PROGRAMMATIC: YESTERDAY,

TODAY & TOMORROW

ABSTRACTThis analysis highlights the impact on media buying and media technologies in the ecosystem today and how the adoption and expansion of programmatic technologies have forced traditional media buying to restructure and refocus on audience data.

Devin JonesEastern Michigan UniversityCollege of Business, Masters of ScienceIntegrated Marketing Communications December 4, 2016

Table of Contents

Programmatic Media OverviewThe Early Algorithm 3The Ad Tech 4Buying Programmatic Inventory 6

The Data StoryThe Data Set 7Data & Media 9

Programmatic Current PracticeAutomated Guaranteed 12Unreserved Auctions: Private Marketplaces & Preferred Deals 13Open Exchange 13Header Bidding 14

The Future of ProgrammaticExpectations of Media Buyers Today 15Cross-Device 16Ad Fraud & The Rise of Ad Blockers 17The Lumascape 18The Shift of Media Dollars 20

Inventory InnovationThe Publishers Perspective 23Native Ads 24Dynamic Creative 25Television 26Out of Home 27

Measurement & Attribution 28Conclusion 30

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Programmatic Media Overview

As technology became a major part of the average consumers’ life, it increased the amount of times consumers were able to see an ad and therefore was now a larger supply of ad space and also an increase in demand. In its simplest form, programmatic can be defined as the automated way to buy and sell advertising, but it is incredibly more complex than that. Joe Zawwadzki, CEO of MediaMath defines the programmatic industry as “the use of technology to automate processes and the use of math to improve results.” (Ebert, 2012) Although technology plays a large role in the delivery of programmatic media and the marketplace seems to be inundated with new ad tech companies popping up on a regular basis, the power of programmatic would not exist without the agility and communication of humans to dynamically optimize media dollars. Technology allows data to be collated, behavior to be watched in real-time, and streamline message delivery to improve effectiveness with the end goal to monetize the media dollar more efficiently through traditional channels.

Gone are the days of paper insertion orders and unquestionable CPMs decided by the publisher. Welcome the days of transparency, data focused buying, and market value CPMs. “Programmatic allows planners to connect people's data on multiple devices to generate audience insight, thus empowering brands to become more sophisticated storytellers by delivering individual users seamless brand narratives where the message and creative are crafted to the environment.” (Regan, 2016)

There is a misconception within the advertising landscape that programmatic is replacing the human touch of ad buying and selling and relying on software programs to buy and sell those traditional ad spaces. The traditional seller of ad space are all those publishers with real estate available within their content distribution channels (magazines, between television shows, above an article on a website, etc.) that they can then align an outside brands (the buyers) product within those channels to reach a particular consumer. Altering the way a major business has transacted for over a century can be equated to climbing up a very steep mountain. Ben Couture, Associate Director of Chevy, Amnet Group US, stated:

“Education is key, when people don’t understand things they typically fear them. New technology (that is as disruptive as programmatic media buying) can create tension if someone feels his/her work is being devalued by the technology. Once people understand how programmatic tools can help them do their jobs even better than before, they are more likely to adopt change.”

Before programmatic stepped into this space of buy/sell/execute media, there lived a world where individual humans were connecting and discussing how best to solve marketing goals of major advertisers trying to reach the everyday consumers. Agreements were made on paper and results were delivered post campaign execution.

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The Early Algorithm

You cannot understand the future of programmatic and where it could go without taking a small step back and understanding where it stemmed from and how history has shaped the digital ad industry today. The dissemination of media always consists of buyers and sellers, as described above, but the types of ads available also play a role in how media is consumed and the cost associated with media. Audience data has been around for centuries but it was only readily available for certain types of media. The television ad industry has utilized data points collected through major companies like Neilson to decide on where to place certain ads so the thought of data in advertising is not new. What matters is what data is now available and how are we using it to make better decision for our business. The beauty of impression-by-impression buying (programmatic) is that a “transaction occurs on the basis of audience inventory that actually exists, as opposed to the television model, in which inventory is bought on the basis that it will exist according to a statistical projection.” (McConnell, 2015)

The first banner ad appeared in 1994 and the first ad networks appeared in 1998 (Rajeck, 2015); the rise of the digital age came fast and fierce. Forbes argues that programmatic has been around since the 1990’s when search arrived. “The origins of programmatic ad buying started with the advent of search engine marketing. AdWords and Overture were, from day one, programmatic, as it was an auction-based system where you bid on keywords in the hopes that your ad would rise to the top of the right column when someone did a search. Prices rose for the most valuable terms.” (Cooperstein, 2014) Google being a large player in the media and ad tech world has been able to establish the reputation of innovator and creator for a lot of the programmatic traction today. Advertisers and media buyers realized the chaos and difficulty of managing the digital ad space due to the vast amount of new media available, new players in

the space, and competition between buyers. No one was able to predict the growth of the Internet or the adoption from consumers and therefore there was a giant hole in the advertising world that allowed technology and innovation to take over and adapt products around the needs of every party involved in the transaction of a media buy. The chart pictured to the left showcases the quick adoption and steady growth of the Internet just in one decade across both mobile and

desktop, allowing for assumptions to be made as to where the market is heading.

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The Ad Tech

The phrase Ad Tech can be found in almost every article discussing programmatic and digital advertising now-a-days, but it has many definitions or descriptions. Ad Tech is a very vague phrase that encompasses any and all companies that bring an element of technology into the sale of media today. The influx of new technology companies with a programmatic solution has flooded the ecosystem and caused more fragmentation than consolidation. The image to the right was shared by DigitalAfBlog.com to showcase the movement of an ad in the programmatic space. (Programmatic, 2016) Media buyers and sellers can benefit from the fragmentation if they are willing to pay for it, flexibility to change to the partner that best solves the business needs keeps the power in the media buyers and sellers hands verses the tech companies. Research has shown that more than 80 per cent of buyers and sellers are transacting programmatically. (Hulett, 2015) It is important that one understands how this takes place before understanding how the ecosystem can and will evolve. The Ad Tech ecosystem embodies over 2,500 players (Tadena, 2016) and with every 50 companies merging or closing its doors 75 new companies will appear. The advertising lumascape that traditional buyers and sellers are used to no longer exists and will probably not look the same in another decade. Agility, innovation, and adaptation are the keys to surviving.

Before defining the technology in the space I want to cover the term “publisher” as it is utilized a lot in regards to advertising and the buy/sell transaction. A publisher can be defined as the party who owns the domain that a consumer visited. (McConnell, 2015 p. 12) When understanding how publishers monetizes their inventory through a supply-side platform one must understand the definition of yield. “Yield is the amount of

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margin a publisher makes from an impression”. (McConnell, 2015 p. 13) The publisher wants to make sure that the inventory, as it becomes available, is sold to the buyer who will pay the most for it. Programmatic lends itself to actually helping publishers properly monetize their inventory in a much faster way and on a larger scale. On the one hand, it gives them options to serve advertisers, and on the other, it gives buyers the ability for advertisers to bid only for the consumer they want, with or without regard for context and therefore pass up on buying all the impressions in a given time frame leaving publishers with available inventory to keep selling.

