The Misunderstood Programmatic Promise

Unless you’ve been vacationing on another planet, you’ve probably noticed: Real-time media buying (RTB) is on the rise. According to the research firm IDC, spending will reach $4.6 billion in 2014 and $6.8 billion in 2015.

But as we celebrate the rise of RTB, let’s remember that the terms RTB and programmatic advertising aren’t interchangeable. Programmatic is the glue that allows marketers to use far more data than they ever have before. It brings disparate sources of data into one place, making all of it actionable. RTB, by contrast, is a great method for buying media on exchanges. It’s a part of the larger programmatic revolution but not the whole of it.

Why is it important to make this distinction? Because to really appreciate the impact of programmatic, you have to appreciate that it’s not just another new process but rather a new way of thinking about the role of data in marketing. It’s s exciting because it allows us to reach the right person, with the right message, at the right time. Simply put, programmatic makes marketing more efficient and saves brands a lot of money.

And yet (you knew there had to be an “and yet” right?) as more and more dollars flow into RTB, the core promise of programmatic is often forgotten or ignored. Take basic Site Retargerting, the practice of targeting users who have visited your site without converting. With a standard Site Retargeting campaign, the marketer has only a limited amount of data and so ends up targeting the same user over and over. This not only wastes money; it makes users feel as though they’re being stalked. It’s RTB, to be sure, but I wouldn’t call it programmatic.

Programmatic Site Retargeting doesn’t have the stalking problem because it’s analyzing far more data. With programmatic you know not only who to target but also who not to target. With more data, it becomes possible to speak only to the right people for as long as that dialogue is needed. Among other things, this means that you can achieve a desired outcome for as little money as possible.

How does programmatic pull of this trick? The key lies in the creation of cloud-based user profiles that let you create highly granular segments and update them on the fly. When you know more about your users and what they’re looking for at any given moment, you can see who isn’t likely to convert and lower your bid prices accordingly. And, of course, you can raise your bids for those users who are revealing intent through their online behavior. With programmatic, that behavior includes data from not just from pages viewed, but also from items in cart, customer profiles, referrals, shipping addresses, environmental factors (time of day, day of week), and so on.

So, let’s be clear. It’s fantastic that RTB is on the risse. RTB is absolutely where dollars should be invested, but not in the way they are today. RTB only makes sense when you’ve got enough data to do it right. The words “Site Retargeting” shouldn’t appear on your budgets unless the word “programmatic” comes first.

About Chango

Chango is a programmatic advertising platform that connects marketers with their exact target audience in real-time across Display, Social, Mobile & Video. We help marketers efficiently acquire new customers, retarget their existing site visitors and build brand awareness with integrated and highly data-driven campaigns. Our ‘Universal Live Profile’ technology and exclusive data help deliver results for Fortune 500 companies like eBay, Lego and Bloomingdales.