Pro­gram­matic Mar­keting

Programmatic marketing is more than just a hype. Intelligent, automated systems can help us to manage complexity and to once again make advertising an experience for the consumer.

Connected phones, connected watches, connected TVs, connected cars, connected houses – and this is just the beginning. Consumers are witnessing the fusion of online and offline. As they open themselves to new technologies, they increasingly close themselves off to traditional advertising. As a result, many marketers are feeling the squeeze. Is this the end of the marketing profession as we know it? Not necessarily. Not if marketers stop enslaving themselves to an ever-changing ecosystem and instead concentrate on the opportunities that programmatic advertising offers.

Blessing or curse?

In marketing departments, at conferences and in the specialist media, you can notice a common theme in the discussions. They are largely unrealistic, occasionally irrational and somehow driven by fear. Conversations with industry colleagues inevitably dwell on the drawbacks and shortcomings of technological progress. Everyone seems to be acutely aware of the perceived negative impact that this progress has on creativity in general, workplaces in particular, and the profits of media agencies especially.

This, we believe, is a great shame. Because it illustrates that many of our colleagues still subscribe to an outdated philosophy. In many businesses, this philosophy enslaves the marketing department to an ever-changing ecosystem. The reasons for this bitter development are as various as they are well-known – to the point where it’s hardly worth noting them all. So here’s a summary of the most important….

Global competition is dynamic like never before. Product lifecycles are constantly getting shorter. Brand leadership is becoming more difficult. The already exploding media landscape is constantly being redefined by the new online giants of content, communication, and distribution. At the same time, we’re producing mind-boggling quantities of data on markets, consumers and purchasing behaviour. There’s a constant pressure to make decisions right here and now. Our demands are greater, our duties more complex.

As we ruminate on these problems, a vast reserve of potential remains untapped – especially in programmatic marketing. To seize this potential, marketers must stop to simply react. They must put their hands back on the steering wheel. Intelligent, automated systems can help us to master complexity. To hit our goals in real-time. And they can help us to once again make advertising an experience for the consumer.

It all began with marketing automation

Most marketing departments already use various software systems. Under the umbrella of “marketing automation”, everything works in harmony. Budget allocation, synchronisation of CRM systems, and lead and campaign management can all be automated, relieving the marketers of much tedium. This is undoubtedly a step in the right direction. But by no means is it a solution to our current challenges. Marketing managers need programmatic systems that can “think” using intelligent algorithms. Systems that can take care of the grunt work. Programmatic marketing combines the benefits of big data, cloud computing, machine learning, and advances in technical infrastructure. Its crucial advantage is the ability to receive constant feedback and to harvest real-time insights and recommendations from the available data. Programmatic buying offers a first taste of the new marketing reality.

Where programmatic buying ends, programmatic marketing begins

Programmatic buying is a hot topic. In some industries, the technology is already generating billions in revenue. In some countries there are marketing channels which are nearly 50% programmatic. Marketers benefit from precise targeting and dynamic price models – a system that is both flexible and efficient. So we can safely say the concept has been proven. And we can insert another, even bolder thesis into this discussion: if TV becomes genuinely programmatic (and this is only a matter of time, given the increasing feedback capabilities of modern devices), the days of non-programmatic media buying will be over. As a consequence, many media companies will have to rethink their value proposition. And some agencies will need an entirely new business model.

One thing is clear. As more touch points become digital, the influence of programmatic technologies can only increase. After programmatic buying, we see the evolution of programmatic marketing taking place in three stages: 1) programmatic all media buying, 2) programmatic creation, and finally 3) programmatic orchestration. In our white paper, The Programmatic Giant, we envisage that these three stages will be implemented starting in 2017, with about two years distance between each. Soon, programmatically deployed advertising will appear not only in our web browsers and on our smartphones, but also on television, in outdoor displays and in wearable tech. Programmatic all media buying is already being tested in the US, the UK and the Netherlands. This looming, fundamental shift in advertising communication appears inevitable. So why wait? Programmatic technology equips marketers with powerful, data-driven tools for segmenting audiences in real time. These tools also help to make better use of semi-automated consumer insights.