The first level of ad tech is the ad server. Ad servers provide the technology for publishers to manage ad inventory and for advertisers to connect a placement to a creative. Ad servers are not new to this space, as originally this was how direct media campaigns were executed when an advertiser signed a paper IO and sent over creative advertisers to the publishing company. When signaled (by the page, rendering), the advertiser’s ad server provides the picture (ad) and that is how the buyers knew their dollars were being spent. Now an ad server is ideally placed to provide accountability data to both sides of the marketplace. There are two basic types of ad server: those that work with the advertiser; and those that work with the publisher. (McConnell, 2015)

Gone are the days where the only two people involved in media exchange are the publisher and the advertiser, there are now Ad Exchanges. Ted McConnell described ad exchanges very eloquently in the Programmatic Primer stating;

“Exchanges attempt to match buyers and sellers one impression at a time to create a liquid market. Exchanges handle billions of impressions a day. A lot of good inventory does not get bought simply because the bidder cannot answer a bid request fast enough. Prices are cheap on exchanges. The reason is that they became outlets for remnant (previously unsold) inventory, but that is changing for two reasons. 1) As options for ‘private exchanges’ blur the line between open bidding and private deals. A private exchange is nothing more than a white list and a price floor to the RTB system. 2) With more sophisticated data and computing power, we are beginning to be able to bid for quality.” (McConnell, 2015)

Two key components of ad tech that enable programmatic transactions are known as the DSP and SSP. A DSP or Demand Side Platform is the system in which advertisers or media buyers use to purchase ad space. It's a 'platform' in the sense that you don't directly buy the space on the publishers website, but instead input parameters, like audience data and the DSP then, programmatically, buys the ad space for you. The benefit to demand side platforms is the use of targeting options beyond what single-platform publishers could offer an advertiser. The ability to utilize a multitude of data options and segments to effectively target an individual versus the masses. The power of data and its implications will be discussed later on.

The Supply-Side platform (SSP) is in turn the other side of the lumascape and manages both the ad content delivered to the site, the audience data, and paying the publisher for the use of their ad space. Publishers utilize supply side platforms to monetize their inventory. Most publishers

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are not making 100% of their inventory available to their supply side ad tech partners due to the desire to maintain those major direct sales that have taken place in years past.

A final component that plays a large role as we continue the discussion data use and the importance of audience data in media is Data Management Platform (DMP). The DMP sounds simple, but it is arguably the most complex, and most important, part of the programmatic ecosystem. The DMP typically includes data organization tools, audience builders, analytics, an optimization engines, and APIs to get data in and out. DMPs are an important piece of technology for both advertisers, buyers, sellers and consumers as it holds the elements to connect all parties efficiently and effectively. Like ad servers, DMPs are not knew to major ad companies both those buying advertising and those selling advertising. The new component is the use of what individual DMPs are holding and the education around the value of those data sets. The value of data will be discussed later in this paper.

Buying Programmatic Inventory

Although programmatic is best known for real time bidding and auction based buying, there are actually four types of programmatic pipes to utilize. Real Time Bidding or RTB as it is commonly referred to when speaking about programmatic plays an integral role in understanding how programmatic differentiates itself from traditional media buying. The act of RTB happens within milliseconds in the programmatic landscape and works when someone browses a publisher's web page, they tell the SSP that new ad inventory is available. The SSP then informs the DSPs and provides some information about the person who is viewing the page. An auction then commences between the various DSPs connected to the SSPs. The DSPs then bid, in real-time, for that ad space according to a bidding strategy determined by the parameters set by the advertiser. The advertiser who wins the bid, via their DSP, is then given the space to show their ad.

The other ways to execute through programmatic pipes include: automated guaranteed, preferred deals, invitation only auction, and open auction. A bidding technology is utilized for all of these executions with the exception of automated guaranteed. This programmatic execution mirrors a traditional buy,

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reserving a set number of impressions or time frame for a specific cost given to the seller up front. The Programmatic Buying Ecosystem diagram illustrates how the players in the ad tech space are connected together to execute programmatically. The difference between RTB pipes and automated guaranteed programmatic pipes is the ad tech connection. A few manipulations between the tech partners and the media buyer can deliver media programmatically any way the media buyer choose. As more companies enter the lumascape, as more sellers make their inventory available through these channels, as more sellers begin to innovate within their own internal ad servers and DMP’s the depicted relations will shift and evolve.

The Data Story

The simple definition of data is “things known or assumed as facts, making the basis of reasoning or calculation”. (Dictionary, 2016) Buzzwords change each year in the media and advertising world and data has made quite the appearance in 2016, but the term has been loosely thrown around and has almost become a catch all. Data in media encompasses a few things and understanding the difference will help when analyzing the future of media and programmatic buying. Understanding the difference between “Big Data” from the current data points, that companies own and collect, is a key component in weeding through the muddy waters of the digital lumascape. “Big data is a term for data sets that are so large or complex that traditional data processing applications are inadequate to deal with them. Challenges include analysis, capture, data curation, search, sharing, storage, transfer, visualization, querying, and updating and information privacy.” (Merriaum-Webster, 2016) Big data is differentiated through the tools utilized to analyze, collect, store, and distribute data points. These tools are adapted to accommodate a massive increase in size and complexity and the desire to have actionable data segments. Businesses, large and small, no longer need to rely on sampling or testing small data sets but instead are able to process large data segments and put together a much more holistic view of the world, more specifically a desired audience tailored to a specific business objective. (Import, 2015)

Today’s ecosystem is not only evolving to include new players developing ad tech platforms, but now it includes non-conventional companies that have the power to turn the ecosystem on its head. “We will see companies that weren’t previously thought of as ‘advertising companies’ getting into the space. Verizon is a great example of the type of ‘Big Data’ that can be used to develop new and even better targeting technology. No one historically thought of Verizon as an advertising company, but their data now makes them a major player in the space in my opinion,” Ben Couture of Amnet US said in an interview on October 16, 2016.

The Data Set

Integrating a data strategy into an integrated marketing campaign in 2016 requires a more in-depth look at how to build a successful data set. A data model provides the details of information to be stored, and is of primary use when the final product is the generation of

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computer software code for an application or the preparation of a functional specification to aid a computer software make-or-buy decision. Simply, a data model helps a computer decision off of specific data points and can be in place at many points of a company’s processes, including activating media campaigns within ad technology. The Business Model Integration is an example of the interaction between process and data models. (McCaleb, 1999)

In general data are viewed from two different perspectives: As a physical or digital entity and as somewhat organized (even loosely), structured, patterned to relate to data various points and to real world. For decision-making purposes, data are looked upon from processing points of view and resulting information (decision-support information). The diagram below depicts the both sides.

