$46.8B Record U.S. agency revenue in 2015
With great opportunities come big headaches -- and that's exactly what programmatic is for marketers right now. The landscape is getting progressively more sophisticated, premium inventory is now being bought and sold programmatically, and major marketers like Unilever, Mondelez and P&G are shaking up the industry with bold moves to buy nearly all of their online media programmatically. Now that the pendulum is swinging to programmatic buying, marketers' frustrations with the confusing structures of the industry are boiling over, and this demands broad industry reflection and the exploration of new ways of working.
Agencies are in the business of being trusted advisors. We serve to partner with our clients to create value for their companies, consumers and employees. The closer we are to being extensions of our clients' marketing departments, the faster we build trust, and usually the better work we create. So how do we help clients structure and organize for programmatic success, with trust at the core?
The current programmatic structure isn't working
Current programmatic models aren't designed around this trusted advisor theory, which is leading more marketers to consider taking programmatic inhouse. This can be a daunting and challenging undertaking for most brands, as programmatic talent can be very costly and the capital investment around this model is very real. But it's leading programmatic players to consider some very significant issues marketers are trying to solve:
1. Confusion. If the mission of the programmatic founders was to create the most complicated set of acronyms and client-unfriendly nomenclature, then mission accomplished. In 2014, you can still bring together 10 different "programmatic experts" and they all have a different definition of what "premium reserved" means.
2. Opaque operating model. In certain situations, programmatic is hidden behind a complicated and opaque model, which has created distrust among clients. Technology, data, inventory, pipes, tools and people are often bundled into one lump, which does not allow clients to be as educated as they desire.
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3. Lack of integration. Programmatic has grown up on a seemingly parallel path with other data-driven marketing functions (like search), resulting in separate infrastructures, partners and systems that pose significant challenges for marketers looking for nimble and integrated marketing solutions.
It's our job to make programmatic work better for our clients.
We have an opportunity to become better programmatic partners by bridging the gap between current models in the marketplace and inhouse models and establishing the partnerships clients are looking for. More agencies need to take steps to create flexibility based on client needs, style and interaction models. After all, we do this elsewhere in the agency, right?
One such alternative model is a specialized programmatic team that is assembled within the agency media department, where members can facilitate knowledge-sharing and best practices, while also becoming brand experts. These centers of excellence allow for deep collaboration and can seamlessly operate as an extension of the media team, giving clients more transparency and control over how data and analytics are integrated. The model can further build trust by changing three core things:
1. Transparency. Marketers deserve to understand what their money is doing for them and where it is going, and agencies deserve to make a profit that can be reinvested back into the very costly business of building excellence in programmatic. We can do this by having honest conversations around technology, service and data fees.
To facilitate this, marketers can do two things: Ask for better understanding of the value chain and invest in self education to get a better understanding of how programmatic is different, with its own unique cost structure. In addition, agencies should remain open to different models. It's better for all parties to negotiate over value than to have long-lasting relationships fall apart over black boxes. This is not a winner-take-all position. It is not about sharing every last detail. Rather, it's about getting to an understanding of fairness that is mutual.
2. Integrated analytics. Marketers are experiencing frustration with channel-level optimization and touch-point planning, as they need to be able to optimize to the last marginal dollar with the greatest return across all channels, not just intrachannel. So programmatic solutions can't be at arm's length. They should remain tethered to other digital and marketing efforts. Marketers and agencies should insist on clarity upfront around reporting and understanding how programmatic data will integrate with other channels, as well as ensure no double or triple counting is occurring.
3. Nimbleness and fluidity. Programmatic is going to have growing pains. Campaigns will break. Brands need to be in a position where they can try new things, test new things, and not be locked into any one technology or way of doing programmatic. Marketers and agencies should understand programmatic is not a channel; it's a way of buying, and they should continue to test multiple methods, tech and partners to find the right recipe.
The days of buying and selling media over three-martini lunches are over. So is the problem of convincing marketers to buy into programmatic. Marketers get it and want it. But marketers want to jump with both feet into a pool that is calm, simple and built on trust. It's time for us to embrace a more trustworthy approach.