Ad:Tech: Making Programmatic Buying More Targeted and Efficient

When it comes to the relatively new industry related to programmatic ad buying—that is, the ability to automate the process by which ads are placed on apps, websites, and other publisher assets—there is a perception that the purchases are mutually exclusive from ad-placement strategies that rely on a human sales force. But at Ad:Tech in San Francisco, AOL CEO and chairman Tim Armstrong said during his keynote that programmatic buying links marketing services (like increasing brand equity) with acquisition marketing strategies that involve deep targeting and typical cost-per-action (CPA) goals.

“The benefit is the ability to let humans use their creative power on top of technology, to figure out new ways to do advertising—to help publishers make more money and get better results,” Armstrong said.

He analogized programmatic buying with programmatic trading on Wall Street, which gained prominence roughly 10 years ago, during which time the value of programmatic trading companies skyrocketed while the valuations of traditional Wall Street companies were questioned.

“Fast forward to today and the companies that mix programmatic and creative trading around the financial [industry] actually have outsized valuations,” Armstrong said.

For advertisers, programmatic buying represents a platform that automates certain ad buying activities, thereby allowing humans to use their creativity for bigger marketing challenges. For example, Armstrong pointed to tax preparation software company Intuit, whose TurboTax product sees tremendous spikes as the tax deadline looms. “The conversion rate for Intuit matters a lot, so every minute of every day, every impression matters,” Armstrong said.

The ubiquity of mobile devices gives Intuit, which used to look predominately at desktop conversions, more factors to consider. “We have charts that show by the hour of the day what devices people use and how they use them,” Armstrong said. “The important thing is how do we instantaneously switch the messaging not just based on the advertiser or the campaign, but by the time of day? A human cannot make those decisions.”

Another problem within the programmatic buying ecosystem is the reduction of dollars as inventory works its way from advertiser to publisher. A $1 investment in ad inventory will decrease as a percentage is taken from the demand-side platform provider (DSP)—which places the inventory in the ad network. Then the ad network takes a percentage and finally the supply-side platform (SSP) provider—which places the ad on the publisher site—takes an additional cut. If each solution within the programmatic buying stack worked more symbiotically, Armstrong argued, fewer cuts would be taken from that dollar. He added that a combination of technology and human creativity will be necessary to optimize the ad buying process.

Ultimately, to optimize both ad efficacy and spend, companies will need to understand the variables across the entire programmatic buying space.

“As a publisher, you want access to that entire ecosystem and you want structured data built into those systems,” Armstrong said. “How do you get access to everything all the time?”

Apropos to the keynote’s theme of optimizing the entire programmatic buying process, AOL announced today an addition to its advertising technology stack: an SSP called MARKETPLACE designed to help publishers manage their ad inventory. The SSP had previously been a hole in AOL’s portfolio of digital advertising solutions, and its addition potentially puts AOL in stronger standing against Google’s competing DoubleClick ad services and solutions.

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