Programmatic Buying for Dummies – The future is bright, loud and fast!

Programmatic buying

Structural technology trends behind programmatic buying and their influence on marketing operations, the media holding company model and CIOs

Completion date: 14/01/2013

Background of programmatic buying:

The future is bright, loud and fast! A growing global audience is spending more time connected to digital media, hyper-communicating their likes, dislikes leading to too much data, knowledge. Media buyers are now moving their budgets to new areas such as display, standard pre-roll etc, and are buying media in an automated fashion through digital platforms (eg. exchanges, trading desks, DSPs), replacing traditional routes of RFPs, negotiations, insertion orders.  Data associated with audience, ad delivery is vital and must be available in near real-time to enable dynamically informed buying decisions.  

Positive digital interactions with customers, prospects can propel company growth and this brings the focus on four major parameters (shown in the diagram below) that can influence the maturity of Programmatic buying (PB).

Programmatic buying

Technology advancement across platforms:

Functionality and trend


Supply Side Platform (SSP)

–          Options across proprietary optimization algorithms (Admel) vs manual or own optimization technology (ApNexus)–          Increasing breadth across ad format acceptance( from basic banner formats to mobile)

–          New features such as private exchange, variable price floor controls, anonymous participation, advertiser-level bid reporting, audience data management

–          Better packaging, positioning of media to buyers–          Increased monetization, operational efficiencies, multi-channel optimization

–          Gives better control and protection to publishers worried about premium inventory or brand association with certain advertisers.

Ad exchanges

–          Self-service, backend platforms enables log-in, set-up, manage campaigns, run analytics and optimize without even talking to a sales person–          Verification systems validate and stop an ad loading if content is not as per advertisers preference( avoid violent, competitor content etc)

–          Some allow buyers, sellers to participate, some allow only ad networks

–           Advertisers have visibility on the site, ad unit and publishers have visibility on which advertisers are buying their inventory and what they are willing to pay

–          Some exchanges allow floor price settings, offering a risk free proposition for publishers ( ad networks don’t tend to offer this)

–          Encourages competition and drives up ad space price per impression, as each impression is valued–          Ad exchanges are different from ad networks that often sell at a lower eCPM to close high volume sales or may not be in a position to quantitatively compare different ad buy offers.

–          Visibility for publishers help them control what advertisers and creative’s they want to encourage on their sites.

–          Few intermediaries in the value chain offer ad budget savings

Demand Side Platform (DSP)

–          Advancements in expertise across algorithmic optimization, knowledge of audience management, breadth of media access, unified campaign tracking and reporting –          Leading vendors have more than 50% of the impression volume RTB enabled. –          Buyers prefer a single platform  that is operationally efficient to access, manage and report inventory supply and campaigns across display, mobile and video

Real-time bidding (RTB)

–          2009 onwards, ad exchanges and SSP’s announced RTB support bringing a surge in activity from DSP’s, ad networks, agency trading desks and other media intermediaries.–          The EU cookie directive which came into effect in May 2011 can bring some challenges to data collection, usage and in turn affect RTB growth. –          RTB’s have cut inefficiencies in the media buying process, offers de-duplicated reach and can cap the number of impressions that audiences would see in a particular campaign–          RTB is an efficient way to buy impressions in real time, having an engine that calculates real time prices can really transform results for advertisers.

Data management platform (DMP)

–          DMP creates a single view of the user by aggregating data across first, second, third party online and offline sources in a unified manner, including segmenting and tagging.–          Leading organizations are building rich user information as a differentiator in an increasingly crowded online advertising area

–          Interactive marketers now have an opportunity to leverage DMPs and run audience based marketing campaigns more effectively than ever before, however, for DMP initiatives, the time and effort required to pull various departments together, such as IT, legal, CRM cannot be underestimated.

Impact of programmatic buying on marketing operations and Media holding company model

Marketing operations will become more efficient and can build a strong foundation based on metrics, best practices for campaign optimization, funds (forecast, reconcile and reallocate), performance reporting. There is a good chance of better campaign ROI not only because of media performance or better targeting but also because of the price squeeze, man power reduction. Positive experience and results from the digital media will, overtime, influence marketing operations team to increase their expectations from traditional marketing channels.

Large media holding companies are buying-out leading digital media agencies to keep up with the trend of budgets swinging towards the digital wave. With transparencies and a shorter value chain, the media industry is set to become a high-volume, low-margin business model ( similar to supermarkets) with pricing models moving towards ROI basis instead of activity based pricing. Customers could end up expecting similar transparencies, ROI in traditional media channels.

Positives and negatives of programmatic buying for marketing organizations and CIO’s


Programmatic buying increases the effectiveness, efficiencies of marketing organizations and increases the probability of bringing the right message to the right audience at the right time.  Today’s CMOs and CIOs have a vital role to play as enablers by leveraging integrated customer information to make consistent customer interactions across channels a reality. Similar to MDM, CDI (Customer data Integration) projects, programmatic buying could trigger data integration across first, second, third party online and offline sources in a unified manner.


