$137.8B U.S. ad spend for top 200 advertisers
The New York Times, AOL, Meredith and The Washington Post -- what do each of these media companies have in common? Within the past year, all have hired top executives as programmatic ad chiefs. Given that real-time bidding digital display ad spend is expected to grow another 38% in 2014 (after increasing 74% in 2013) and reach $9 billion in ad spend by 2017 (almost 30% of total digital display ad spend), it makes sense that these companies are investing senior-level resources to help embrace and monetize the massive opportunity.
Finally, the industry has realized that the debate is not about man vs. machine, but about how man can manage the machine to deliver the best outcome for all stakeholders involved -- media companies, brand advertisers and targeted consumers. We've placed a lot of power in programmatic technology's ability to scale ad buys and find more precise audiences, but human intelligence still remains the most important part of the equation.
More than ever before, a new crop of talent specifically tuned for more technical and analytical business requirements is rising out of the woodwork and taking hold in organizations across the ecosystem, from programmatic ad chiefs at media companies to programmatic media specialists at digital agencies. I predict that it won't be long before a second CPO joins the C-suite: Along with the chief product officer, the new chief programmatic officer will affect influential strategies in the board room.
Here are three underlying skills the new CPO will need to be successful:
1. See the forest from the trees. Despite its celebrity status these days, programmatic does not make sense for all marketing strategies or revenue-generating deals. The CPO needs to understand this and not only educate and advise the sales team on the best targets for sales, but also understand big-picture metrics such as return on ad spend (ROAS) in order to help steer the organization's clients and partners toward a direction that supports their larger strategic goals. There are inherent differences between the needs of brand marketers and performance marketers; a great CPO will be able to identify these differences and align the entire organization with the right brands and advertisers.
2. Provide channel integration. As Mike Zeman of Netflix pointed out earlier this year, a company that manages its own programmatic offerings -- one that, for instance, has its own CPO -- provides better opportunity for marketing across channels. By working closely with account managers and department heads, a CPO is able to streamline clients' real-time marketing budgets so that they are not limited to display only, or search only, but instead have full access to all offerings on a single budget.
3. Master insights from big data. Massive amounts of data (e.g. audience, location, etc.) can run through a programmatic campaign within a short period of time -- think milliseconds. Extend this to the life of dozens of campaigns running in parallel -- some representing multi-million dollar budgets -- and there is incredible opportunity for real-time performance optimization. Let's also not forget that brands run direct campaigns via other channels and publishers, leading to warehouses of first-party and third-party information across multiple platforms and devices.
While many companies may have entire teams of data scientists devoted to analyzing the data, the CPO must have "Moneyball"-like insight to harness the right data into actionable business decisions for the organization's sellers and buyers. In other words, brands and performance marketers have inherently differently needs, and the differences in first-party vs. third-party data and technology can make or break their efforts. Decisions can impact anything from changing programmatic pricing and inventory allocation to determining which partnerships or outside technologies to better leverage. Moreover, the CPO must stay apprised of the latest buy- and sell-side trends to ensure the company remains competitive in the marketplace.
The CPO's role will become increasingly important in the coming years as the marketplace evolves and technology advances. Not every company may have the luxury of hiring a CPO in the future, but my point is this: A company that expects to survive and lead an industry that delivers ad tech innovation at accelerated speeds needs to have a member in the C-suite who can eloquently navigate between the left- and right-brain requirements of programmatic. With this executive, an organization can quickly accelerate ahead of the curve and take advantage of the incredible opportunities that lie before it.