Before diving into the uses of data in media one must first understand the different types of media available for purchase. First- party data can be described as data from “behaviors, actions or interests demonstrated across website(s); data collected through a CRM tool; subscription data; social data; or cross-platform data from

mobile web or apps.” (Lotame, 2013) First-party data can also house a lot of deterministic data points that can prove valuable. Deterministic data is data typically input by a consumer allowing for unique identifiers to that specific data point. Commonly referred to as “declared data”, examples include email addresses as logins, home addresses, credit card information etc. First party data could be considered the most valuable simply because of the quality and purity of it. Second party data is basically first-party data that is gathered directly from another source. Accessing a specific audience data points or other segments specifically through a publisher one strikes a deal with, where one defines the price around the value of one’s first party data sets. (Lotame, 2013) Third party data is data that is generated on other platforms and can often include aggregated data points from multiple websites. The majority of third party data will be described as probabilistic or an “audience group with the high probability to be accurately profiled” (Chang, 2016) Probabilistic data is built to scale, the start of the segment has deterministic roots but is scalable because of data modeling and profiling. These data sets tie into the DMP of choice for an advertiser and that is why DMPs are vital. Data management

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platforms serve ecosystem transactions and companies by presenting and recording data in support of bidding decisions, sometimes in real-time. A DSP needs to know, right now, a hundred million times a day, if a cookie is an Auto intender, or female, or lives in zip code 45206. (McConnell, 2015 p. 33) The DMPs have architectures that service several aspects of trying to meet bid timing and latency limits, and to read information that comes back from browsers. They can also curate, merge, correlate and enrich, using data from anywhere, and create custom profiles for individuals. These different data points help bridge the gap between company and consumer.

Data & Media

Traditional media has always utilized structured data (think mailing lists) but the Internet allowed data to become a major player in the space and utilized almost as a currency within advertising but considered unstructured data. The data points gathered within the unstructured data set includes things like; Netflix cues, social media declarations and login information, purchase behaviors, etc. The power of data in the digital advertising ecosystem has shifted the way media buyers are strategizing and advertisers are beginning to move major dollars around to accommodate new costs. In the first quarter of 2016 alone $15.9 billion dollars were spent in digital advertising, outpacing the 2015 record-setting quarter of $13.2 billion as shown in the IAB / PwC 2016 Internet Advertising Revenue Report. The chart shows the drastic growth of digital advertising revenue across multiple mediums including web sites, commercial online services, free e-mail providers, and all other revenue sources from selling advertising online. (IAB, 2016). The growth trend rate surpassed 32 percent annually on average in the past 10 years.

The shift in the marketplace is merging data, technology, and analytics in a way that can be tied back to media exposure across multiple devices of a single consumer and even go as deep as purchase activity and in store visits. (Barns, 2015) Cookie-based data points are helping

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connect the dots for advertisers. A cookie data is an observed behavior that becomes a proxy for an attitude (I went to a car site, so I like cars). There are four major data point categories that play a current role in digital advertising today: personal data, transaction data, web data, and sensor data. Personal data is gathered through multiple sources and includes everything from email addresses, home addresses, and vehicle ownership data to household income levels and number of children. Transaction data is not just web based purchases but credit card data and timing around purchases as well. Web data can include behavior patterns, time spent on certain sites, interactions within pages gathered through cookies and labeled as impressions, engagements, clicks, etc. Sensor data is the newest piece that is now accessible via digital advertising and programmatic channels thanks to GPS on mobile phones, phone tower signals, weather detectors on buildings, geo information stored in mobile apps etc. These elements of data and the ability to utilize any of these and many more information to enhance one’s media buying strategy and target specific users or audience segments bring a new level of efficiencies and specificity to the marketplace. These data points allow the value to be placed at an impression level instead of a placement level. Each impression will hold a different value depending on the advertiser trying to reach them and the cost varies on the quality of data points defining that user.

To be successful, advertisers need to use brand relationship data to inform the inputs to their campaign as well as using it to assess long-term contributions to brand health. Companies like DataXu process 300 trillion bytes of consumer data each day (Digital Ad Blog, 2015) and build audience segments that are accessible to campaigns built with their platforms. Programmatic buyers have the ability to take data developed in phase 1 (combination of audience data points or first party data) and in real time, optimize for execution in phase 2 (mid campaign, retargeting, data refresh) which is setting a programmatic campaign a part from a direct execution. Data segments are unique and each company usually analyzes and creates the segments with slight differences, it is the media buyer’s job to understand how those data segments are defined and built to ensure proper targeting is applied. In a study put on by Millennial Media, they found that “more than 50% of media buyers say real time targeting is the most import thing in the programmatic space”. (Digital Ad Blog, 2016) Targeting allows the notion the right message at the right time to the right consumer to be actually possible and even more important, measurable. Ensuring the consumers are the ones the industry as a whole is keeping at the forefront of decision making and data collection will then in turn drive brand success through engagement and specific KPI’s. According to John Svendsen in an article for Warc.com, “programmatic systems promise the earth about reaching the right person. They tell advertisers about the hundreds of data points they collate to ensure that messages are highly targeted. Most of these data points, however, relate to past, or at least recent, online behaviors, which may not be the best targeting variables.” (2016) Demand for up to date data, accuracy and connectivity to other devices is the new norm for data aggregators. “Once brands have collected and stored the data, they need to ensure it remains fresh and can be sensitively applied to improving the targeting of marketing messages. Subject to permissions, brands should also look at monetizing this data.” (Svendson, J. 2016) Utilizing audience data to enhance programmatic campaigns is a key component and driver of success but the value of a company’s first party data must never be compromised. Major advertisers and media buyers

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need to be cautious as to how they utilize their own first party data and how to access other company’s first party data and ensure that no matter on what side of the ad business one is, everyone is protecting the personal information of the consumers.

Programmatic Current Practice

Within the publisher yield stack, programmatic is often used as a remnant filler, with little upstream integration into the main direct sales pipeline. General access to inventory is more limited, and much of what is put out into the market is ‘blind’ or ‘semi-blind’ – meaning little information about the publisher’s site and specific placement attributes are shared. With demand for transparency and inventory being made available through programmatic channels publishers and buyers have now opted into transacting a few different ways to achieve these goals. Auctions being the general way to transact in the programmatic space, automated guaranteed (also known as programmatic guaranteed) or direct deals were the only ways advertisers could side step the auction set up. When an impression goes up for auction, it is first offered to the highest tier; if that tier doesn't bite, the same impression is pushed down to the next tier. This repeats until someone makes a bid. But the process doesn't always get the publisher the true value for their impression. Nor does it give advertisers equal footing to bid on the impression they want. There are three main programmatic transaction types with new options entering the market consistently. The following table highlights the different execution types and programmatic auction options for buyers and sellers.

Pricing can vary depending on negotiations between buyers and sellers, but it is clear that as more premium access is granted within a seller’s ad stack, the pricing will increase for those placements/impressions. As new technology enters the ecosystem we can expect to see this graphic evolve to include new entry points into a publishers ad stack or for the inventory waterfall to become obsolete and inventory become price based only.

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Automated Guaranteed

Automated Guaranteed is inventory that is trafficked alongside direct demand in the publisher’s ad server via an automated reserved technology solution. This execution keeps the media cost of automated reserved campaigns aligned with direct sales CPMs. Originally this solution was presented as a way to automate the tradition media-buying model and eliminate the paper IO and labor intensive process behind the scene to launch a campaign, but now there are many other benefits to this solution if executed properly. Buyers and sellers alike that are taking advantage of this technology are saving time and garnering insights into performance that historically may only have been available post campaign. Allowing campaigns to be connected

through programmatic arms gives visibility into efficiencies and performance that cannot be seen holistically when running a separate direct campaign.

