Programmatic Marketing Demystified for Direct Marketers

Programmatic marketing is tailor made for direct marketers. Why? Because direct marketers know the identity of our customers and opt-in prospects and that data can be matched with browser IDs. Matched customer data takes online advertising beyond retargeting. After clearing away the techno-speak, what you discover about programmatic marketing, or real-time bidding (RTB), is a hidden opportunity for direct marketers. With a 35 percent growth rate projected in the next three years, programmatic marketing is an online opportunity every direct marketer

Programmatic marketing is tailor made for direct marketers. Why? Because direct marketers know the identity of our customers and opt-in prospects and that data can be matched with browser IDs. Matched customer data takes online advertising beyond retargeting. After clearing away the techno-speak, what you discover about programmatic marketing, or real-time bidding (RTB), is a hidden opportunity for direct marketers. With a 35 percent growth rate projected in the next three years, programmatic marketing is an online opportunity every direct marketer needs to become versed in.

My hunch is that a lot of direct marketers are lost, either trying to grasp how programmatic marketing can be practically used by them, or if it’s even worth exploring. I’ve recently investigated and researched programmatic marketing for a client to determine if it made sense for them. In the process, I discovered something that suggests direct marketers have a leg up as users of real-time bidding.

I’ll explain how the opportunity for direct marketers works in a moment. But first, let’s review a few fundamentals about programmatic marketing and how real-time bidding enables it to work.

  1. Programmatic marketing is where you establish automated business rules (who is targeted, and with what ad) so you can quickly and efficiently target your most valuable prospects and prospective customers.
  2. This targeting enables you, the marketer, to serve your prospects and customers with digital ads.
  3. Programmatic marketing is a strategy, or a marketing process. Real-time bidding (RTB) is the tactic that enables programmatic marketing methods to work.

Unlike most banner ads that are indiscriminately shown to anyone on a certain website, the goal of programmatic marketing is to eliminate wasted impressions. That is, you only want your ad to be shown to users who have, based on prior online behavior, indicated a likely interest in the category of the product you’re marketing. Through sophisticated tracking systems, in just milliseconds a bid is processed (based on prior web behavior and other attributes) and the ad served in “real time.”

How does RTB enable programmatic marketing?

  1. Ads are served to people based on online surfing. A person using a search engine with the keywords “investment opportunities” or “new mortgage,” is known to be searching for these topics. Those individuals will see ads on certain websites (even those websites that aren’t in the investment or mortgage business) related to the search terms they just used. These are search retargeting ads.
  2. Another powerful feature of RTB is when an individual visits a site and moves on to other places on the web. When that happens, the user sees ads related to a site they just visited. Those are site retargeting ads.

But beyond ads being retargeted to someone based on behavior, programmatic marketing offers a third hidden opportunity for direct marketers. In this case, ads can be served to your customers without them having searched, or even visited, specific types of sites.

Some advertising technology companies will connect you with a third party firm who can match the names and addresses of your customers and known opt-in prospects to their online browsers (e.g. Internet Explorer or Apple’s Safari). The third party firm will a) remove personally identifiable information (called “PII”), and b) append to your customers or known prospects their browser ID. (To emphasize: personally identifiable information is removed from your list during this process. Codes are assigned to your list so that no names can be tracked back and the user’s privacy is maintained).

The result? Your ads can appear online to your customers or known prospects.

“Typically, around 50 percent of a direct mail list can be matched to online browsers,” says Frost Prioleau, CEO at Simpli.fi, an advertising technology firm. “This enables advertisers to communicate with their known prospects through online display advertising across a wide range of web sites, enhancing their brands and driving incremental sales.”

Looking at this another way, it means that whenever your customers or known prospects are on websites that show banner ads, your ad will be shown (or served) so your customers and prospects can click to a landing page with an offer reserved for them. You can even split versions of ads so customers see one ad, linking to a landing page for them, or you can use a different ad for opt-in prospects with a landing page and offer for them.

This is a significant hidden advantage of programmatic marketing for direct marketers. That is, your customers can see your ads without being retargeted based on search or sites they’ve visited.

Ads served to your customers or known prospects can be more powerful than only retargeting for the simple reason that a current (or former) customer will be reminded of your company every time they’re surfing websites that accept ads. If you have been marketing to them by direct mail, email, or other channels, this is one more opportunity for you to be on their radar screen when they may be researching competitors, or have simply reached the tipping point decision to get more information or buy.

Are You Buying ‘Smart Media?’

Media buying, or online advertising, is more than just a Web strategy to help grow your business. It’s both a science and an art. It involves a bit of finesse, competitive research, creativity and good negotiation skills.

Media buying, or online advertising, is more than just a Web strategy to help grow your business. It’s both a science and an art. It involves a bit of finesse, competitive research, creativity and good negotiation skills.

Sadly, with most online advertising experiences, the lagging partner is typically the business owner by no real fault of his or her own … it’s simply from sheer lack of industry knowledge and media savoir-faire.

I’ve been buying online ad space for more than a decade. Here are my personal powerful and money saving tips to buying smart media. These are “must ask” questions that will help you get the most bang for your buck:

1. Competitive analysis—Find out what the typical industry rate is for that particular ad spot and placement in your niche. For instance, if you’re interested in running a 300×250 banner ad, do some research. Call some ad networks and find out what that ad unit costs on the home page and ‘”run of site” within your target niche. What ad units typically get the best clickthrough rates (also known as CTR)? Read some online e-zines or blogs and get an idea on average metrics so you have a benchmark to measure your campaign against.