Targeting precision, ad relevance can bring a creepy feeling to customers who think they are being followed and publishers are trying to keep premium inventory in private exchanges to protect margins and brand. Non-compliance of cookie legislation could attract a fine up to £500,000 and lawsuits, giving more problems for the CIOs and their legal colleagues which could in turn slowdown data integration projects. 


Oracle’s strategy in the marketing automation space, how this affects the competitive landscape for the peers of both Oracle and Eloqua, and what the wider ecosystem impact of this transaction is set to be


Article date : 14/01/2013
In the future, organizations that successfully embrace the digital space (in addition to traditional channels) to understand their customers’ current and future needs stand a better chance to offer consistent value, superior customer experience and enjoy loyalty. Oracle has been moving fast into this digital space through numerous acquisitions, recently Eloqua, a marketing automation firm. Interestingly over the last 6 years, Oracle has bought more than 70 companies, out of which more than 60% of the companies are in the applications area including companies that help analyse unstructured data. With digital disruptions across customer landscape and business models, Oracle can serve its customers better by building a strong ‘Customer Experience’  platform by adding Eloqua, to its strong salesforce automation products and the recently acquired RightNow callcenter automation solution.
CRM to CEM Evolution: CRM was mainly seen as a marketing system to automate and synchronize the internal functions of marketing, with the recent explosion of interactions across various new channels (social, mobility) that touch customers and the amount of information available, the scope of marketing systems has significantly changed. CRM to CEM evolution will also increase the ‘qualitative and effectiveness’ focus in addition to the earlier focus on ‘quantity and efficiency’. In 2010, when Oracle announced that it had purchased the intellectual assets of Market2lead, it was clear that Oracle was strengthening its offering for the large, demanding marketing operations market. Considering the fact that Siebel already had marketing automation solution for the consumer marketers, Market2lead was set to strengthen Oracles’ B2B focus. From the current 4 CRM flavors from Oracle, Oracle EBS CRM and Oracle Peoplesoft CRM can be deployed if a company already has EBS or Peoplesoft ERP products, alternatively, one can choose Oracle on Demand CRM as a SaaS option or Oracle Siebel CRM as an enterprise option. Oracle EBS CRM and Oracle Peoplesoft CRM don’t seem to be getting much investment and development for future compared to Oracle Siebel CRM.
Oracle competition:
The SFA industry transformed into a broader CRM industry and now the marketing automation industry will merge into the Customer experience management industry., Oracle CRM on demand, SAP sales on demand and few others used to be SFA products only, not many are in the same space now.
IBM and Oracle have positioned their claims with Unica and Eloqua acquisitions respectively and other two large competitors; Adobe and currently do not have a strong ‘marketing automation’ element in their portfolios.
SAP CRM has targeted their installed base of SAP ERP and also B2B to achieve significant growth but still lags behind in terms of offering a fully featured on-demand CRM solution. might have to now look at acquiring a more traditional marketing automation company in addition to its recent acquisitions Radian6 and Buddy Media. The marketing automation industry can expect to see a flurry of acquisitions.
Eloqua competition:
As the market is moving more towards ‘Customer experience’ most of the marketing automation companies such as Marketo, Hubspot, Act-ON, Neolane, Infusionsoft etc might become acquisition targets. Vendors will be forced to develop open integration with other systems as differentiators based on functionality will be hard to sustain( as serious competitors can easily build those features).
With the Oracle acquisition, Eloqua is in a better position to penetrate into the non-tech sector compared to its traditional competitors. Eloqua customers that have made integration investments with SFDC would need reassurances that the integration will continue, if not, they’ll have to look at competing products. Though Marketo has defined its own position in this industry, it is closely linked to the SFDC customer group and could develop closer ties with SFDC.
Impact on the wider ecosystem:
Marketing is more a science than art, this being the mantra of Eloqua and other marketing automation companies, the tech sector also bought into it, whereas the non-tech sector is looking at marketing more as an art, hence making growth difficult in these sectors. Once these aspects come out in the open, the other marketing automation companies’ share price or valuation will have a negative impact, but on a long term basis non-tech sector will understand the importance of the ‘marketing science’ part due to the digital disruption and might embrace marketing technology like the tech sector.
– Pre-digital to post-digital transformation: In the post-digital period, as companies are trying to maintain or improve their position from the pre-digital period, it’s equally important for vendors to maintain or improve their value propositions during this transformation to stay relevant. This means marketing systems need to be integrated across channels (social, mobility, search etc) and have a single view of the customer based on internal and external information, better knowledge management systems, balance between qualitative and quantitative information and much more.
– On-premise vs Cloud: Cloud solutions are witnessing a higher growth rate compared to on-premised solutions, forcing traditional on-premise vendors to embrace Cloud solutions as a new business line, even if it cannibalizes a portion of the traditional revenue streams.
– East meets West:  Leading companies from the west are entering high-growth markets in order to capitalize on market potential and growth rate. Marketing automation, as part of ‘Customer Experience’ solutions can help these companies enable employees in local markets, instead of slowing them down through control mechanisms in traditional systems.
– Existing customers: Considering the current integration between and Eloqua that some customers use, Oracles’ acquisition of Eloqua needs to have a delicate balance between collaboration and competition with
– CMO perspective: With all this interest of technology vendors in the marketing or customer experience area, the biggest beneficiary could turn out to be the marketing department and in turn the CXOs as it only increases their ‘insight’ into the market. Insight along with intellect is key for innovation. Leading organizations have already spotted cutting edge marketing technology solutions and are creating technology COE’s within their marketing department or marketing COE’s within their IT department depending on the industry and impact of technology on their business. We can expect considerable amount of investment from marketing solution vendors to educate, build business-cases and mature the market, which could only make it easier for CMO’s to get more budgets for technology investments. 2013 will witness a push towards acquiring better marketing technology and also trigger enterprise wide programs to integrate various customer facing & internal systems in order to give a unified and consistent customer experience. Data integration programs across offline/online, first, second, third party customer data would be critical to increase the relevance of marketing programs and ROMI(Return on Marketing Investment). Data protection laws and hurdles from internal legal department might slow-down some data integration programs.