Advertising is not a one size fits all system and not every publisher is willing to put its inventory in the open market but still is interested in reaping some of the benefits offered with programmatic. Since an automated guaranteed platform offers the ability to

purchase forward-reserved inventory, publishers can guarantee placement for next month, next year, or any time in the future—something not possible in the RTB world to date. (Chandler, 2015) Today’s inventory availability is lacking due to tight integrations between the automated reserved technologies and other systems in the programmatic stack. As more publishers onboard their inventory into these platforms the difficulty of accessing inventory that would have been complex to secure in the past, such as inventory in smaller markets without direct sales support diminishes. eMarketer continues to see significant growth coming from automated guaranteed, which will reach $8.57 billion in spending in 2016, representing 42.0% of US programmatic ad spend, up from 8.0% in 2014.

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Unreserved Auctions: Private Marketplaces & Preferred Deals

Private auctions or private marketplaces (PMP) is a buzzword that all brands in this space love and embrace. A private marketplace allows buyers to pass on impressions they do not want and pay more for the impressions they do want. The transaction takes place in the RTB landscape and the deal is established ahead of time between buyer and seller in which there is an agreed upon floor CPM (the minimum that advertiser will pay for impressions). An auction typically consists of one seller and multiple advertisers that can bid against each other (with no visibility on the buy side of who the other advertisers are). Prioritization is typically one level above the open auction and there’s manual workflow involved in setting up a PMP. When this happens a unique identifier that represents the terms of the agreement between the buyer and seller (the Deal ID) is generated to represent the deal. (Spence, 2014)Preferred deals also known as premium marketplaces are very similar to a PMP but with more prioritization and exclusivity granted to the advertiser at the cost of a higher CPM. The set up and execution stays the same and the deal terms are negotiated between seller and buyer ahead of time but in this case the auction is exclusive to one advertiser. This type of deal can be negotiated to be prioritized above PMPs and open exchange and should give the buyer view of more impressions and the opportunity to win more impressions without fear of competition. Programmatic adoption is growing and private auctions are a huge part of the steady growth. By the end of 2016, eMarketer expects spending on private marketplaces to reach $3.31 billion as open exchange investments remain flat.

Open Exchange

The most standard and unrestricted way to buy inventory programmatically. An Open Exchange allows many buyers to bid on the inventory of many publishers in an auction environment. Buyers can target multiple large exchanges at one time in one campaign. The inventory that typically lives within these exchanges are publisher’s remnant or non-sold inventory at the time. This is also the first step for many small publishers into the world of programmatic as they can make as much or as little inventory available in these exchanges and gauge what their inventory is being bought for amongst the millions of buyers in the auction. As programmatic

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buyers get more granular with the data they use, open auctions can help achieve scale and pace campaigns appropriately when their data segment is small or niche.

Header Bidding

Header bidding squashes the traditional waterfall model. The waterfall model allowed publishers to prioritize advertisers above one another based on projected spend, historic partnership or buy type. Header bidding is the process of putting a tag in the header of a website. With header bidding, everyone bids at once, which often drives up the price and in turn gives publishers more money. At the same time, it gives advertisers a more even shot at the inventory they most want. This technology takes the process and optimizes to ensure that advertisers see all impressions and have the ability to pay a higher price for higher valued visitors to our ultra-premium content network. (Whetzel, 2016) Header bidding puts more of the buying control into the advertiser's hands with price being the ultimate filter. The current limitations for this technology lay within the publisher set, a lot of publishers may not have the engineers or ad ops support to ensure this type of technology can be executed. This technology is not guaranteed to stay around but continues to drive competition and transparency into the programmatic space.

The Future of Programmatic

The multiple factors at play in the advertising landscape today only gives a glimpse as to what potentially could develop. There are visible innovation opportunities at every stage of programmatic ecosystem. Efficiencies can be garnered throughout the media transaction. Advertisers are continually trying to gain an understanding of all the new technology that is developed so rapidly within the marketplace while simultaneously trying to organize and monetize on their own first party data. The challenges advertisers are facing is the speed at which they need to understand how to follow the evolution of their current and potential consumers through each point in a marketing funnel, as each of their customers are engaging and interacting with media through different mediums than the previous.

Following and understanding the consumer’s path to purchase is a large task advertisers and agencies alike take on every day. Closing the loop on measurement for advertisers and their agencies will come with education, understanding, and execution of programmatic media alongside the direct media buys. Every impression can produce measurement data, and that data can be used immediately to change decisions in a running campaign, with measurement data now coming from all directions (display, social, mobile, PCs, websites), the challenge becomes integrating the data to get a complete picture of media behaviors. In an interview with over 98 brands and 88 media agencies, none admitted to mastering the programmatic landscape. (DataXu, 2016) In a programmatic questionnaire Lauren Schubek, Amnet Group Detroit, was asked, if anyone could master it and she provided an answer that resonates with the theme of this programmatic analysis, stating “I think mastering something means you are

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done learning and the landscape will not change. In the case of the programmatic landscape, it is constantly evolving and growing so I don’t see anyone “mastering” it any time soon.”

Expectations of Media Buyers Today

“At a digital agency, everyone is in strategy, everyone plans media and everyone should be a media expert,” Jen Scheel, Vice President, Amnet Group Detroit stated when asked how has traditional roles changed or evolved and what expectations should these new employees have in regards to an ad agency in a questionnaire. Leveraging programmatic for media campaigns has become expected but how does that affect the other players in the planning phases? Tony Regan, Founder of Brand Performance, stated “programmatic can help planning become more agile, more strategic and less labor intensive as better, quicker data provides a better picture of the consumer and supports faster decision-making.” (Regan, 2016) I have asked some of the leaders at a top trading desk, Amnet Group (an agency a part of the Dentsu Aegis Media Network) their thoughts on expectations of the future media buyers and the importance of integration within the media agency. There was one consistent answer throughout the multiple interview held with the leaders at Amnet in regards to one question, what is something you have learned in your experience that has helped propel your success in the programmatic landscape, Jessica Schulz, Associate Director, GMC & Corporate Brands, Amnet Group stated alongside her colleagues that flexibility was the key. “You need to be able to shift and change at a moments’ notice and be comfortable living within the ever changing world of the programmatic industry. You may think you have a good handle on things and then you blink and it changes- and you just have to be able to evolve with those changes.” Agile, flexibility, adaptation and innovation are keywords used throughout this analysis and within a multitude of programmatic case studies and pegs the question, how has this industry changed the current role of media planners. The role of the media planner is part of the evolution as it should be viewed as such, when asked how the role of traditional media planners has changed and the effects on trading desks Vincent Bareges, Vice President Publisher Development, Amnet Group, stated;

“It hasn’t changed, it is changing. It is a slow evolution (probably slower than most agency leadership would care to acknowledge) because change in large structures like media agencies, takes time. Media planners’ roles are changing in two ways: they are learning to become more audience centric (meaning focusing on actual data to understand how best to reach that audience and generate positive business outcomes – as opposed to using antiquated tools like ComScore to develop a media plan), which is necessary for them to grasp programmatic among other things; and second, they are spending less time thinking or wasting resources on activation, which opens up significant opportunities for agencies to further develop their programmatic capabilities to help with that. Trade desk or programmatic employees aren’t media planners or seen as the new planners, however they do contribute actively to a client’s media activation strategy, and as their role and the role of programmatic is increasingly felt upstream in

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the planning process, programmatic specialists will need to learn the language and thinking of media planners. “

The growth of the industry can look exciting and challenging from the outside and intimidating and confusing from the inside. The programmatic space is designed for machine and human to work together to drive efficiencies that were unable to happen historically with a level of transparency being demanded by media buyers today. “Technology is always evolving and prone to errors and malfunctions. People make the technology work for them, not the other way around,” Diego Martinez, Programmatic Account Executive at Pandora LLC stated when asked what he felt was needed in to succeed as a programmatic buyer or seller. Cross-Device

In order for companies to garner solid insights from programmatic campaigns and to ensure that advertisers are allocating media dollars correctly as this lumascape evolves, advertisers need to become more hands on with accountability measures and understand that success in programmatic are derived from tailored messages to individual consumers. That is where cross-device comes to play. The most recent criticism in programmatic and digital media alike is ties to identifying the different devices an individual owns or is accessing within a household. As referenced in the earlier sections of this analysis, individuals are consuming content more rapidly and across more devices simultaneously. Marketers connect to consumers to gather insights around behaviors through a multitude of channels and work tirelessly to keep those data points refreshed and scalable.

