If 2013 was the year of native advertising, Patrick Dolan of the Interactive Advertising Bureau (IAB) thinks 2014 will be all about advertisers crunching data to display ads based on personal behavior. So-called programmatic ad buying, like native advertising or sponsored content, has a number of definitions, but a report released in November by Winterberry Group in partnership with the IAB concluded that 85 percent of advertisers and 72 percent of publishers are using programmatic buying. That is expected to grow to 91 percent of advertisers and 83 percent of publishers in two years.
Dolan and other ad industry experts discussed the report, “Programmatic Everywhere? Data, Technology and the Future of Audience,” in a recent webinar put on by hyperlocal industry site Street Fight.
“To some, [programmatic buying is] an auction-based approach to buying display advertising on the Internet. To others, a series of tools designed to automate back-end customer marketing processes. And to yet others, an amalgam of data- and technology-centered functions that promise to engineer new results from digital media long cloaked in complexity,” the report says.
Using big data to provide relevance
Where programmatic buying differs from traditional marketing is in its use of big data to serve ads that provide context and therefore relevance, and its deployment is only expected to increase. According to the report, display advertising, which includes programmatic, grew 9 percent in the first half of 2013 to $6.1 billion from one year ago.
“What this approach allows is kind of the idea of a holy grail where you can apply data to automated-buying technologies and use these things to have an always-on message and delivery,” Dolan said in the online forum. “We’re not there yet, but we’re making big strides to get there, and it’s very exciting, as we see that more capabilities are going to be put in the hands of marketers to reach people at the right time with the right message.”
Other expected areas of interactive advertising growth include digital video, which is up 24 percent, from $1.3 billion to $1.1 billion; rich media, which grew from $495 million to $640 million; and mobile, which grew 140 percent.
Knowing where you shop, gamble, learn
Dave Peterson, CEO of Sense Networks, an ad platform that does programmatic buying on mobile ad exchanges, said during the webinar that his company collects data and then geo-tags users. From the data it collects, it can determine where they shop, what their lifestyles are (such as where they are likely to go for entertainment, if they like to gamble, if they are affiliated with a university, where they frequent outdoors), income and age distribution, which Sense Networks collects using U.S. Census data.
Brands can use this data for retail re-targeting. They use data for loyalty programs and to send messages to people who shop at competitors.
“We think this really hits the nail on the head in the industry, which is to reach shoppers in advance. The promise of mobile advertising for a long time has been, you can reach somebody who is near your store,” said Peterson. He explained, however, through testing, his company has found that if you’re near a store, it’s likely that you already were planning on going to the store, or you were on the way to another store.
Peterson also said that most people plan their purchases ahead of time.
“You need to be able as an advertiser to talk to these users prior to them being near a store. You need to really influence them at the point of decision,” he said, using an example of Home Depot, and upwards of 15 opportunities that a brand could reach a potential customer.
He also explained that through research his company has discovered people are no more likely to click on an ad when near a store than when sitting on their couch.
“What we have observed is that, contrary to popular belief, we don’t really see a relationship between real-time distance to the store, namely you’re close to the store right now, and click-through rates,” he said, adding results might vary based on the product or offer. For example, large-ticket items are typically planned purchases, while buying a cup of coffee might not be.