Social networking could have saved Kodak?


The recent past has witnessed a level of hyper-communication in most of the fields with different ideas flowing through, thanks to social networking. We know that there are benefits of two way or multi-way communications where an idea, strategy, thought could be looked from various angles to either build it or sometimes bury it! Whilst crowd-sourcing is a step in the right direction, is it enough? Let’s step back in time – 1970’s and look at a particular company and the importance of culture in addition to communication.

Let’s look at what happened to Kodak or more importantly what did not happen inside Kodak. When Steve Sasson, the Kodak engineer who invented the first digital camera in 1975 and shared his idea with Kodak management, their response to his invention was

‘But it was filmless photography, so management’s reaction was, that’s cute—but don’t tell anyone about it’.

So did the management fail to see the new trend or the thought of cannibalizing their revenue streams blinded them – perhaps both.

For the next 3 decades, the management were in denial about the emergence of this digital trend. While the founder of Kodak, George Foreman managed to embrace a new trend in the right time twice (once when he turned down profitable dry-plate business to move to film and then when he invested in color film even when their black and white business was doing well), the successive CEO’s managed to stay on the same old trend and failed consistently. The next failure, in 1996, was its $500Mn project Advantix Preview film and camera system (this was 10 years after developing its first mega pixel camera). The Advantix preview would allow the users to preview their shots and select the number of picture prints required and this was possible because it was a digital camera. The major cause for failure was the introduction of films into a digital camera just because Kodak was in that business!! Would you really buy a digital camera and still pay for film and prints? So what’s the root cause – Management stopped ‘listening’ thereby didn’t see the impact of the chinks in their armor then went on to refuse embracing the new trend, even worse,  they spent millions of dollars on research to force fit an old trend (films) onto a new trend (digital) using Advantix preview. If Kodak had a two or multi-way communication mechanism ( like social networking today)set-up in 1970’s, 1980’s and marketing-employee relations and other stakeholders picked up on the pro and anti ‘digital trend’ views, and made a futurist decision perhaps Kodak would be bustling with growth today

To look at the issue, let’s draw an analogy between a company and a person. Companies tend to behave like people; in addition to other qualities successful companies and people tend to have a right balance between conviction and self-awareness. For an organisation to start a journey of creating this balance, the following 3 aspects are critical

1/ Multi- way communication (social networking is just one platform) with all stakeholders (customers, employees, prospects, analysts, investors.) can be very helpful provided companies actively listen more and say less.

2/ Marketing/Employee relations to work 2 in a box to understand employees’ views on company’s products, services, new trends, challenges in addition to traditional employee relations work.

3/ Management/Leadership culture that is keen to listen to the findings of Marketing and other departments (after carrying out point 1 & 2).  Conviction and Self-awareness need to go hand-in hand. Management with too much conviction and very little self-awareness will lead to a Kodak moment, too much self-awareness and very little conviction is a non-starter.

Back to the question, social networking could have saved Kodak?  Maybe, it would have atleast created more awareness or noise around embracing the new digital trend which would have received some more attention and over time the management culture could have become a bit more self-aware. Social networking can help with awareness; adoption has to come from within where culture also plays a role. More so now than ever, for a company with competency and resources to be successful, management needs to get their employees behind their strategy and drive the company forward. This does not mean building a strategy in isolation and hard selling to the employees and customers to get their support or this does not mean trying to find a democratic strategy – this means running programs to socialize ideas and to  listen to the views, solutions that emerge and/or to listen and pick up new ideas and monetize them.

Would be keen to listen to your views and experience on this topic!

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