Automation has become the industry-wide buzzword for search engine marketing, display advertising, search marketing, and nearly every other form of online commerce. Businesses want to harness the power of automation because it frees up personnel for other tasks and introduces a new level of precision to the process. This is never more true than with programmatic advertising.
The question isn’t “Should we try programmatic?” or “Will my business benefit from programmatic?” It’s “How do I leverage this technology for my business?”
The agency model has served the industry well in all forms of digital advertising. Businesses leverage the experience, knowledge, and personnel of established agencies instead of hiring an entire department for the job. However, many businesses have grown disenchanted with the loss of control the agency model purportedly brings. They bring programmatic in-house — and, in many cases, they fail.
A Surge in Programmatic Interest and Spend
According to a 2015 eMarketer survey, 27 percent of respondents had implemented an in-house programmatic strategy, and another 42 percent planned to do so within the next 12 months. Businesses are clearly interested in harnessing the power of programmatic for their firms, and many intend to use an in-house strategy.
The interest in programmatic stems from its ability to generate positive ROI. eMarketer reports that, between 2014 and 2017, programmatic display ad spending for video in the United States is expected to grow from $630 million to $7.62 billion. It’s important, however, for businesses to convert their ad spend into positive ROI. Otherwise, they throw good money after bad and run the risk of depleting their advertising budgets.
Business owners are concerned about just that. In 2014, fewer than 10 percent of executives reported that they trusted programmatic advertising — whether because they’re not sure exactly how it works, because they resist the thought of giving up perceived control to an agency, or because they don’t believe the industry has created a unified definition of the term. As those concerns begin to wane, business owners and executives have important decisions to make about how they will handle programmatic.
Ultimately, firms that fail to embrace a programmatic model might fall far behind the competition. As programmatic advertising spend increases, it will become increasingly difficult for businesses to compete in the marketplace if they refuse to use the available technology to speed up the ad-buying process and to make it more accurate through a programmatic approach.
In-House Strategies Don’t Always Succeed
Business executives, managers, and marketers crave transparency. They want full access to data and they want control over how their advertising spend is used. As mentioned above, this is why many businesses have created in-house programmatic advertising strategies. They attempt to replicate the function of an agency without depending upon outside sources.
Unfortunately, failure sometimes results from in-house programmatic strategies. Without a solid infrastructure backed by experience, in-house efforts can’t produce the results businesses need from their advertising campaigns. They don’t have the data, the insight, or the personnel to adequately design and manage an effective initiative.
An in-house strategy remains prohibitively expensive for all but the largest firms. Not only do you need the budget for your advertising spend, but you must also pay the salaries of numerous personnel who have backgrounds on either the agency or the publisher side. Without key insight into strategy, a business can’t make the pragmatic and strategic decisions necessary to create an effective programmatic campaign.
This is why large businesses have sometimes experienced success with in-house programmatic. They can hire the best talent in the industry to advise their marketing and advertising departments. Furthermore, they have the resources necessary to use the best tools and materials when creating and executing their strategies.
However, even major corporations often see the light when it comes to the agency model. American Express, for instance, has made headlines recently because of its devotion to programmatic. It has devoted most (if not all) of its advertising budget to an automated model, and it originally decided to bring the entire operation in-house. However, AmEx has since adopted a hybrid strategy.
Instead of relying exclusively on in-house programmatic, AmEx uses both an in-house and an agency system.
Agencies Bring Tremendous Resources to the Table
The agency model works well for businesses because of the complexity of programmatic advertising. According to an International Advertising Bureau whitepaper, “Marketing Data Technology: Cutting Through the Complexity,” almost 10 percent of enterprise marketers are juggling upwards of 30 different programmatic tools at the same time. With so many balls in the air, it’s no wonder that businesses are struggling to gain headway in the programmatic space.
An agency already has a strategy and a set of tools in place. It knows not only how to collect and organize data, but also to analyze it effectively. It also has a built-in team of advertising experts to fine-tune its client’s campaigns.
