This is complicated advertising purchasing, and the dialogue is characterised by complex clarifications when advertising networks want to push programmatic advertising. It is easy to make good money from dodgy page views and low traffic whereby advertisers risk finding their ads on completely irrelevant pages. The hidden fees are redolent of advertising agencies who really skimmed the cream some years ago.
“The term “programmatic” refers to showing advertisements and the automation of buying and selling, either through an open auction (real-time billing) or a private auction, or buying reserved space just for you (programmatic direct).”
This is programmatic purchasing
In brief, this is about the automated purchase of advertising rather than "manual" purchasing by calling the advertising sales department of one or more websites, for example. I.e. traditional purchasing, negotiating, bargaining, etc. are skipped – and replaced by machines and automation.
The concept is not new. Google and Facebook are examples of channels in which advertisements are almost exclusively purchased programmatically via self-service systems, and these advertising channels have been in use for over 10 years. What has changed in recent years is that alternatives that have traditionally sold directly are now sold programmatically; for example, advertisements in the majority of Norwegian online newspapers.
“We are moving away from trying to reach the users on a specific website towards reaching the users in the target group”
Instead of only being able to purchase space on a specific website, the commodity is now the users, or rather the cookies, in a target group. This permits advertisers to use information and insight to define whom they want to reach, for example, demography linked to previous user behaviour and interest categories.
We are moving away from trying to reach the users on a specific website towards reaching the users in the target group. Many advertisers have extensive experience of banner advertising in Google’s display network (GDN). In GDN you also buy advertisements programmatically, and the tool is a reliable and free alternative to more expensive programmatic platforms that charge higher commissions. For many, GDN will be sufficient because Google’s network has very good coverage in Norway. You want to reach the most people, and even if the placements are often seen as a bit “second rate”, you can achieve good exposure on many large websites such as TV2 and the Dagbladet newspaper. Advertisers who have large display budgets and are used to buying banner spaces directly will, however, require something more.
Programmatic = effective
Programmatic advertising purchasing is less time-consuming; you can save money on reduced manual follow-up. You also gain better control of your media purchases because you don't just hand over money to a website and receive a report in return at the end of the promotional period without further impact or insight. In addition, and perhaps strategically most important: optimisation based on insight – improved results, continuously based on real-time insight.
As programmatic buying generally involves traditional banner advertising, this raises multiple challenges. The effect and click frequency has consistently fallen in recent years. An increasing number of people say no to ads; in Norway, around one in three choose AdBlock, although not yet on mobile phones. This is in line with Denmark but lower than in Sweden, where the proportion is closer to 40%. The figure among the population under 30 years of age is significantly higher than 30%. The mobile phone is also a more challenging surface for banners due to the smaller screen size.
In addition, programmatic purchasing gives the advertiser reduced control of where the advertisement is shown. It is obviously important to be conscious of where the brand is being exposed – even if you are reaching the right users, it is not certain that you want to be associated with all the websites that the user visits. This can be controlled by the systems, including by the use of so-called “blacklists” and “whitelists, but many people are careless here. We often see examples of serious brands exposing their brand on dubious or extreme right-wing websites.
What does the future look like for programmatic buying? Has the classic banner ad had its day?
Programmatic buying as a concept is definitely here to stay, and you can potentially see exciting applications in TV advertising and out-of-home advertising, for example.
At the same time it is not possible to ignore other challenges associated with traditional banner advertising in a market characterised by increasingly greater advertising density.
In recent years, marketeers have placed increasingly greater focus on content marketing, marketing in dedicated channels and social media. So-called “inbound marketing” has seen enormous growth in recent years and has taken an increasingly greater proportion of advertising budgets, often at the expense of the more traditional display advertising.
”Manual tuning will remain in strong demand in national markets”.
What should be the mindset of a player in a national market?
Normally, Google Display Network and Facebook will work better for most Norwegian/Nordic businesses. We represent a small market, and much of the technology and algorithms out there are designed for larger markets. A number of platforms are simply not scaled for our domestic market, because the algorithms work best with high volumes to be able to provide statistical significance.
For many, digital purchasing via Google Display Network and channels such as Facebook, Instagram and YouTube will be sufficient. We represent a small market, and much of the technology designed for the large open ad stock exchanges works best in bigger markets. A number of platforms are simply not scaled for our domestic market, because the algorithms work best with high volumes to be able to provide statistical significance.
Advertisers who invest a lot and see the positive effect of banner advertising and who have not been used to buying advertising space directly should, however, definitely consider moving over to programmatic purchasing. Private “deals” in which you’re offered advertising space on a predetermined selection of websites (for example, in Schibsted's network) can often be a better option than buying at an “open exchange”. You know that you are buying quality space and will benefit from the flexibility that programmatic purchasing provides.
Nonetheless, it is important that you as an advertiser have a basic knowledge of the technology. You should have an overview of where your brand is being shown and what you are paying to whom.