How Programmatic Media Buying Is Saving The Banner Ad
Why is it so tempting to dismiss entire swaths of the media landscape as dying or dead as Farhad Manjoo did in a piece for the New York Times earlier this month? TV is dead, Print is dead, and as Mr. Manjoo suggested, the banner is dead, proclaim technology and media reporters! The answer is that killing off a media channel is a step toward simplicity in a maddeningly complex landscape. Many industries are sustained by media, which means many people need to make sense of the media landscape in order to make critical business decisions. How do I reach my target audience in an efficient manner, asks the marketer? How do I monetize my content, asks the publisher? As complexity proliferates, it can be very tempting to intellectually dismiss an entire channel, freeing up the brain to try to make sense of the latest new fangled obsession.
When such a new tactic arises out of the ether, like native advertising, it can be a shining beacon in the rough waters of the media ocean, compelling media professionals to pursue it with reckless abandon. This false euphoria is the other side of the "banners are dead" paradigm. The media industry alternates between these two extremes: death and life, cool and uncool, new and old, rarely stopping to ponder the more nuanced middle ground.
Mr. Manjoo's piece is guilty of this type of sweeping generalization. His article stops just short of blaming the "web's decline" on banners. Say what? Hours after publishing, Mr. Manjoo was promptly taken to task by the president of the IAB, Randall Rothenberg, for writing an article heavy on hyperbole and light on statistics. Sure, the banner isn't perfect, but it's hardly a monster swallowing the web.
The bigger story is that the way banners, and frankly all media, is being bought and sold is undergoing a radical transformation which is changing how consumers experience ads on the web, and thus the web itself. And it's only just begun... Yet, Mr. Manjoo's piece made no mention of programmatic media buying, which would suggest he mailed this piece in, if snail mail wasn't dead of course.
Programmatic media buying uses data to target the placement of ads. Behind this simple statement is an incredible technological phenomenon: offline data, for instance loyalty card data reflecting what a consumer buys in a brick and mortar store, can now be used to target online media. A new industry within online advertising has been forged on these technological advancements: Marketers pay data brokers to match offline data with online data, they license data management platforms (DMP) to organize the data in a visually simplistic manner and they use demand side platforms (DSP) to automate the execution of media buys that makes use of the data. In short, advertisers have embraced a new technology infrastructure and now routinely target audiences based upon a web goer's data profile.
This data based approach reflects a radical departure from how media has previously been bought and sold. In the past, content was used as a proxy for the target audience. For instance, a dog food maker bought ad space on a cute puppy website with the assumption that visitors to that site are pet owners. This approach has a major flaw: many of the site's visitors love cute puppies but don't have a pet to feed at home. The advertiser is paying for ads that are unlikely to positively impact the business, and the consumer is seeing something irrelevant. I see what Mr. Manjoo was complaining about.
But what he missed is that the data based approach of programmatic media buying changes that. Now, the fact that a consumer has a history of purchasing dog food (online or in-store, both data sets are viable) becomes the criteria for targeting ads. In the era of programmatic media buying, data has replaced content as the means for targeting.
Ad targeting is now incredibly precise, but it's also automated. Programmatic media buying allows advertisers to program their buy with a target audience, and then let the DSP find that audience. This "set it and forget it" approach frees up marketers' time to focus on building creative that is useful, entertaining or otherwise relevant. Automation will power nearly 62% of banner ads in 2014 -- that's a lot of free time for marketers to invest in improving the advertising experience.
Accelerating this change is the fact that data based targeting costs about half of content based targeting. That's right, even though data based targeting is more precise in finding a specific audience, it costs more to use content -- like the dog food site -- as a proxy for a specific audience. In the programmatic era, advertisers don't need to pay content premiums to target an audience; they can use less expensive data.
As you can imagine, this puts downward pressure on the rates publishers can charge advertisers, threatening their business model. In essence, the ad-buying marketplace posed an existential challenge to publishers: How can you justify a premium when data allows an advertiser to more effectively and efficiently reach its target audiences?
Traditionally, the answer is there's branding value in being associated with content consumers know, love and trust. There's also value in delivering an ad in an environment that is contextually relevant to the advertiser's product, like dog food on a puppy site. But, try pitching soft branding value to a marketer charged with hitting a quarterly sales goal. Is it worth them paying double? In reality, publishers had to find a new way to validate the premium and the answer was the content itself. Advertisers now routinely "co-create" content with publishers. Instead of buying ads next to the content experience, ads become the content experience. Once publishers began co-creating content with advertisers, the idea of integrating that content into the site's editorial stream felt less taboo, and thus, native advertising was born.
The rise of content marketing and native advertising is thus interconnected with the rise of programmatic media buying. That interconnected history is still present today. Banners, content and native are three tools that complement one another. Whether publisher or advertiser, knowing how these tools are interconnected, their strengths and their strategic role will determine how the web is experienced by consumers.