Core Concepts of Programmatic

Transcription

1 Core Concepts of Programmatic Session 01

2 Contents Core Concepts of Programmatic Contents page 05 Editor s Note Welcome to the School of Programmatic page 06 Preface The School of Programmatic: Why Now? page 07 Overview page 08 Intro Why Programmatic? page 10 Section 01 Building a Common Language: the ABCs page 11 page 12 page 13 page 14 page 15 Programmatic Impression-Based Buying Real-Time Bidding (RTB) Buyers/Sellers Buyers Sellers Viewability Campaign Performance Real-Time Optimisation Be the Expert 02

3 Contents Core Concepts of Programmatic page 17 Section 02 Exploring the Marketplace page 18 How it Works page 19 The Players page 20 page 21 page 22 page 25 Section 03 Deal Types page 26 page 27 Ad Networks Agency Trading Desk Ad Exchanges Supply-side Platform (SSP) Demand-side Platform (DSP) Data Providers Data Management Platform (DMP) A Brief History of Programmatic Selling Private Exchanges Types of Programmatic Models Open Exchange Buys Automated Guaranteed page 28 page 30 page 31 page Unreserved Fix Rate Invitation-Only Auctions About OpenX Contacts and General Info Agenda Be the Expert 03

4 Session 01 Core Concepts of Programmatic Be the Expert 04

5 Editor s Note Welcome to the School of Programmatic Welcome to the School of Programmatic Innovation in advertising and the growth of programmatic in recent years have been phenomenal. Digital technologies are disrupting every aspect of modern life - from the way we communicate, to how we consume media, monitor our well-being and of course, how we find and buy things. Marketing is at the sharp end of this transformation. Where we once had a tried and tested marketing mix for communicating with our customers, we now have a complex and rapidly evolving landscape. The pace of change is outstripping our ability as marketing professionals to stay up to date. One such area is programmatic advertising. Reports suggest spending on programmatic advertising has increased by 66% since 2013 and is growing 30% year on year. The speed of this change has created a knowledge gap. Through our own research we have found just how much the industry needs to up skill; where there are knowledge black spots and how people want to learn. We ve looked at the problem from both the supply and demand side too, to make sure we truly understand where we need to focus our attention. It is our mission to lead the way in educating the advertising and media space about programmatic advertising. I hope you will find the time to join us at OpenX s School of Programmatic as we continue to drive advertising in the digital age Join us and be the expert. Sincerely, Tim Cadogan CEO, OpenX Be the Expert 05

6 Preface The School of Programmatic: Why Now? The School of Programmatic: Why Now? Programmatic advertising is increasing in influence, with such rapidity that many media professionals, even the most experienced, admit it s hard to keep up. We know, because we ve asked them. In order to understand the knowledge gaps across the programmatic community, OpenX has undertaken extensive research. From trading room to board room, all of the programmatic professionals we ve spoken with recognise the need for further education. To help with this, OpenX is inviting all members of the programmatic world to meet together and reach the same page. It doesn t matter how little or how much you know about digital advertising; the School of Programmatic sessions will give you the knowledge to get ahead right now. Every professional to attend will benefit, because everyone will learn to speak the same language. Acronyms will make sense and knowledge gaps will be filled. The concepts and technologies that once seemed opaque will be explained in easy-tounderstand, accessible layers. Said they want to learn more about pricing, particularly when it comes to strategy and the debate of quantity over quality Said they want to learn more about how to set up operationally for programmatic; including systems, processes and agency operations So why now? Programmatic is the future of advertising. There s no better time to harness its power than the present. Be the Expert 06

7 Section 01 Building a Common Language: the ABCs Our vision is that everyone who works with, or is affected by, programmatic advertising already recognises its value. Yet the potential of programmatic remains bewildering for many. Join the School of Programmatic and watch the mystery surrounding its technologies, systems and processes disappear. With experts to quiz and hands-on demos, we ll highlight the positive aspects of programmatic advertising, explain the technologies and address the challenges. OpenX wants you to discover and embrace every opportunity that programmatic provides as the digital transformation of the advertising industry accelerates. Be the Expert 07

