The rise of Airbnb, Uber and Spotify testify to the ability of technology to transform the economics and business models of established industries. In the marketing sector, programmatic advertising effected a similar change on the business of buying and selling online real estate for advertising purposes.
It is a prime example of how automation and vast computing power—far exceeding the manual abilities of humans—can deliver a more effective service for all parties concerned. Programmatic provides speed, scale and the ability to target audiences based on an increased likelihood they will engage with the advertiser. Current developments in the sector, however will make earlier eras of programmatic seem crude, wasteful and simplistic in comparison. We stand on the brink of a new, richer, more effective world of digital advertising.
Until now, programmatic, despite its considerable benefits, has presented a number of challenges for brands—safeguarding reputation and ensuring that budgets are spent effectively being chief among them. A cursory web search reveals countless instances of unfortunate online ad placements, such as ads for flights next to articles on plane crashes or supermarket offers alongside food-safety scares. Indeed, marketers and agencies have cited brand safety as their biggest concern in programmatic campaigns.
Ad fraud is another area of concern. One study estimates that brands wasted US$7.2 billion globally in 2016 on spend for ads seen by bots rather than real people on genuine sites. In a region such as Asia Pacific with a wide variety of cultures, programmatic spend is also squandered on serving ads to people in the wrong languages.
And then there is the prevalence of ad blockers. One study found that a third of smartphone users in Asia Pacific block ads on the mobile web.
There is, however a solution that already addresses many of these issues: context. Analysing the keywords and context of individual web pages before a programmatic ad is placed can determine whether the page is a safe environment for a brand to advertise and ensure that the copy is in the same language as the article on the page. A British expat reading The Guardian online will be served English-language ads, even if her laptop’s IP address is in China. With context involved, programmatic can move beyond price and availability being the main factors that determine placement to a situation where relevance is the key driver—such as in serving ads for guitars and amps next to articles on Jimi Hendrix’s playing style.
Bringing context into the equation not only overcomes some of programmatic’s biggest shortcomings, it opens up entirely new vistas for online marketing.
One such opportunity is in live audience targeting. Once context becomes a decisive factor in programmatic placement, we can advertise to consumers based on what they’re reading at any given moment, rather than a search they made a month ago. It’s the difference between a salesman sparking up a conversation with you on a subject they know you’re interested in compared to following you around for weeks, constantly tapping on your shoulder and wanting to discuss a topic you mentioned in passing weeks back.
Until now, search data and cookies have governed much of the programmatic process. But when we add context and social signals to the set of buying considerations we create a much more powerful, relevant and targeted proposition. We begin to capture the richness, variety and breadth of human interests, tastes and experiences—and get a better idea of how we can draw on these to approach individual users with more relevant content. The data available has staggering depth and scale too: programmatic software provides contextual analyses of 3 million URLs each second, while assessments of hover and dwell times indicate how effectively content has engaged viewers and readers.
The tailored, personalised advertising that this richer understanding facilitates also indicates how the industry might tackle ad blockers. We are no longer addressing a passive audience which has no choice but to receive advertising messages, and we can no longer measure success by our ability to interrupt people. The marketers and brands that succeed will be those that capitalise on this rich world of data to tap into their audience’s needs and desires, and pique their curiosity.
Combining data from context, social, search and cookies also allows advertisers to reach consumers in cost-effective ways. For instance, programmatic solutions can track major global sporting events and instantly buy up ad space that sits next to news articles announcing the results and winners. Brands can reach the same audience segments targeted by official event sponsors for a fraction of the cost.
There are 140 billion programmatic transactions every day, compared to the 100 billion that occur daily on global stock markets. Big brands are setting aside increasing amounts of their budgets for programmatic, and with that comes greater scrutiny into the efficacy and transparency of the investment for each of those transactions.
As digital advertising transforms from a transactional, auction-style marketplace into a rich, complex space more beneficial to both consumers and the brands that advertise to them, this is the moment to ask where you and your brands can take your online campaigns next.
Chris Pattinson is senior vice president of Grapeshot Asia Pacific