Programmatic Advertising’s Secret Weapon

Picture chickens happily pecking for worms in a fenced in-yard, unaware of the worms just outside the fence. They could easy fly over the fence and eat those other worms, but because they cannot see through the fence, the chickens stay in the same yard, pecking harder and accepting diminishing returns as worms get eaten.

We’re the chickens.

Well, not exactly. But, there is a lesson to be learned from this analogy. For all the promise and efficiency of programmatic media buying, we fall into the same trap that the chickens do, believing that the supply cannot be changed, and the only way to get more is to work harder or dig deeper. We do this because of a misperception that the available supply information is adequate to inform buying strategy.

However, new technology has demonstrated that tremendous scale and efficiency can be added to programmatic buys simply by incorporating real-time supply information into the buying process.
Missing Supply Information
Today, when we lose a real-time auction, there is no clear reason why. Our built-in biases assume the bid wasn’t high enough. The typical reaction, therefore, is to increase one’s bid. But, raising bids can lead to an erosion of the price efficiency that programmatic ecosystems were supposed to deliver in the first place.

Another option is to abandon the increasingly inefficient auction for a new one. Yet, when exploring new auctions without the guidance of supply data, there are three significant barriers in the media buying process. These barriers combine to keep buyers from exploring more efficient targeting opportunities.

  • First, buyers must identify a new auction to test. Buyers tend to be restricted by inventory and categorically narrow targeting parameters when they rely on auctions with historical data.
  • Buyers can’t measure their return until they have purchased a statistically significant amount of media. During this waiting period, the ROI isn’t yet measurable. The risk of wasted time and spend reinforces the hesitancy to explore new targeting parameters.
  • Once buyers have a statistically significant amount of data, they can optimize their media purchases. Because of the delay between their initial purchases and the ability to optimize, it is hard for buyers to react quickly to market opportunities.

So, as we have experienced, the limited data currently available in media markets creates a bias that acts like a wall and limits a media buyer’s vision. Because they can’t easily see beyond the wall, it’s very difficult to find the other worms.

But, what if there was an alternative? What if escaping an inefficient auction wasn’t filled with these barriers and risks? For that to happen, programmatic buyers would need to see beyond the wall. They would have to find a way to gain greater insight into supply.

Social trends represent consumer demand for information, the leading indicators of advertising supply.

The fact is that there is a way to see beyond the wall – listening to audiences is the key. The collective voices of consumers can act as a beacon guiding our media buying. For example, when a particular social conversation spikes in volume, it becomes clear that the topic is interesting to that audience in that moment. Audience interest almost always results in behavior, with the most-read and most-shared topics along some kind of trend growth curve. In those moments, advertising supply (contextually targetable via keywords) related to the growth of that trend is likely to sharply increase as well.

By following social conversations, trends and breaking news, buyers can attenuate programmatic media buying to real-time changes in audience interest. Those able to automate the detection of trends (and, thereby, automate the analysis of media supply) can then make more informed media buying decisions, rather than simply bidding up an auction. They can stay in an auction until it is inefficient, and then move on to the next auction, as predicted by audience interest trends. It also means that they can enjoy first mover benefits, opening up more auctions and selecting the most efficient ones.

At the end of the day, that means more worms. Programmatic buyers will be able to target ads more broadly as unexpected audience interests and targeting keywords are revealed by this approach. And, ultimately, that data will reduce the cost of testing new auctions and drive better optimization.

Using trends and conversations as a mechanism for informing programmatic, bidded media is an emerging practice. The most advanced programmatic buying algorithms generally do not access supply data and react to price fluctuations determined by competition levels. Audience interest can now fill the gap of missing supply information.

The programmatic media promise is more than just pecking away at a shrinking pool of worms, albeit with computers rather than IOs. It is the promise of seeing beyond the wall, using data to understand supply and then truly realizing the promise of more efficient media buying.

Interestingly, marketers have been listening to audiences and customers for years. It’s time programmatic media buyers to do the same.

By: Danny Harris | Account Manager of Taykey

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