Programmatic Trading: The Ins, Outs, & Whereabouts

Jun 1

Programmatic Trading: The Ins, Outs, & Whereabouts

Programmatic Trading has become a buzzword. Many people talk about it, few people understand it and only a handful implement it. The intention of this post is to demystify the myths revolving around the Programmatic Trading scene and shed the light on its true essence.

By Mohammad Khartabil, Managing Director EMEA, TailWind

To begin with, Programmatic Trading refers to the process of buying & selling of online inventory  (Display, Video, or Mobile), on a per impression basis, via a systematic instant auction environment. Programmatic Trading technology has re-invented traditional online media buying & selling, through the use of data to target ads to specific audiences, generating unprecedented results.  Digging a little bit deeper, a DSP – Demand Side Platform – is what allows advertisers to buy, whereas, on the other hand, a SSP – Supply Side Platform – is what allows publishers to sell. Furthermore, to better understand the different types of programmatic transactions happening between buyers (i.e. Advertisers) & sellers (i.e. Publishers), let’s have a look at the following extract:

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With the flexibility given to both buyers & sellers through the available technologies, buyers have the ability to transact via different models when purchasing inventory, whereas sellers have the option to sell their inventory with their own set of rules.

Demand Vs Supply

As much as there are reports saying that Programmatic Trading is over hyped, there are even more reports, case studies, and research proving the exact opposite. Programmatic is indeed a very intriguing option both for advertisers and publishers. Why? Here are some of the benefits that Programmatic brings to the table for both ends of the spectrum:

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Some of the benefits as a demand player:

  • Increased control over campaign performance, which yields to better results.
  • Increased spending efficiencies via cost effective reach and frequency.
  • Enhanced consumer targeting capabilities & elimination of wasted impressions and ad dollars.

Some of the benefits as a supply player:

  • Packaging inventory with data which yields to higher CPMs.
  • Opening new opportunities for demand, both in global & local scale, to maximize the value of each individual impression.
  • Efficiencies in time & effort spent for deals, which can be automated.

The Future

Was 2013 the year of Programmatic Trading? Or is it 2014? in any case, the future is bright. Some of the advancements that we are going to witness in the near future, include (but are not limited to) the following: further adoption of Rich Media Ads, integration of Social Networks inventory pools, availability of more Branding metrics, growth of Video Programmatic Trading, leveraging location data for Mobile Programmatic Trading and, last but not least, further progress of private marketplace deals.

Recently, a study by The Trade Desk and Digiday indicated that premium Programmatic Buying is directly related to the rise in direct buys. This puts a load on advertisers & media agencies to work on eliminating barriers through the constant education of publishers -especially as their need to programmatically buying premium inventory increases. On the other hand, a whitepaper published by IDC, states that Programmatic Trading is on the rise, it varies from region to another and is best portrayed in the following graph:

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Iterating on the front of premium Programmatic is the recent news by Microsoft that they wouldn’t have followed the path of transparency even if they were only 1% hesitant that this could affect their direct sales. That wasn’t the case, therefore MSN and Skype properties are no longer masked in Microsoft Exchange and, as a result, are now targetable by top-level domains. For sure, this will pave the way for other premium publishers to follow.

MEA in perspective

Although the region lacks data about the state of Programmatic Trading, yet it is essential to mention the pioneers in this scene, i.e. the Trading Desks of the respective Media Agencies.  Let’s take a moment first to define what is an Agency Trading Desk with an extract from AdExchanger: “A centralized, service-based organization that serves as a managed service layer, typically on top of a licensed demand-side platform (DSP) and other audience buying technologies; manages programmatic, bid-based media and audience buying “.

Now that this is clearer, it is worth mentioning that all Agency Trading Desks functioning in MEA region are investing in enhancing their Programmatic Trading offerings to their clients via a mixture of talented resources, technology, data & most importantly the education of media suppliers. While Agency Trading Desks are more advanced on the Programmatic Trading front, there are publishers out there as well that have invested in Programmatic Trading, using different available technologies to monetize their inventory, packaged differently from one publisher to another, mostly non-transparent at this stage. On the mobile front and in recent news, Millennial Media and AppNexus have announced rolling out mobile media exchange (MMX) to KSA & UAE among other countries, where Programmatic Buying has had unprecedented prominence.

Last but not least, in a recent article, Dimitri Metaxas, the Managing Director of Resolution MENA, stated that Programmatic Buying is one of the fastest growing disciplines in the MENA region. Moreover, he highlighted that it accounts for over 40% of the display investment (approximately $80-100 million annually) and growing at a rate of +40% year-on-year.

Impressive, huh? Well, as the table below shows, eMarketer is even more optimistic about the growth of Programmatic Trading. Therefore, regardless of what the actual growth rate will be in 2014, it goes without saying that Programmatic in MEA is growing at a very fast pace.

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Conclusion

The Programmatic Trading industry is moving so fast, that it is only a matter of time before it catches up with you, wherever you stand in the spectrum. The infrastructure is in place, therefore it is in the hands of demand & supply players to fulfill both their needs.  Many misconceptions will remain, as is the case in any other discipline, but it is the obligation of experts of this field to eliminate them. Programmatic Trading is not a magic stick for either players. Demand players need to have an integrated approach to Programmatic Trading, including data, algorithm and bidding, across the entire purchase funnel, which is essential to create a coordinated set of targeting tactics. On the other hand, Supply players need to have a mixture of offerings available for different requirements, without cannibalizing direct sales.

Stay tuned, as more posts regarding this topic will follow. In the meantime, we are here to energize you (publishers & advertisers) to cut through the complexity of the digital ecosystem and drive your business fast forward.

P.S. TailWind & AppNexus are running a regional survey in order to identify the status of Programmatic Trading across CEE, SE Europe & MEA.The findings of this research will be announced at Arabnet on June 3rd  and at ICEEfest on June 12.