Yet the massive influence of algorithms extends beyond media planning and buying. It also touches strategy and production. There now exists a new form of personalised advertising, and it’s called programmatic creation. Campaigns are becoming modular and much more customisable. Messaging, content and tonality can now be freely arranged in any number of layouts, with the most appropriate combination served up at each touchpoint via an intelligent software system. The goal is to display only the advertising that the viewer wants to see. To understand what’s already possible in this field, take a look at “Romeo Reboot”, a Brazillian campaign for Axe deodorants that can be viewed in nearly 100,000 variations. M&C Saatchi is also getting in on the act. With their programmatic test campaign for the virtual brand “Bahio Coffee”, they demonstrated that artificial intelligence paired with modular advertising could be the future. The final step toward perfectly user-customised advertising is called programmatic orchestration. It becomes possible when the system can interpret and learn from user reactions.

Let’s be honest: what’s currently being sold as programmatic is really just a polished version of targeting (or re-targeting, or whatever you want to call it), spiced up with some prognostics and a bit of extra processing power. Eventually, programmatic marketing will be genuinely based on location, context, and even mood. In the meantime, new buzzwords will be thrown around. But this is the direction in which we’re moving. So is programmatic marketing an all-purpose weapon against consumers who refuse to be swayed? Of course not. In future, consumers will absorb advertising of their own free will – or they won’t. Programmatic marketing merely increases the chance that your advertisement will be in front of the customer at exactly the right moment, when they are interested in, and open to, your message. But you have to move fast. And that’s the great promise of this technology: to make marketing communication almost as flexible and efficient as the best human conversations – intelligent, empathetic, argumentative and persistent. This is ultimately what programmatic must, and will, deliver.

Marketing needs new skills and new ideas

This is all beginning to sound like the Brave New World. Machines assume responsibility for the mind-numbing Excel work, which they can do much better than humans anyway. Marketers are left with more time to focus on important strategic and creative work. But here’s the reality: as long as the creative Master Brains refuse to embrace digital transformation, to recognise the power of data, and to consistently view the world from the consumer’s perspective, they will never reap the fruits of these new developments. Marketing has the power to become a central interface in customer-oriented business. But only if it opens itself completely to the new era. It’s no longer just about sales. Marketing can also influence the development of products and services. This influence is the fuel that powers the new marketing reality. To prepare your marketing department for the future, you need more than a good digital strategy and half-hearted attempts at flat hierarchies. You need the right attitude. You need to accept “constant beta” as your new normal. You need to push innovation forward, rather than holding it back. Along with new processes, marketing departments will witness an influx of new skills, especially in data science and IT. Implementing these skills will be a central challenge within the next few years. Because in the transformation to come, the question will not be “what”, it will be “how”.

The five Es of the new era

We don’t have a crystal ball. Nor do we have a master plan for the marketing department of the future. But we can give marketers a set of benchmarks by which to guide their efforts. The arsenal, as we understand it, consists of five Es: ego, engineering, empirics, empathy and energy. In a world that turns faster every day, brands must show form and composure. A strong brand needs an identity, a foundation. An ego. Marketing will increasingly use IT solutions to build technical infrastructure and sensors. Just as we currently have productions IT and logistics IT, in future we will also have marketing IT. Engineering will become a critical success factor. It is no longer enough to simply harvest and process data; the data streams need to be understood. In future, statistics, IT and marketing will go hand in hand. In the marketing manager’s toolkit, another indispensable skill will be empirics. Yet data and insights alone will win you no customers. Only by translating those data into meaningful stories will you create a personal connection with your audience. To be genuinely relevant, you must understand the needs and interests of your target audience. A new age of empathy will dawn. Marketing will only be successful when it reaches beyond sober, rational decision making. The decisive factor in innovation will be the ability to grasp emerging consumer trends and spot the smallest differences in the big picture.

The shift to programmatic marketing departments will be painful at first. It will drain resources. It will require stamina, motivation, and a new way of thinking about leadership. Marketers need energy to face the challenges ahead – and to prevail.

This text originally appeared in Markenartikel 11/2015.