Agencies + Programmatic = Success

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The AdTech ecosystem is constantly evolving and continuing to be a highly competitive environment. While major agencies have embraced and invested in programmatic buying, new research from Strata Marketing suggests that small and mid-tier shops are still hesitant to commit themselves fully to the process.  According to a new agency survey by Strata Marketing, only 6% of executives felt comfortable buying media programmatically, while 46% reported they don’t use it. Slightly more than one-third of agencies indicated they are undecided about whether they trust programmatic buying to execute their ad orders. The biggest issue uncovered, however, wasn’t a lack of confidence, but a need for an accurate and unified definition for programmatic buying. This confusion was indicated by almost 60% of the survey participants.

Programmatic systems allow publishers (via supply side platforms or SSPs) and agencies (via demand-side platforms or DSPs) to conduct large-scale transactions in a mutually strategic manner. Programmatic media buying is an automated means of buying digital advertising, compared to the traditional processes of the past. Programmatic ads are bought and sold by a live auction using RTB (real-time bidding), on a CPM basis. While publishers can maximize the value of their inventory, programmatic buying allows agencies to purchase strategically impressions that reach the right audience, placement, or content category to increase their campaign ROI ultimately.

Before the rise of programmatic media buying platforms, nearly all digital advertisements were only available for bulk purchase through publisher websites. Agencies were required to incur a separate cost for the 3rd party’s service, decreasing their overall margin.

With the introduction of programmatic ad buying platforms into the market place, agencies now have a unique opportunity to take control of their media buying and bring the operation in-house, thus decreasing costs and increasing margins. This transition allows for agencies or brands flexibility and oversight of what they’re buying and at what price. The closer a company gets to bringing programmatic media buying in-house, the higher their margins will be due to the fact they no longer have to pay a 3rd party. Budgets initially allocated to another agency/tool can now be used in other areas to project one’s digital marketing efforts forward.

The industry leaders in this space understand that programmatic is a new concept and that there is a learning curve for the implementation and execution process. The age of programmatic marketing is upon us, with IDC forecasting nearly $14 billion in real-time buying spend by 2016.  With that being said, many companies have taken steps to guide adopters through the process and agencies are looking to integrate programmatic into their business processes.