The automation of planning and purchasing processes, data-driven media planning, campaign control and optimization, the use of a global market to monetize publishers' advertising inventory, the opportunity to use data to offer consumers a target group-oriented and entertaining advertising approach, the theoretical opportunity for transparency between advertisers and websites and the possibility of running campaigns at any time, 24/7 - "instant satisfaction".
According to Emarketer.com, 59% of digital advertising bookings in the display sector in the US and the UK were booked via programmatic in 2015. In the video sector, this figure was 39% in the USA in the same year. According to an estimate by Magna Global, a third of inventory in Germany will already be traded programmatically in 2017.
In Switzerland, this share is estimated at 25 percent by Netprofit GmbH in 2015. Ne-
n addition to auction-based media buying ( real time bidding ), direct programmatic buying of digital inventory in a 1:1 relationship between the advertiser and the website ( programmatic direct ) will increase. Automation is progressing rapidly, but there is still some way to go before the future vision of a self-learning advertising system that assembles modular, individual and entertaining advertising messages and thus guides the right consumers through the digital buying process at the right time and in the right place. Here in Switzerland, too.
The use of data as a challenge
Many advertisers see data as the new gold. Whoever has the best expertise in interpreting figures and data in such a way that customers buy more and are more satisfied has won. The technical possibilities for using data have been around for some time. According to a study by AOP Research in the UK, only 4 percent of advertisers use their own customer data (first party data) to achieve better results from programmatic campaigns. According to the same study, 68 percent of marketing decision-makers do not use any additional data in programmatic campaigns.
Data-driven campaigns offer many opportunities, but consumers do not want to be disturbed. The intensive use of dynamic retargeting over the last three years has led to increased sensitivity among consumers. Some of the advertising is already more relevant, but consumers are more aware of what is being tracked about them. One response to the overuse of consumer data is the proliferation of ad blockers. In Switzerland, Pagefair and Adobe estimate that 15 percent of users already use ad blockers.
Creativity as a challenge
Consumer behavior only shows that the advertising as a product is not good enough. The task now is to link the world of creative agencies with the performance figures of the campaigns. Advertisers, publishers and creative agencies will now be required to work much more closely together or possibly integrate vertically.
The security challenge
In May 2015, digiday conducted a survey for Chango and Rubicon on the challenges of programmatic buying in the US and the UK. This revealed that some advertisers are still reluctant to use the programmatic channel due to fraud, the quality of the environments/websites, the visibility/invisibility of the advertising or uselessly purchased reach. The industry therefore needs to work on transparency and security.
The challenge of technology costs and complexity
In the days before "programmatic", publishers traditionally used an ad server or possibly a yield solution to optimally control the advertising and monetize the inventory perfectly. These solutions were still affordable. Then came the new automatic or programmatic technology development. Now the technology providers on the publisher side ( supply side platform, SSP ) no longer want to be paid a price per thousand contacts of CHF 0.03, for example, but up to 15 percent of the media costs. There is also the possibility for a number of intermediaries to integrate a non-transparent fee into the set-up. The technology manufacturers on the customer side ( demand side platform, DSP ) also want their margin, which is already integrated as standard. No problem for the technology providers and intermediaries. For the performance of the campaign and for transparency, however, it is.
If the performance of the campaign is compared with other channels, the performance is too weak and therefore the costs are too high. As a result, other channels will be considered in the next wave. In addition, these solutions, whether on the publisher side ( SSP ) or on the customer side ( DSP ), are very complex. There are approaches in Switzerland to reduce this complexity by using another solution - with a reduced and simplified interface - on top. Here too, every intermediary reduces the performance of the campaign. It is therefore important to understand the complexity.
The challenge of competence
Selecting and operating the complexity of these high-tech, data-driven solutions requires highly competent employees. The smallest media agency or medium-sized marketing teams need data analysts, campaign managers with programmatic understanding, media traders or IT-oriented project managers who know how to combine dynamic advertising media with brand messages, campaign results and publisher sites and optimize them in such a way that the consumer has fun and the campaign performs for the brand according to the specified standards. The knowledge of brands, consumers/people, campaign mechanics, impact models and the entire range of digital techniques is invaluable.
Opportunities for the innovative
The world of digital advertising space trading is definitely changing. The growth in usage shows great hope. The challenges conceal great business opportunities for innovators.
Jochen Witte is COO at Stailamedia and a programmatic expert. He comments on the developments in the market as follows: "Even conservative market participants recognize that there is no getting around the topic. In 2015, the big agencies were still focused on transferring established business models into the programmatic world as 1:1 as possible, but the focus is now increasingly on the new opportunities that programmatic advertising offers. The main topics here are cross-device user tracking, the use of data to optimize branding campaigns and the introduction of viewable impressions as a currency. If real time advertising was cool in 2015, it will be normal in 2016."
Programmatic services as a future opportunity
As we all know, Switzerland is a country of services. There will certainly be some new business opportunities in the area of programmatic services in the future. Be it in the consulting area for the selection of technology on the customer or publisher side, or in the area of data analytics, algorithm optimization, user journey architecture, target group segmentation, data sales or strategy consulting for bidding, etc.
Technology as a future opportunity
Anyone who manages to bring a simplified solution to the market at a reasonable price has good opportunities. If the quality of the inventory is then seriously controlled, the potential is great. Security on the customer side can then be increasingly guaranteed.
Future opportunities Competence
At the same time, expertise as a challenge opens up very exciting opportunities for the quick and smart. Programmatic specialists are rare and expensive. Those who continue their education and acquire highly qualified expertise will have very good opportunities on the job market in the future.
Catrin Rubenson has been working in the field of digital media in Switzerland for 16 years. She has been self-employed as a personal growth coach and digital media consultant since the end of 2015. Most recently, she was CEO of the digital media agency Admazing in Switzerland. Prior to that, she was Managing Director of the first and leading affiliate network Tradedoubler in Switzerland. Catrin Rubenson is married and lives in Zurich and Sri Lanka. Catrinrubenson.com
This article was published in Werbewoche's "Branchenreport Digital" on April 15, 2016. You can download the publication as a PDF under this link download free of charge.