If you have anything to do with advertising, then you know programmatic is the marketing word of the year. At least that's the conclusion of a recent vote by some 349 members of the 100-year-old Association National Advertisers.
But dig a little deeper and you'll find there are still rumblings beneath the buzz. While one ANA member noted 2014 was the year advertisers "woke up to the potential of programmatic," others conceded everyone is still "scrambling to understand what it means and how it impacts their business.”
And another added, “Everyone is talking about it, trying to see how to measure it, implement and/or define it. But few people get it or do it.”
So what does the data show about marketers’ true adoption of programmatic? Was it just a one-year wonder trend or does it have staying power?
The Potential of Programmatic
According to a new report being released today by AdRoll, a company that offers advertisers retargeting products for cross-platform, cross-device display advertising, programmatic — and retargeting as a tactic specifically — is here to stay.
While the conclusions may seem self-serving, given AdRoll's stake in the space, we opted to give it a closer look. AdRoll partnered with a third-party research firm, Qualtrics, to survey 1,000 marketers. The firms then paired those responses with data from more than 11,000 marketing campaigns throughout 2014.
"Today’s marketers are becoming more like analysts, using technology to understand and react to always-on consumers in real time. It’s only natural that they’ve begun to demand tools that support their vision for a full-funnel, multi-platform, data-driven marketing strategy," the report states.
Retargeting, which works by keeping track of people who visit a site and displaying related or retargeted ads to them as they visit other sites online, has been "a breakout tactic since marketing made the shift from traditional trial and error programs to real-time programmatic campaigns," the report continues. Retargeting "introduced a simple, practical way to put programmatic ambitions and valuable customer intent data into action, and drove clearly measurable ROI."
The report found US programmatic digital display ad spend grew 137.1 percent in 2014, accounting for 45 percent of the US digital display advertising market. At the same time, CPMs or the cost per thousand impressions have continued to climb year-over-year, which means it is expensive to buy the wrong impression. "Retargeting was one of the first tools to help solve this problem, and marketers adopted it at a rapid rate," the report states.
As Marketo's Divya Dutt, senior program manager (PPC and Paid Social) and her colleague Mike Tomita, senior program manager for web marketing, add in the report, retargeting provides another opportunity to reach prospective customers with different and more relevant offers. And over time, this can help move these prospects down the sales funnel.
To better gauge the merits of this study, we turned to someone with the experience to know, Ali Plonchak, director of digital strategy and integration at New York City-based Crossmedia, which was voted AdAge's 2013 Small Agency of the Year.
"The study is good for basic stats to help agencies and clients level set and gauge performance versus the general market. AdRoll is a big player in the retargeting space and does more sophisticated retargeting than just targeting a user based upon a visit, so I would trust most of its expertise and feel comfortable citing the report as a source," she said.
However, as someone who needs to assess media partners for clients, Plonchak said the study also raised a few questions. "I would take some of the information with a big grain — or bucket — of salt," she added. What makes her skeptical? Primarily, conversion statistics.
Based upon the methodology of the study (responses self-reported by 1,000 marketers and combined with AdRoll's own data), she said agencies and clients need to take a critical look at the conversion stats, especially because As AdRoll acknowledges attribution in the digital space is "less than perfect." She continued,
The bulk of attribution still occurs based upon cookie data and within that a lot of advertisers default to "first or last click/interaction" (58 percent according to the study). In basic terms, this means generally the first or last click or view of a digital ad gets 100 percent credit for the conversion, even if there were many (sometimes hundreds) of other ads for that marketer shown previously to a user."
For example, say a marketer that uses retargeting also has advertising on Hulu, Spotify and the NYTimes. A user might see ads on those direct sites, then click on one of them to visit the advertisers site. "From that point forward the user will be placed in a retargeting pool and likely served retargeting ads many times (I've seen as much as 56 times in one minute from another retargeting company). When the user ultimately buys online, the last retargeting ad will get 100 percent credit for the sale, leaving Hulu, Spotify and the NYTimes with no credit and a low return on investment/return on ad spend (ROI/ROAS)."
In fairness, AdRoll notes that process needs to change and that there are many other direct cookie models (linear, time decay) and custom models based upon advertiser data. She explained:
But the problem with the conversion stats included in the study are that they are self reported by marketers and they can all be using a different attribution model. A marketer reading this study needs to understand that they really can't compare their performance to these stats since their attribution model could be different. Ideally advertisers are comparing themselves either to relative to other similar advertisers/competitors with the same attribution model and not just going off of blanket statements like this (but it's published by AdRoll so it's going to be a bit self serving."