Benchmarketing Blog
Digital Strategy | Untitled-13 5 min read

3 reasons you’re not programmatic buying

by Bench May 22, 2014

I read a blog published on AdAge, outlining how ‘easy’ it is to execute programmatic buying. While the blog mainly made sweeping, often ill-informed but easily-digestible comments on what programmatic buying is, I do agree that it is an important topic to be talking about. CMOs certainly need a ‘Guide to Programmatic Buying’, but that blog highlighted the fact that there is a lot of misinformation floating around, and even in major publications. So I’d like to clarify a few things.

A quick definition of programmatic buying:

Rather than paying the same price for every person who sees an ad, buying media programmatically means advertisers are able to segment consumers based on their online habits, their behaviour, their likes and dislikes, and how closely these match a certain advertiser. The advertiser who bids the highest and wins the ad placement, usually bases this bid on a large set of information they have about the customer who is about to see the ad. The bid is informed, the customer sees ads, offers and services that appeal to them, and the publisher gets the highest price that the market forces of supply and demand will allow for their inventory. Sounds pretty easy so far, right?

Here’s 3 reasons why it’s not:

1. It is not just about having the best optimisation technology out there

Tech is important, but it does not guarantee results. The way each company builds their own media buying technology is believed to be the ‘secret sauce’ of the industry. Every DSP has their own engine that analyses the habits and behaviour of people online, each of them trying to bid the exact right amount for each ad placement. If each DSP has different technology, it makes sense that they will yield different results in different situations. The key to programmatic media buying is not the technology itself, it is understanding whose technology will work for your brand, your campaign, or your offer. Some DSPs have a good track record of results for certain verticals, lets say camping products, for example. But the only way to know that is to have the experience with that DSP in the first place. Successful media buying is executed using high-level optimisation, constantly picking and choosing and testing the right sources for each campaign. If you want to avoid bias and get real results, it’s just damn time-consuming.

2. It is a game of negotiation and balance

If a client has a certain budget to spend in one month, that budget will yield a volume of ads depending on the bid price for each ad. Let’s say a client has $100 a month to spend, the job of a good media buyer is to spend that budget in that time, but get the best prices for each bid and thus conversion. A media buyer might set their bid price initially to cap at 10c, which will likely only give them access to remnant inventory (that is publisher ad space that is ‘left over’ after direct sales and has been put into the exchanges). As the media buyer increases the bid price (always making sure they are spending the right amount to extend the budget over the period of time they are given) they have access to more inventory but are also competing with more advertisers, and so their eCPA (effective Cost per action/acquisition) will increase too. In online bidding, as opposed to bulk retail buying, the more media you require, the greater the bids required to win that inventory.

As the demand for the media goes up, so does the price, and so media buyers are always balancing the campaign goal they are trying to achieve with the time and budget they are given. This is, seriously, really hard.

3. Click fraud is only a problem if you focus on clicks

Another point mentioned in the AdAge blog was the apparent ‘click fraud crisis’, explaining that ‘nearly every entity along the supply chain benefits’ from it. That is wrong for so many reasons. A good media buying company will not advise their clients to set clicks as the only goal. Sure, for some campaigns clicks might reveal that there is in interest in a product or service, that there is an audience or that brand awareness is increasing. However, if you read our blog on attribution you’ll realise that clicks are only a small part of the equation. Most campaigns, especially for retail brands or online stores, will set their main campaign goal as sales, and good media buyers will optimise and only attribute goals to their media only once an actual sale has been made. Numbers really do, do the talking, and so even if a million clicks were fraudsters, if your main goal is sales, or time spent on a website, or your customer bounce rate, that’s really not going to matter.

This was really only a quick run-down of some of the reasons why buying media today is not as easy as some people make it out to be. Simply ‘entering’ the world of programmatic media buying will not, by any means, guarantee you success. It needs experienced media buyers, data analysts, teams of people whose sole responsibility is to make operational and high-level optimisation decisions. It’s not easy, and that’s why there aren’t many companies out there doing it right.