“CDIM (cross-device identity management), or CDUI (cross-device user identity), is the gateway to an integrated, positive advertising experience for the user (via universal frequency capping), new creative opportunities (in the form of sequential messaging), and the ultimate measurement of true cross-channel attribution.” (Regan, 2016) The creation of a persistent cross device ID is the ultimate goal of marketers on both sides of the media transaction. Cookies can be deleted, people get new mobile devices, change cable providers or change Netflix accounts and when these things happens all the data collected goes away and those data points need to be collected again. Solutions are being brought to the table consistently but nothing that represents a true complete solution. “Smartphones offer huge amounts of unique data about users. Login data for social platforms enriches a strategic planner's view of an individual's behavior across devices, allowing for the creation of campaigns that programmatically target relevant ads based on user behavior and location, regardless of device.” (Regan, 2016) Although social media provides a connection to a user that is less likely to change (Facebook login information) Facebook does not allow many of the key aspects of ecosystem buying (running your tag on their page), they do allow computer programs to buy media, using data, at their own interface. Cross-device graph tracking is also an opportunity for programmatic buyers. The concern with this technology is that it couples deterministic and probabilistic data and does not give a true match of the user. Bareges of Amnet is a firm believer that a cross-device solution is of paramount importance due to need of gaining a holistic consumer view to continue to drive media forward. “Figuring out how to address

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consumers across devices and channels will remain one of the big promises (currently mostly unfulfilled) of programmatic, since media planning and buying today is still mostly done in a channel-based approach which negates the massive overlap in media exposure”, he said.

Ad Fraud & The Rise of Ad Blockers

The vitality of the digital ad space relies on the continued growth around fraud protection and data protection. Fraud within the digital is described as computer programs that look like browsers, and thus can act like humans surfing around the web, this is traffic without a fraudulent purpose. (McConnell, 2015) There are thousands of these programs that scan sites for interesting content, measure ‘tags’, and index content (for Google, for example). Many of these act enough like humans that sites cannot detect them, and so serve ads to them. When this happens, advertisers pay for those impressions. All parties involved in the transaction of programmatic media should be aware of the environment in which ads are served and should be actively trying to contribute to solving the issue of ad fraud. Around half of ad impressions are considered not viewable (less than 70% of the ad is not seen), and perhaps half of that traffic is considered non-human all cause for concern around brand safety. (Regan, 2016) Ad fraud, ad blockers and viewability are hot topics of discussion for everyone. Integral Ad Science claims that over $8 million dollars are wasted each year on ads deemed fraudulent. (Integral Ad Science, 2016) Diego Martinez, Programmatic Account Executive at Pandora expressed his opinion on the subjects by saying, “More private deals with more quality publishers and less open exchange, blind buying. Knowing exactly what you’re buying and demanding transparency are the only way to ensure you’re not buying fraud.” Deciphering through publishers capabilities lives within the buyer’s realm and transparency of sites and inventory is found within demand side platforms. Combining publisher knowledge from a buyer and technology should allow for real time optimizations to combat fraud regularly.

Ad blockers should not be ignored but should not be the determining factors on purchasing digital media. Adoption of ad blockers has grown with over 14% of millennials use an ad blocker on both their desktop and mobile devices, ad blocking is expected to be utilized by 86.6 million people in 2017, compared to 69 million people in 2016. (Most, 2016) The ad blocking phenomenon is forcing everyone in media to take a closer look at their business model. The loss of revenue for publishers is an obvious reason for companies selling advertising to try and find solutions for their company. Business Insider is testing a new product that funnels consumers into a subscription based model, similar to music streaming services. This gives consumers a number of free articles per month and then they will have to

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choose to purchase a subscription or wait until next month. In conjunction with this product Business Insider has announced that anyone utilizing an ad blocker when trying to visit Business Insider will be forced to whitelist their site or pay to subscribe. (Mateus, 2016) Marketers and sellers alike are combating ad blocking through other methods as well, new ad formats have been implemented. Native ad units are being swapped in, code on the publisher website is being redesigned to maintain a certain load time or number of ads and even blocking users

entirely if they are using an ad blocker. eMarketer reported on the top methods companies are using to tackle the rise and use of ad blockers. The influx of impression availability, increase in budgets for the digital space and the growth of digital content puts the pressure on companies to combat all the fraud and viewability questions in the marketplace. Lack of collaboration between technology companies, major data collectors and publishers can cause developments to be slow and painful for all parties

involved.

The Lumascape

As stated previously there are over 2,000 Ad Tech companies in the marketplace but only a handful have a solid stake in the lumascape. Some well-known “full stack” companies, full stack meaning a portfolio of products that allow advertisers to reach multiple media goals with one company, include DoubleClick, Adobe and Oracle. DoubleClick which is owned by Google has close to 80% of the market share currently. (McConnell, 2015) Ad servers are a large part of the programmatic lumascape and two prominent ad servers include; DoubleClick DFA and Atlas (owned by Facebook).

There are a multitude of exchanges available for advertisers to tap into within a DSP and some of the larger exchanges are; of course, Googles Ad Exchange, as well as AppNexus and OpenX. Merkel has a media business, Acxiom can deliver segments for trafficking to demand platforms while comScore, and Nielson are measurement companies and DoubleVerify, IAS, MOAT are fraud protection services. (McConnell, 2015) The graphic represented here depicts the display media lumascape. This image is well known within the advertising world as it gives readers an understanding of just how many options a media buyer has when strategizing and planning a programmatic campaign. (Luma Partners, 2016)

