American Express Wants to Shift Online Ad Budget to Programmatic Technologies

RFP Reveals Amex's Intentions, Which It Later Says Are More Theoretical

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American Express recently dropped an RFP on the desks of some of the globe's biggest ad-tech companies with some startling news.

The company, a major digital advertiser, said it planned to shift 100% of its online ad budget to programmatic channels, and it needed their help to get there.

"American Express would like to transform their Display Media Channel to become 100% programmatic," the document said.

American Express then asked responding vendors to "demonstrate to us how they can become our programmatic buying solution based on their expertise, services and technology that will enable American Express to achieve their vision."

The statement quickly caused jaws to drop around the industry. American Express spent $128.5 million on online display ads in 2013, according to Ad Age Datacenter, making it the ninth-largest online display advertiser in the U.S.

Currently only about 20% of online ad buying is conducted through so-called "programmatic" technologies, automated, auction-based systems where ads are bought and served across the web to a specific audience in real time. And while its not uncommon for big advertisers to increase their spending in programmatic, it would be very unusual for a marketer to attempt to spend all their online ad dollars that way.

Strategic 'thought'
Ad Age contacted American Express, and it turns out the intent was more an aspiration than a real target. "It's more of a theoretical strategic thought," said Amex VP US Media Jill Toscano. "I couldn't say with the volume of media buys that we do, and the volume of communications plans that we execute, that we would ever go towards 100% programmatic."

The reality is it would be very hard to actually follow through with that target, given high-value partnerships with publishers are custom-built and hand-sold. WeatherFX GM Vikram Somaya said it might be possible to go 100% programmatic for international buys. "But to do it across the brand? No, it's not going to happen today." he said.

Yet the document highlights the mindset of American Express -- and no doubt other marketers -- who are looking for more efficient ways to spend and target online ad dollars. American Express spent $299 million in advertising media (not including search) in the U.S. in 2013, according to Datacenter.

"For them to say something like this, it's incredibly telling about the state of the industry as well as how they are being smart about positioning themselves," Mr. Somaya said.

In looking for tech vendors, the company asks for detailed responses on everything from the companies' relationships with inventory sources, to their global reach, third party tech integrations and even management structure.

The goal, it seems, is to find a demand side platform that can boost the brand's international programmatic efforts and allow it to reshape its relationship with its media agency, Mindshare.

Focus on data
Reading through the RFP, it becomes clear that Amex's belief in the power of its data is a major driver for this initiative. The company cites a heavy investment in an internal analytics team and asks potential vendors about their ability to integrate with Amex's data management platform -- BlueKai, at present -- to pass data back and forth.

"Where bidding algorithms exist, we would also want the ability to incorporate our proprietary algorithm into the bidding process," it says.

Mindshare will still play a key role, responsible for ensuring the buying goes according to plan, and for developing private marketplaces and direct premium buys which could essentially take Amex's now-direct business and execute the transactions through the automated ecosystem.

"We believe the advancements in programmatic buying give Amex the opportunity to get much closer to the digital media campaigns specifically using our expertise, data and resources," the RFP says. "We would envisage your solution supporting us to do this and us to work directly with you to execute and optimise our programmatic media campaigns."

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