The problem with many agencies and their clients lies in transparency. Businesses want to get close to the data; they want to know exactly what the numbers say and — even more importantly — what they mean. And since they’re diverting a not-insignificant chunk of their budget toward programmatic, they feel they deserve access to their own data.
And they’re not wrong.
Businesses that want to try programmatic need an agency partner that allows them to own their data. Without transparency, businesses don’t know exactly what benefits they’re garnering from their agencies, so the partnership inevitably dissolves. The business decides to try programmatic in-house, expecting to experience immediate results because they suddenly have unobstructed access to their data.
The best partnerships, however, find a balance between transparency and advisement.
Choosing an Agency Partner
An effective programmatic strategy requires a cohesive team that works together toward a common goal.
Businesses that want to partner with an agency for programmatic advertising can garner better results if they choose an agency that promotes transparency. You’ll want to not only know exactly what your data says, but also have some form of accountability.
A transparent fee structure is imperative. For instance, can the agency impose add-on margins that increase your overall spend? Does the agency monitor bot activity so you know when your clicks are potentially fraudulent? Are there systems in place that double verify data accuracy and validity?
These factors should play a considerable role in helping you choose an agency partner that will work with you instead of milking your business for every possible dollar. An effective partnership leverages responsive customer service and takes your feedback into account. It also takes a proactive approach to your programmatic campaign rather than responding reactively to problems.
In other words, you want to know — down to the cookie — how your campaign performs and what you should expect from future campaigns. It’s also important to look for an agency that gives you control over your contract. Can you cancel if the relationship doesn’t work the way you expect? Can you pause or suspend your account temporarily?
The more control you gain, the more confidence you have in the partnership.
Balancing Control and Access
While a healthy balance between control and access sounds like the perfect marriage, you have to evaluate your options to determine what will work most effectively for your business.
A firm that branches off by itself to create its own programmatic advertising campaign is a little like a pilot who takes off in his jet without the aid of an air traffic controller. He can get the wheels off the ground and perform a few stunts in the sky, but he has no way to prepare for obstacles he might encounter or to land safely should he run into inclement weather.
An effective programmatic advertising campaign needs the right talent mix and a solid infrastructure. But how do you attain it?
Starting with the agency model might prove most effective for your business. You’ll learn more about programmatic advertising and how it works, and you can experiment with it on a trial basis. Let the agency show you the results it can achieve so you can make an educated decision.
You can then continue with the agency model, set sail with your own in-house program, or try a hybrid approach like American Express. Whatever you choose, you’ll know exactly how you might benefit from each strategy.
Taking Advantage of Growth Opportunities
Programmatic advertising isn’t a static industry. It continues to grow and evolve, just like every other form of advertising, and branching out on your own might restrict your opportunities to take advantage of growth potential in the industry.
Mobile, for instance, represents one of the greatest growth opportunities in the market. In fact, eMarketer reports that mobile programmatic will actually outpace desktop programmatic in the near future. An increasing number of consumers are using their mobile devices to make purchasing decisions, and consumer behavior ultimately drives advertising trends.
However, consumers behave differently on mobile than they do on their home computers. For instance, if a consumer is shopping for a particular product on a smartphone, he or she is likely on the road, hitting stores and actively seeking the product in question. Therefore, the best way to target him or her with advertisement changes.
Similarly, video is poised to become a major component of programmatic advertising. As more consumers watch videos on lieu of reading articles, the demand for programmatic solutions will only grow. However, if you don’t have an agency partner, you might miss these types of opportunities.
Programmatic advertising is one of the most compelling topics in the online marketing space. The more you know about this fascinating new way to target consumers, the better positioned your business becomes for success.
Elite SEM is uniquely positioned to introduce businesses to programmatic and to increase their ROI. We take a completely transparent approach to data management and information-sharing, and we create accountability down to our talent pool. Get in touch with us to discuss your programmatic needs! [email protected]