In their perennial search to get the most value from their advertising spend, brand marketers have gravitated increasingly to programmatic strategies. According to recent data from eMarketer, programmatic advertising now accounts for more than 80% of digital ad spending (including display mobile, social and search), making programmatic a predominant approach for marketers.
But are those marketers getting the best return on their programmatic investments? The convergence of digital marketing channels—along with a push for greater transparency into agency fees and ownership of their own proprietary data—has fundamentally shifted the economics of programmatic, prompting a necessary change in how marketers leverage the channel.
“Programmatic was once a channel where transparency and client-led economics were secondary to hitting impression targets,” says Peter Chun, vice president of platform strategy and growth for SocialCode. “It used to be more about programmatic partners’ bottom line than it was about advertisers’ objectives.”
Much of the recent shift in programmatic strategies and economics can be attributed to marketing channel convergence—and to the fact that Facebook and Google have accounted for the lion’s share of digital advertising growth in the past two years.
“Digital and social marketing are more intertwined than ever before,” Chun says. “There is less and less of a distinction there, and the buying methodology of Facebook is really driving how the other channels are evolving.”
Previously, social was bucketed off as a marketing channel separate from search, online video, over-the-top and programmatic. But as they've expanded, social platforms have become primarily destinations for video content. And with Facebook becoming increasingly mobile and more dominated by video, more publishers adapted to become like Facebook in different ways, designing ad products that look just like Facebook's ad products.
With that, it has become more evident to marketers that they shouldn't necessarily be treating programmatic differently from how they treat Facebook.
“When it comes to how brands approach planning, those two streams—social and programmatic—are converging more and making an impact on marketing team decisions, like what they are choosing to buy and how they measure campaign performance,” says Matthew Berman, senior director of programmatic for SocialCode. “Marketers started taking a closer look at their programmatic strategies and started scratching their heads and asking why only 50 percent of the dollars they were putting out there are going towards working media. Instead, brands should actually spend less across both channels and can still achieve the same results. Effectively the economics of a channel which allowed brands to be displayed and reach across the internet was being right-sized.”
Transparency is another characteristic that’s new—and necessary—for programmatic. As much as they desire automation because it brings with it the ability to maximize reach and boost the success of campaigns, savvy marketers also want to own certain decisions about their advertising spend.
“A major factor that contributed to the evolution of programmatic was the shift from publishers’ ad servers determining when an ad was served,” Berman says. “That was not working for marketers, because they didn’t have any control over who was seeing their ads. Three impressions could all happen within an hour, for example, and then a brand wouldn’t be talking to consumers the rest of the day.”
SocialCode’s approach is to be transparent and to help marketers put more working dollars toward media, he says.
“We’ll advise marketers on which platforms will perform the best, but we want to be able to move budgets between platforms to continue to see the best performance,” Berman says. “It’s about brands understanding how that dollar is working for them—being transparent with what goes towards click tracking, towards audience segmentation and towards ad serving, rather than ‘Here's your IO, and here's how many clicks and conversions you received.”
The Importance of Portability
Another critical requirement for marketers deploying programmatic strategies is ownership and portability of the data generated by their campaigns. In most cases with programmatic, marketers don't own the data that comes back out of the exchange.
“When you push for your cookie pools or you create different types of campaigns or you upload different audiences, you're actually not able to bring that back out to use it for other marketing purposes,” Berman says.
Data portability means that marketers could integrate and leverage first and third party data, which is what SocialCode’s Audience Intelligence Platform facilitates. The intelligence gleaned from that data can be applied to other aspects of marketing, from social media to email or search marketing and beyond.
“If we know that there are audience segments that work really, really well on Facebook, we can help brands get exponential reach outside, at the right economics that can scale above and beyond social,” Chun says. “That’s why data portability is critical. Your priorities are going to change. Who you work with evolves over the years. The way you buy media evolves over the course of your partnerships. You should have the liberty to leave and take everything that you've earned to the next partner.”
For marketers that might ultimately seek to bring their advertising in-house, portability also means that an agency can never hold their marketing data hostage. That’s important, given that a recent study from the Association of National Advertisers indicated that in-housing has recently trended upward, with 35% of brands reducing the role of external agencies. An IAB study of brand advertisers shows that hybrid in-housing is also prevalent, with 47% of brands moving programmatic functions in-house.
"Since we’ve been working with SocialCode, we’ve seen strong performance across our social channels and are ready to build upon that momentum. Programmatic media is the next channel we intend to expand upon, and we are happy we have an agency like SocialCode to partner with us", said Ryan Hartman, VP of Performance Marketing at The Zebra, the nation’s most comprehensive comparison website for car insurance quotes.
Regardless of which tack a marketer might take—fully in-house or leveraging select strategic partners—access to data intelligence and transparency into programmatic fees and other factors remains critical, which also means selecting the right partner to maximize the value of programmatic investments.
“The growth of social, social targeting and social measurement is informing literally every other channel that exists,” Chun says. “Partners with this emphasis—versus traditional programmatic agencies or buying partners—are economically focused on giving our clients more working media, allowing them to get more for spending less.”