2. Ad targeting—Find out if the publisher allows day parting (running ad during specific time periods). This can save you money on ad rates, especially using the CPM (cost per thousand) pricing model.

3. Dedicated email—Find out the size of the list you’re thinking of renting, the frequency the list goes out, and the average unit sale (AUS) per subscriber. Ask the publisher who’s mailing for you if there will there be a lift note (an introduction or implied endorsement). Lift notes help “warm up” the list (subscribers) and boost conversions.

4. Out clause—Ask your account executive if the media agreement has an out clause or termination right. This is important as if your campaign is not working, you don’t want to have to ride it out and waste money. You want the ability to end it and cut your losses. Also find out if you can pause your ad during a slow traffic times (i.e. summer, holidays) as not to waste impressions (CPM).

5. Reporting—Ask your account executive if you will be given daily/weekly reporting OR access to the online ad serving system. This will allow you real-time access to clickthrough rates and more to evaluate if creative (banner and landing page) is striking a chord with the target audience.

6. Seasonality—Each industry and niche has its highs and lows. But, generally speaking, it’s typical to see drops in website traffic during summer (June to Aug.) and around certain U.S. holidays. Research your industry and use consumer purchase behavior to your advantage. For instance, in some industries, the days around Thanksgiving are slower than usual. If you’re running a campaign that falls on this timeframe, ask about getting lower rates or pausing your ad during the slowdown. DoubleClick and ClickZ are great sources of information and often release quarterly consumer Web reports on buying patterns and traffic.

7. Exclusivity—Similar to economies of scale (where the more that’s produced, the cheaper the unit price), if your banner ad is sharing space with other advertisers for less “solo” time, you should be paying less. It’s important to ask whether your ad will get 100 percent of the rotations or sharing ad exposure. And if sharing, find out what percentage of exposure you are ultimately getting during your ad run. This is known as being “fixed ad placement” or “shared ad placement.” If you’re told you have shared placement, this is a great bartering tool to get a more competitive rate.

8. Site targeting—You’ve heard in real estate it’s always about location, location, location, right? Well, online real estate is no different. Find out if your ad will be run of site (ROS), run of channel (ROC) or on specific high-traffic pages. Typically, the further you drill down, the more you pay. It’s known as “site targeting.” Similarly, the higher you go up, the less you pay. ROS is the highest (most broad) level, so it’s usually the cheapest ad location. Next is usually ROC, whose ads appear on certain channels or sections of a website. Then there are also specific pages or demographic targeting. Your goals and budget will determine which placement is best for your needs.

9. Remnant space—Often the forgotten about query, remember to ask if remnant space is available. Remnant ads are those ad units that the publisher or ad network is having a difficult time selling for whatever reason. They can also be last-minute specials or units that are now available due to another deal falling through. With more popular, high-traffic websites, you can save a fortune buying remnant media. Just pay close attention to the terms and conditions in the insertion order, as with most special deals, there are usually restrictions and little leeway.

All of these factors will help determine the value of your ad space and, ultimately, the cost you’re willing to pay to access that audience. Good luck!

Baby Boomers, Gen Y Embrace Personalized Online Ads

This past week, I came across a new study by Q Interactive, an advertising network specializing in predictive behavioral targeting. It found Generation Y Americans (individuals born between 1982 and 1995) and baby boomers (individuals born between 1946 and 1964) are the two most active generations, with the greatest willingness to provide information online in exchange for more personalized advertising.

This past week, I came across a new study by Q Interactive, an advertising network specializing in predictive behavioral targeting. It found Generation Y Americans (individuals born between 1982 and 1995) and baby boomers (individuals born between 1946 and 1964) are the two most active generations, with the greatest willingness to provide information online in exchange for more personalized advertising.

The study’s core finding showed that when given the choice, 63 percent of Gen Yers would provide personal data in exchange for targeted advertising. In addition, 53 percent of baby boomers would do the same.

The study surveyed more than 1,500 consumers on their feelings about targeted online advertising, and these groups had the highest percentages.

“The findings were surprising to us, because they go against a lot of perceptions advertisers have about what consumers will provide in order to receive personalized advertising,” Q Interactive’s President/CEO Matt Wise told me this week.

It’s little surprise that Gen Yers are used to providing personal information on social networking sites such as Facebook and MySpace, Wise said.

But baby boomers’ comfort with providing this type of information online was more surprising, Wise said. “Baby boomers finally really understand the value proposition of offering personal information online in exchange for something now,” he said. “If we surveyed them in 1999, I’m sure we would have gotten a different response.”

The study also found consumers, as a whole, value online advertising targeted to their individual needs and interests. Additional findings from the survey included the following:

  • 56 percent view advertisers “favorably” when ads are tailored to a personal interest; and
  • approximately one in three Gen Yers and baby boomers feel more relevant ads tailored to personal interests improve their online experiences.

So, if you’re targeting either Gen Y or baby boomers, try testing a program that offers more personalized advertising in exchange for their information. But make sure you do it the right way by following behavioral targeting best practices.