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Michele Weber, SVP/Marketing at AppNexus describes the early era of programmatic as an era that was really around automation: ‘Let's automate the manual process of digital media buying,' then, ‘Let's try to automate that in real time and let's do it in scale.’ (Precourt, 2016) Through the use of any tech platform you choose and the ability to change between players in the lumascape allowed for constant adjustments. Media buyers have the ability to test multiple platforms, solutions and data providers driving major efficiencies and optimizations. At least 75% of brands are currently buying some form of programmatic media. (DigitalAdBlog, 2016) There are major advertisers that have taken a stance with this new tech and their brands first party data and have started to bring programmatic execution in-house. These full stack tech companies are a threat to agencies and trading desks, providing solutions directly to advertisers through partnerships or managed service opportunities. Netflix has always executed their media buying and marketing in-house and Wayfair has recently implemented a 100% programmatic strategy for their digital media budget executed through their internal marketing staff. When speaking at the Association of National Advertisers' (ANA) 2016 Masters of Measurement Conference in Naples, Florida, Matt Herman, Associate Director/Marketing at Wayfair Inc. stated “what we're really trying to do is make marketing into a profit center instead of a cost center.” The plethora of first party data that Wayfair has at its fingertips has allowed this company to truly embody what it means to execute programmatically and garner real time learnings from each impression and click. "We very much view ourselves as a technology company first and ecommerce retailer second. So we're very much centered in technology, analytics and data-driven decision making”, Herman stated. (Precourt, 2016)

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Although there are advertisers choosing this path of ownership not every major advertiser wants to do that or is capable of replicating what their agency partners are doing currently. This saturation of companies and drowning of options caused Herman and his team to choose one partner for this strategy and when asked about the results he said, "we were really good at driving efficiency – almost too good in that, perhaps, we optimized to a fault and sacrificed the experience-side of the equation.” (Precourt, 2016) When asked how to sift through the chaos, Jessica Schulz of Amnet Group stated;

“Finding a unique offering is rare and without the education to ask the right questions to determine whether that offering is exclusive or proprietary causes large duplication within the space. Having a large group of programmatic experts at hand to bounce questions off of has proved to be extremely helpful when weeding through the different partners in the space. If our brand hasn’t worked directly with a partner or heard of them, most likely someone within the company has.”

Media buying agencies and trading desks are building relationships with key ad tech companies and leveraging the buying power of multiple advertisers verses just one. The ability to remain nimble and flexible is what will push the market towards integration and innovation all to the benefit of advertisers and consumers alike. Major media buyers should be taking advantage of these new technology experts to help them capitalize on the multitude of potential partners and innovative executions and look to the experts to recommend the use of multiple partner’s verses investing 100% of programmatic media dollars with a single company.

The Shift of Media Dollars

The speed at which the industry is shifting and adopting new technologies and new strategies is at a rate even the best employee could struggle to keep up with, but internal progression cannot happen without advocates. “The same way Digital media needed it a few years ago, every advertiser will need internal advocates who can make the case for programmatic and any audience-centric way of transacting media, to help make it an integral part of their media strategy and investments moving forward. This comes with internal education possibly external seminars and training opportunities as well”, Bareges stated in an interview. The power of influence is alive and well in the advertising world. Influence can stem from any individual involved and the individual may even be unaware of the power they have. Starting as influencers and creating advocates or becoming advocates themselves, cognitive bias drives interest or fear. These individuals can be clients, competitors, firms pride and ego, profit or prospects.

"The internet requires us to deliver a personalized experience for, potentially, 34 Billion connected consumers," Michele Weber, SVP/Marketing at AppNexus. (Precourt, 2016) Innovation is strived for at every level of business and the introduction of new media, new technologies and the change in content consumption gives programmatic an edge into becoming the largest way to transact media dollars and staying as the leading way to reach

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consumers in today’s modern world. Gone are the days where you were choosing context only or demographics only (Neilson TV data), advertising today expects context, content, and audience data to align. The term context now encompasses more than its traditional meaning of where the message is delivered, context now embodies the content surrounding the message coupled with how the individual user is consuming the ad including device type, time frame and speed at which the user is scrolling through the content. Deborah Wahl, McDonalds SVP/CMO, describes it well by saying, "It's really not about my device. It's about what I need, at that moment. It's not about my screen. It's about my context." (Warc, 2016) Programmatic has been described as delivering the right message at the right time in the right place.

Programmatic adoption hinges around media investment into the space. The programmatic industry is expected to reach $30 Billion dollars by the end of 2017, which is up from $8 billion in 2016. (DigitalAdBlog, 2016) Although there are no guarantees that the dollars will be divided as described in this report you can expect to see

major shifts happening in which types of media are bought programmatically. The infographic on the left depicts the growth of digital display advertising for 2017 and the shocking percentage of how much of advertising will be bought through programmatic technologies by 2017. (Liu, 2015) Display dollars shifting to programmatic is not too much of a surprise as it was the first ad type available in the programmatic space. Different media placements are always integrating with programmatic technologies driven by demand of large media buyers or publishers trying to be first-to-market with innovative media solutions, but Vince Bareges, Amnet Group, throws in his two sense on what has the most opportunity for change within the programmatic lumascape, “the ad-server is the next one up for grabs in terms of being ripe for re-invention.” How does the ad server come into play when speaking to the evolution of programmatic? The ad server has been a part of the traditional digital model since inception, programmatic is causing this technology to be evaluated to try and better monetize inventory at the rate in which programmatic buyers are demanding it. Publishers and holders of inventory real estate have begun to realize the value of a unique high impact placement wanting to be transacted within the programmatic space, requiring these teams to evaluate how the ad server can help deliver these units in this fashion.

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The rise of mobile is expected as consumers are actively engaging with brands via their mobile device more often than on desktop. eMarketer released its third quarter ad spend results that highlight the increase in mobile spend between both desktop and video placements. Mobile being over 70% of the total display spend as of September 2016. This is a natural fit and adoption when taking into consideration the agility of the mobile space and how programmatic technology functions. By 2017, programmatic mobile video ad spending will reach $3.89 billion, representing 51.0% of total programmatic ad spending in the US. By comparison, programmatic desktop-based video ad spending will reach $3.73 billion, dropping to 49.0% of total programmatic digital display ad spending in the US. (Media, 2016) Measuring success within the mobile space is not always clearly defined throughout a campaign. Drivers of success in the mobile space can change based on brands end goals and mobile metrics cannot always be translated to compare to desktop metrics. The most common success indicators within the mobile space are app downloads and click through rates (CTR) as those numbers can be easily identified. The ability to measure a user across multiple devices is where the mobile space is still lacking. Marketers are working through many solutions to make sure the measurement of success on mobile web ads or mobile app ads is attainable and accurate. US marketers polled by the Direct Marketing Association and Demand Metric reported “a median 12% to 14% ROI for mobile”. (Measuring, 2015) Mobile is fueling programmatic growth and is a driver of innovation within the space. As consumers continue to rely on their mobile devices more heavily the potential campaign executions will grow and the measurement tools will continue to evolve. The biggest factor in continuing to drive mobile programmatic success is to work with brands to educate on KPI’s (key performance indicators) for this space and to teach advertisers to look at the consumer’s engagement as a main measure of success verses the historic metrics alone.

Inventory Innovation

Historically traditional media executions have become available to programmatic buyers including; out of home (digital billboards, movie theatre ads, gas station TVs etc), and OTT (Over The Top) cable boxes. New technologies joined the ecosystem and opened up additional

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inventory available through programmatic pipes including ads on; smart TVs, streaming apps, and in the virtual reality space. The ability to connect and engage with a consumer at any point within their journey from path to purchase is what every advertiser strives to be successful in doing. As advertisers and their media buyers adapt, learn and retain the knowledge of the programmatic and audience data ecosystem they will be able to better utilize their first party data in conjunction with second and third party data sources and execute campaigns through technology driven algorithm’s and human optimization expertise. This level of intelligence and flexibility has not been available historically and turns advertising into a cyclical business unit, bringing together analytics, planning, execution and learnings together in a continual motion. The lethal combination of machine and human intelligence fueled by innovation brings together a brand message tailored specifically for one consumer delivered at the perceived right time to continue pushing them through the sales funnel.