8 Introduction Why Programmatic? Intro Why Programmatic? Direct buys are the traditional way to buy ad space, and for a long time, served newspapers, magazines, radio, television and the display worlds well. Typically, direct buys are relationship driven, with the publisher s sales team working hand-in-hand with the brand to understand desired goals and audiences, and devising the best way to reach them. In today s world, direct buys are an important component of brand campaigns where the goal is to raise widespread awareness for a new product or brand when: Significant overlap exists between the publisher s audience and the advertiser s target market (e.g. outdoor camping sites and Colemans) The audience is homogenous, by which we mean, the advertiser s message is appropriate for every reader (e.g. this toothpaste reduces cavities and brightens smiles ). Given that brand campaigns seek to target consumers in the pre-consideration phase, the potentially mixed demographics of readership (men, women of all ages and income brackets) national media sites offer deal homogeneous audiences. To achieve scale for digital brand campaigns, marketers will plan their budgets across several large websites in order to aggregate audiences. Often, 80% of available media budgets are allocated to purchasing media directly from publishers. But what happens if prospects respond differently to messages? If, for optimal results, the message should be driven by the user who sees it? In such cases, a blind allocation of media budget to directly purchased media won t produce the most efficient outcome. That s where programmatic comes in, and it is why it has grown exponentially since its inception in early 2000s. Be the Expert 08

9 Section Building Building a Common Language: the ABCs a Common Language: the ABCs Be the Expert 09

10 Section 01 Building a Common Language: the ABCs Section 01 Building a Common Language: the ABCs The world of programmatic demands you learn a new language of advertising. While it s impossible to talk through a glossary of terms, there are some key concepts everyone must know going into programmatic. Note that we have created a glossary of terms for a handout. 1.1 Programmatic There are as many definitions of programmatic as there are vendors that sell programmatic services. Though the definitions vary, everyone agrees that at its heart, programmatic is about automation. Specifically, programmatic eliminates manual intervention between a buyer (advertiser or agency) and a seller (publisher) of digital media, and replaces it with machines. The benefit of programmatic is that it is highly efficient. For instance, buyers can cherry-pick the impressions for their campaigns based on any combination of user, time of day, page URL, geography and numerous other attributes. They no longer need to purchase every user on a page, which leads to media waste. For publishers, programmatic means streamlined operations, as well as the ability to sell every impression to the buyer who is likely to pay the most for it. Be the Expert 10

11 Section 01 Building a Common Language: the ABCs 1.2 Impression-Based Buying In the pre-programmatic days, inventory was sold in blocks (e.g. homepage, run of site, style pages, etc.), which meant buyers paid for users who were not their target audience, or wouldn t convert under any circumstances. The result was significant media waste. Impression-based buying allows buyers, through their buying proxies, to purchase inventory one impression at a time, based on what is knowable about each impression and campaign goals. Buyers often use a combination of first-, second- and third-party data to help determine if a consumer behind an impression is a likely candidate for the product or service advertised. 1.3 Real-Time Bidding (RTB) In many (but not all) programmatic scenarios, inventory is sold in an auction, where numerous buyers compete for each impression. Real-time bidding awards the impression to the highest bidder. (In many instances, second price auctions apply, which means the buyer who bids the highest amount wins the impression, but is asked to pay fractionally more than the second-highest price offered). Be the Expert 11

12 Section 01 Building a Common Language: the ABCs 1.4 Buyers/Sellers At the end of the day, programmatic is all about helping advertisers and publishers find one another so that an advertiser can reach and engage a desired audience, and so that publishers can earn advertising revenue to keep their site in business. But with programmatic, there are lots of companies in the middle. 1.5 Buyers DSPs, agency trading desks, ad networks, other publishers Programmatic is complex, and buyers need a bidding engine to participate in the real-time markets. Because it is extremely difficult and costly to build and maintain, most buyers partner with a programmatic tech-provider to buy their impressions for them. Those partners are typically demand-side platforms (DSPs) or agency trading desks (ADT). In some instances, such as OpenX, individual brands can leverage a rules-based interface to purchase inventory. At times, an ad network may need to purchase inventory from an ad exchange in order to achieve the volume it needs for its own clients. The same is true for publishers, who may purchase inventory from the ad exchanges in order to fulfil campaigns that exceed its readership. This is called audience extension, since the publisher seeks from the exchanges users who are similar to its users. Be the Expert 12

13 Section 01 Building a Common Language: the ABCs 1.6 Sellers Ad exchanges, ad networks, supply-side platforms Likewise, publishers need to partner with a programmatic tech provider in order to sell its inventory programmatically. Typically, those providers are ad exchanges or supply-side platforms (SSPs), which aggregate inventory from many different sources into a marketplace. Additionally, many publishers have relationships with ad networks, which fulfill (i.e. sell) inventory on behalf of the publisher. Be the Expert 13

