put, the term encompasses a range of technologies that have started automating selling/buying, placement and optimisation of advertisements, replacing the earlier human-interface methods such phone calls, emails and, yes, several rounds of sandwich lunches. Think of it this way: with the help of programmatic technologies, advertisers can pick up advertising inventory from publishers the way you pick up books and mobile phones off Amazon and Flipkart. Experts reckon programmatic is likely the future of the advertising industry as it offers the promise of one-stop efficient buying of multi-screen inventory, cutting time and layers of go-between.

If it is such a fantastic way of buying media why hasn't programmatic taken off on a bigger scale? Now consider the stock market. The spot markets involve real-time bidding, but the majority of trading takes place in the form of options to buy or sell at a future date at an agreed prices. That's what's going on here.

As things stand, the problem with programmatic boils down to a lack of understanding about who benefits the most. Many surveys have shown that advertisers are suspicious of the quality of inventory, implying that publishers are dumping last minute unsold inventory down the pipeline.

Indeed, today's programmatic originated as a platform to trade remnant inventory at low prices. This worked fine when nobody cared about the pedigree of the publisher or the quality of the ad. But as we move up the value chain, the lack of quality measurement becomes a big problem. For the most part, they still don't have relevant data to slice and dice visitor data on websites, so they are unsure if they are really targeting who they want to target.

The same problem they are facing in 'traditional' media.

On their part, publishers feel that third party data is messing up the process. They do not want to jump on to the programmatic bandwagon for fear that it will undercut the value of their inventory. So there is little push from media platforms/publishers because, one, most of them do not understand how to extract the maximum mileage, and two, most of them are more comfortable with fixed rates that reservation-buying entails. This allows them some sort of assurance on the cash flow.

One way both marketers and publishers are trying to get around the problem of uncertainty is programmatic direct (as opposed to real-time bidding) - where the advertiser chooses to target a customer through a direct buy, to make sure he is reaching her. As more and more advertisers begin to use customer data and the publisher also starts opening up its user data, a direct buy can be executed automatically.

All said, advertisers and their agencies should remember that advertising is not just about efficiency, the outcome largely hinges on the quality of the creative. As Peter Daboll, CEO, Ace Metrix, points out in a Forbes article, "Human response to a brilliant creative campaign will always dwarf how efficiently the ad was delivered. The key is to measure creative impact before so that the best ads are paired with the best inventory. That's where programmatic will really make an impact."

Make the most of programmatic
Tips for the publisher Mukesh Agarwal, vice-president, product management, Komli Media
  • Programmatic is no longer just a medium to sell remnant inventory. Think of the programmatic channel as a way to automate media sales that brings operational efficiency
  • Programmatic direct can give you the benefit of direct sales while automating the process of executing sales. Publishers can gain operational efficiency in selling premium inventory through programmatic direct
  • Leverage programmatic deals to open up your unsold inventory to vast numbers of buyers without taking the pricing risk.

  • Average CPM (cost-per-thousand impressions) in open RTB are getting better as increasingly large number of advertisers are buying on RTB exchanges. Publishers shouldn't keep the floor price too high. Let the market decide the price for the inventory. If you are a global publisher, keep floor prices specific to the market. Average CPM in different markets varies and one global floor price might create yield inefficiency.

Tips for the marketer Senthil Govindan, CEO & co-founder, Datawrkz
  • Rather than locking themselves into a fixed volume and flight dates with a given publisher, advertisers can dynamically decide on the allocation of budget across publishers based on results of a campaign
  • Understand the potential of audience information - whether retargeting for bottom-of-funnel conversions or demographic/interest targeting for top-of-funnel prospecting - programmatic provides a way for each advertiser to determine the 'value' of an impression based on the user who is viewing a web page
  • Instead of broadcasting to all visitors of a website, use data analytics to target specific audiences.

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First Published: Mon, June 29 2015. 00:10 IST