The Publishers Perspective One example of a publisher adopting the space and embracing the technology is Condé Nast. Condé Nast expands across many famous publications and has embraced programmatic and honed in on their first party audience segments and its value. Efficiencies are garnered on both sides of a media transaction and the ability to focus on innovating new products as a publisher and monetizing every available impression should drive programmatic adoption. “Condé Nast is opening a new group, Spire, which will match the pub’s 1 trillion unique monthly data points with purchase insights from 1010data, owned by an affiliate of Advance Publications, Condé Nast’s parent company.” (Conde Nast, 2016) Condé Nast is coupling this new capability within new products it will make available for its advertisers including a data reach program that allows advertisers to utilize Condé Nast data outside of their own content properties. Condé Nast, whose portfolio includes 21 brands, is also packaging its private marketplace and automated guaranteed inventory in ways that are more attractive to buyers. A brand can buy packages around events like the Met Gala, the Allure Readers’ Choice awards or the New Yorker Festival. Such buys can be time-based, contextual or a combination of both. There is an underlying fear within the publisher side of the business that they are commoditizing the inventory and therefore garnering an overall lower CPM and in turn lower revenue. The steady adoption is helpful in combatting certain fears within the publisher set but the rapid evolution of the industry forces those unwilling to jump in to be in a constant state of catch up. The fear of loss revenue has been debunked by many and Bill Guild, Vice President of Marketing at ChoiceStream stated, "There are more bidders entering the marketplace, also more premium content, more valuable content being put into the marketplace means prices go up." (AdWeek, 2015)

Placing the value on an impression or on a specific ad placement comes with negotiation opportunities and disagreements. Audience buying now lives at an impression level with transparency around the individual consumer, making way for opportunities for strategy and data to drive the cost of the impression and placement. The purchase of an emotional connection has been discussed as new way to reach consumers and increase the likelihood of

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engagement with the ad. Publishers need to work to improve the way data is collected, stored and managed around the consumers of the media. First party data segments applied to inventory can assist sellers adding a premium to the CPM and helps brands understand more about the emotional response of the sellers audience. (Svendson, 2016) The underlying question is can this be measured and quantified differently than a probabilistic data set based on behavioral data points? Although emotion and engagement are typically a part of audience measurement, organizations are starting to delve into defining levels of engaged users to attribute emotion levels across different ads. Different placements and ad units garner different quality of attention or audiences, so some productizing is warranted. When (and if) attention becomes currency, impression cost will be the same for every impression but the price can be drastically different for each individual impression based on the buyer and audience goals. (McConnell, 2015)

Native Ads

The Interactive Advertising Bureau describes native ads as one of the following; sponsored articles, in-feed units, paid search, promoted listings and an ad that is embedded within custom content on a page. Native ads are third-party ads that match the look, feel and visual context of the site on which they render. (Khatib, 2016) These units require flexible creative and technology that can build an ad unit in real time. Native is most commonly referred to when speaking about social media execution that limits the volume of native inventory available in the programmatic space. With the user shift to mobile, users have higher expectations for a great user experience and advertisers and publishers are working hard to deliver on those expectations," Dan Taylor, managing director of global display and programmatic at Google, told Ad Age. (Chen, 2016) Advertisers and sellers alike are striving to connect to consumers and gather valuable data to better their business and native ad units historically can garner higher performance, as these ads flow better within the mobile environment. Multiple technology solutions (both exchanges and SSPs) have entered the lumascape within the last couple years bringing solutions to programmatic buyers regarding native inventory needs and capabilities. Triplelift, Sharethrough, and Teads are three companies with current solutions, and as of 2016 Google has come to market with its native solution. Now that Google has released its native solution, the competition will need to continue expanding in order to compete with the sheer scale that Google brings. The buy-side is the hold up within this space but is catching on quickly with Google onboarding over 200 publishers into its native technology. (Slefo, 2016) These types of units lead well into the next section as adaptable creative is growing both in demand and execution.

Dynamic Creative

Driving value at an impression level requires buyers to also create impression level messaging. Demand for high impact units and engaging ad units pushed for the rise of dynamic creative executions within the ad buying and selling space. Publishers have been utilizing this type of

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technology on their landing pages in the past, called MVT or Multi-variant testing. This technology allowed publishers to display different headlines or images in a random order to find the best performing combination. Dynamic creative is taking similar technology and applying it to banner ads. Technology now has the capabilities to make advertising more interesting through modifying the specific advertisement a consumer sees when triggered by different variables like the geography of the impression. Not only can advertisements be swapped out but messaging and ad size can also be altered based on site attributions, creative format goals, consumer specific attributes (examples like expandable formats, copy that moves with the page etc).

Creative design and capabilities for agencies live within a different partner than the people purchasing programmatic inventory so education of the creative agency needs to be a top priority. Disconnect between programmatic execution and creative implementation has opened a window for new companies. A new company, Anagram, and a new service by Omnicom’s Annalect platform have entered the lumascape to try and bridge the gap. This company is looking to work directly with advertising who have brought programmatic in house to educate on how to create programmatic specific creative. Anagram plans on creating ad concepts for specific audience segments, to be delivered programmatically. Companies like Anagram are popping up in hopes to connect creative and execution at the beginning of the media process verses keeping the organizations separate. Omnicom’s product presents a slightly different solution and an actionable solution for media agencies. Annalect, lets brands customize creative to segments by inputting 14 creative options and the algorithm creating over 170 creative concepts. “It takes social, CRM and third-party data from its DMP, then deploys creative assets from a repository.”(Pathak, 2015) Historically major ad tech companies that lived in the buy/sell space steered away from creative rendering due to the inability to keep up with the needs of all of their advertisers. As the industry continues to evolve and companies similar to Annalect start popping up, it would not be surprising if the major players like Google and Facebook started to test in the dynamic creative space. As far as advertisers go, the major issue with creative development tends to be client approval and involvement. These dynamic, creative solutions require a little less control from the buyer side and rely heavier in the chosen tech partner.

Television

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Video dollars are the major conversation in 2016 as the argument of whether the dollars should be shifted from traditional TV dollars or from digital video dollars into the programmatic space has caused quite the territorial argument. According to an article on eMarkter cited by Ashley Evenson, “US programmatic video ads will grab 40% of digital video ad spend in 2016 or $3.84 billion, up from $2.18 billion in 2015.” (Evenson, 2015) Does programmatic video include digital video? Should traditional broadcast dollars be shifted when discussing digital video in the connected TV space? All questions being posed today with no clear-cut best practice established. Television advertising has held the largest share of media dollars for centuries as it represents the medium that is the largest in terms of visual appeal and mass reach. By 2020, $40-50 billion per year of US TV ad spend will be ‘re-priced and repackaged’, bought according to audience and behavior, not just content and environment. (McConnell, 2015) This does not necessarily represent the dollars that will be shifted into the programmatic space but does represent the opportunity for television to now be bought differently than in years past. The television market is changing as digital ad spend increases. Television is considered a mass medium but with the alternate ways of consuming television content and movies it is now becoming an interactive medium. Shifting the focus from pushing messages to mass consumers to delivering tailored messages on the device the consumer is actively engaging with in that moment is where digital video captures and opportunity that traditional television is unable to do. The graph on the right compares predicted television spend and digital spend through 2020 in regards to media. Success measurement is still a topic of conversation and the traditional way of measuring TV advertising does not seamlessly translate to the digital space. To gain a deeper understanding as to how programmatic is working in the traditional television space regarding measurement metrics please review the Attribution & Measurement section in this paper.