14 Section 01 Building a Common Language: the ABCs 1.7 Viewability The concept of viewability is a direct response to reports that up to 70% of all digital impressions that advertisers pay for are unviewable, meaning they fall outside of the user s browser. Viewability is a metric that is quickly being adopted as a means of transacting digital media. Specifically, to be considered viewable at least 50% of a creative must appear within the user s browser for at least one full second. Advertisers don t pay for impressions that aren t viewable. 1.8 Campaign Performance How do we measure campaign success? Truly, it s an art. Most campaign optimizers access a variety of metrics to determine a campaign s performance including: Click-through rate (CTR) Compares the number of people who clicked on an ad to the number of actual impressions shown Cost per action (CPA) Cost per 1000 impressions (CPM) Leveraging the cost (CPM) and the click-through rate, measures how much the advertiser paid for actions earned from an ad The price per 1,000 digital impressions Engagement Rate (ER) Engagement Time (ET) Typically used by branding campaigns, compares the number of consumers who engage with an ad to the number of ads shown. Measures the length of time consumers actually engage with an ad. Be the Expert 14

15 Section 01 Building a Common Language: the ABCs 1.9 Real-Time Optimisation In the pre-programmatic days, advertisers had to wait until a campaign was complete before assessing results and figuring out how to do better the next time around. Programmatic changed that by collecting results in real time, so that campaign managers can assess campaign performance and make changes to campaign criteria immediately. This is known as real-time optimisation. Typically, the buyer s DSP provider has campaign managers on staff who are expert at assessing campaign results as they come in, and using that insight to hone in on the users, pages, time of day, creatives, messages and a host of other attributes that deliver the most conversions. Often, results are shown via heatmaps. Be the Expert 15

16 Section Exploring Building a Common Language: the ABCs the Marketplace Be the Expert 16

17 Section 02 Exploring the Marketplace Section 02 Exploring the Marketplace Real-time bidding (RTB) is an online advertising technology that s taking the market by storm. The enthusiasm stems in large part from advertisers, who get to cherry - pick impressions for their campaigns. The result is stellar ROI. So what is RTB exactly? It centres on ad exchanges, where media buyers and publishers meet to buy and sell inventory, one impression at a time via real-time auctions. There are no set prices for inventory, publishers set a price floor (and if they don t they should), and see what the market will deliver. It centres on ad exchanges, where media buyers and publishers meet to buy and sell inventory, one impression at a time via real-time auctions. Be the Expert 17

18 Section 02 Exploring the Marketplace 2.1 How it Works Here s a typical scenario. When a non-guaranteed impression becomes available, the publisher s ad server sends an ad request to an ad exchange. That request may or may not include the publisher s URL (many choose not to disclose that information so as not to interfere with direct sales efforts). But that ad call will certainly contain the user s cookie, which is a key distinction of the technology. Potential buyers grab that cookie and, using first-, second- and third-party online and offline data, develop a remarkably clear picture of the user. Then, leveraging sophisticated, lookalike models and algorithms, buyers calculate a bid based on campaign goals (e.g. brand vs. performance) as well as the user s probability of taking a desired action. The ad exchange collects all of the bids and selects a winner based entirely on the CPMs offered. Some exchanges pay the publisher the highest CPM offered, while others award the impression to the highest bidder, but pay the publisher the second-highest CPM offered. The winning bid is sent to the publisher s ad server, along with the URL for the winning bidder s ad creative. The user s cookie is a key distinction of the technology. Be the Expert 18

19 Section 02 Exploring the Marketplace 2.2 The Players If you ve ever seen a Lumascape diagram, you ll understand that the programmatic landscape can look like a bowl of spaghetti. Though confusing, it can generally be broken down into the following categories: Ad Networks Ad networks are aggregators of advertising inventory that package it together to sell at an increased margin. Ad Response Ad Request Advertiser Ad Server Publisher Ad Server Redirect Redirect Network Ad Server Be the Expert 19