Addressable TV has entered the programmatic space as of 2016, historically addressable TV was only available through set top boxes and with cable inventory only. Now addressable TV can be executed with programmatic technology and audience segmentation to deliver tailored messages to individuals at a household level. Programmatic targeted TV ads have delivered 56% greater efficiencies. (Addressable, 2016) this is separate from buying TV audiences historically, buyers define their target audience using set-top box data. Utilizing programmatic pipes, audience matches are identified on a household level, bid on in real-time and delivered directly to the targeted household. The execution of this type of media relies heavily on the

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partners available in the marketplace. Samsung will now offer addressable TV across broadcast channels through their smart TVs. There are over 20m Samsung smart TVs in the US and 50m globally and with a 28.5% share of the smartphone market cross-device campaigns could be a possibility. (Cross Device, 2016) Samsung now joins the arena of AT&T, Comcast and Dish Network and alters the TV market in regards to broadcast media dollars. Along with addressable television, the programmatic inventory within the connected TV space and the OTT space continues to be grow. Devices including; smart TVs, gaming systems, Chromecast, Amazon Fire stick, Roku and much more are pull video dollars to try and capitalize on programmatic technology and audience activation strategies to drive efficiencies in a space that has historically been extremely linear. YouTube alone is the leading over-the-top (OTT) video service, with 180.1 million users this year. That represents 95.7% of OTT video service users in the US. (Mobile, 2016)

Out of Home

Another opportunity is digital out of home programmatic executions. Digital billboards, gas station TVs, movie theatres and much more are now able to be bought with audience data applied through programmatic technologies. Geography and probabilistic data points are currently available and there are limited partners executing this type of media as of today. There are several advantages in aligning current media strategies with OOH strategies, with anonymous data from mobile networks, for example, brands now have access to a deeper understanding of audience movements and behavior. “This allows more efficient deployment of out-of-home (OOH) advertising against specific commuter groups throughout their journey.” (Svendsen, J. 2016) Xaxis, one of the world’s largest audience buying platforms launched a new product called Xaxis Places. This platform couples digital OOH inventory with programmatic pipes and delivers a brands message to over 100,000 screens nationwide. Because this platform is fully integrated with Xaxis owned DMP, advertisers can easily align audience segments that live within Xaxis to reach across multiple strategies. (Xaxis, 2016)

Measurement and Attribution

We often have databases used for benchmarking and norms, unfortunately that is slightly underwhelming in regards to measurement. We need to look at how our data can contribute to a new paradigm of right time, right place, and right message. Advertisers and marketers are so concerned with brand outcomes, both delivering and understanding them. Attribution within media means understanding deterministic and probabilistic data points and matching on anonymous cookie data, thereby enabling attribution systems not just to recalculate the influence of every media tactic on overall performance, but on the performance of specific audience segments that the brand has defined. The gap in measurement and attribution in the programmatic space lives within the inability for planners and suppliers to convince advertisers that the value of a brand relationship or consumer engagement should be measured differently than the end result of moving the bottom line or solely driving clicks. Seeking out individuals

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within an organization that can help everyone understand the predictive lifetime value of that business consumer can help organizations make sure you are properly tying attribution to actual business impact.

Traditional metrics do not always seamlessly translate to the programmatic space, an example being television. Some TV stations are launching data management platforms to enable

advertisers and agencies to plan and buy programming based not on traditional sample-based TV ratings, but in a way that is akin to how agencies and trading desks buy audiences online. (Svedson , 2016) During the adoption and evolution phase of programmatic the majority of buyers are being tasked with delivering against traditional success metrics, specifically last click attribution. Connecting consumers to

multiple devices and multiple interactions will help brands measure on metrics far greater than the “last click” model. Neilson presented, Twitter TV ratings, a product that allows TV networks to measure the full Twitter engagement surrounding their programs. The goal would be for brands to measure the “effectiveness of Twitter TV-related audience engagement strategies and to better understand the relationship between Twitter and tune-in.” (Neilson, 2013) Nielsen Twitter TV Ratings are a separate set of measures that complement traditional National TV Ratings. Consumers today are now multi-tasking in a way brands have never seen. Watching shows on television also consists with checking mobile devices simultaneously throughout the entirety of a program. In 2014, 15% of respondents said they watched two or more programs at the same time, fast forward to today and 20% of consumers asked claimed to be consuming two or more shows simultaneously.

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Closing the loop on a universal cross device ID ties in with how currently attribute success in media campaigns today. Mobile presents a significant challenge in attribution due to loss of cookie or tracking id, technology has not yet caught up to this need for advertisers. Companies are coming to the table with temporary solutions to help push past the “last click” attribution model and help bring more knowledge to the full customer journey and garner more cross-device insights. The solutions include probabilistic reporting (post campaign) and company specific user ids, created and given to an audience set, that track within the company specific inventory set. As of 2016, 72% of companies agree that the perfect attribution model is impossible to achieve. (The State of Marketing, 2016) With over 40% of advertisers claiming that they are overwhelmed by data it is no surprise that the chart displayed above shows the many reasons given as to why they haven’t switched to a more complex attribution model. (The State of Marketing, 2016)

Creating a unified consumer for brands can successfully drive high performance in campaigns, but as the world waits for the technology to evolve to meet these needs brands are stuck relying on probabilistic analysis or company defined consumer ids. Brands are tasked with taking a step past the traditional consumer information data sets and diving into what their consumers do when they are not on their sites. Consumers typically are engaged with 6-8 times before completing a transaction, giving brands ample time to connect and drive consumers further towards their brand. (Baker, 2016) For now it is important to restructure standard media KPI’s to ensure proper success metrics from the start. Media buyers are tasked with taking a look at internal goals and focusing big ideas into a more granular approach to help in selecting the right programmatic technologies for the campaign, defining the audience and attributing value to each placement within the campaign individually as it reaches the audience.

Conclusion

Programmatic technology is no longer the new kid on the block but instead has become a key player in the media ecosystem. Brands can no longer ignore individual consumers and

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advertise utilizing a push method, pull strategies. Engaging content and tailored messages are not only expected by consumers but also required for brands when trying to justify media costs. Media buyers and sellers are expected to have an understanding of what is programmatic, how does programmatic technology enhance media campaigns and how do individuals integrate and participate at all levels in today’s ad world. The key is to focus on more than web metrics, focus on consumer actions and be willing to share data points with key partners. Focus on data, close the gap between the business problem and the work, and close the gap between the consumer and the brand. The end game is that you can only win if you give consumers the information they need. Knowing what they need, where they are in their own process, and offering something (discounts, entertainment, and information) will allow you to get the right attention at the right time. Consumer knowledge, in the end, wins the game. (Cooperstein, 2014)

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