20 Section 02 Exploring the Marketplace Agency Trading Desks In-house digital media trading desks that execute campaigns on behalf of clients as a managed service, and are seen as experts in the use of data and technology Ad Exchanges Open ad exchanges are the bread and butter of the real-time bidding revolution. They aggregate inventory from hundreds of publishers of all sizes and sell all available impressions via highly automated real-time auctions. The benefit of open ad exchanges is the scale they offer billions of impressions reaching 100 million unique users per month. Visitors enter site. Publisher sends request to Ad Exchange. Visitor sees ad unit (the process takes place in milliseconds). Advertisers see visitor, site and unit deitails. Advertisers bid. Ad Exchange picks best bid and sends ad DSP A Real-time bidder DSP B Real-time bidder DSP C Real-time bidder Be the Expert 20

21 Section 02 Exploring the Marketplace Supply-side Platform (SSP) SSPs are software platforms that let publishers sell impressions automatically, and maximize the price their earn by attempting to match each impression with the buyer who values it most. SSPs allow publishers to access a large pool of potential buyers including ad exchanges, ad networks and demand side platforms, and to apply sales controls, such as price floors (i.e. minimum prices). THE TRADITIONAL SSP Network Demand RTB Demand Evolving towards NETWORK DEMAND + RTB DEMAND Be the Expert 21

22 Section 02 Exploring the Marketplace Demand-side Platform (DSP) A demand-side platform lets advertisers and agencies buy impressions automatically. A DSP assesses the attributes (user, geo, time of day, page URL, etc.) of every single ad impression, calculates the value to the campaigns, and assigns a bid based on those attributes Data Providers Data companies are big in the RTB game. Companies such as Nielsen, and Experian enable buyers to overlay data segments of interests to the users the ad exchanges send them. In other words, let s say an auto manufacturer wants to target auto intenders. Whenever an exchange sends a request for a bid, the brand (or DSP or trading desk) can see if that IP address happens to be in the Nielsen auto-intender category. If so, the brand can choose to bid on that user, even if the request stems from a site like lifestyle.co.uk Data Management Platform (DMP) Lots of advertisers and publishers are realising the value of first and third party data, and want to use it for their own purposes. A data management platform is a centralised platform used by agencies, publishers and marketers to manage and merge data such as cookie IDs. They can also combine a variety of online and offline data sources within the platform to generate audience segments for improved targeting. Infographic next page Be the Expert 22

23 Section 02 Exploring the Marketplace Advertiser / Agency Ad Network Ad Exchange Publisher Be the Expert 23

24 Section Deal Building a Common Language: the ABCs Types Be the Expert 24

25 Section 03 Deal Types Section 03 Deal Types 3.1 A Brief History of Programmatic Selling In the early days of programmatic trading, all inventory was sold in open exchanges, where any qualified buyer* could purchase any inventory that was available, as long as the buyer placed the highest bid. Publishers had some sales controls at their disposal advertiser white and blacklists, price floors but not enough for them to feel fully comfortable to sell their best inventory in the channel. As a result, programmatic inventory was equated with sub-premium or remnant inventory, and buyers expected to pay cut-rate prices for it. While programmatic was long associated with remnant inventory, both sides of the transaction couldn t help but notice the efficiencies of automated trading. That led them to ask: how can we apply the benefits of programmatic to inventory typically reserved for direct deals? The answer: Private Exchanges 3.2 Private Exchanges With private exchanges, publishers offer inventory through a walled off section of an ad exchange, which buyers purchase via DSPs. Private exchanges work just like open ad exchanges in that the buyer isn t obligated to purchase an available impression; if an impression represents a desired user, the advertiser is then free to submit a bid. If the advertiser opts to pass on an impression, the publisher seeks an alternative buyer. Depending on campaign objectives, media planners can include or exclude users on the basis of geography, retargeting, third-party data segments, time of day, browser/device, as well as many other attributes that determine outcomes. Today, there are a number of deal types that can be executed via a private exchange. * Ad exchanges screen buyers based on product, messages, fraud, creative types and so on. Be the Expert 25

26 Section 03 Deal Types 3.3 Types of Programmatic Models Type of Inventory Pricing Participation Other Terms Used in Market Automated Guaranteed Reserved 1 Fixed 2 One-One Programmatic Guaranteed Programmatic Premium Programmatic Direct Programmatic Reserved Unreserved Fixed Rate Unreserved Fixed One-One Preferred Deals Private Access First Right of Refusal Invitation-Only Auction Unreserved Auction One-Few Private Marketplace Private Auction Closed Auction Private Access Open Auction Unreserved Auction One-All Real-time Bidding (RTB) Open Exchange Open Marketplace Other Considerations Prioritisation in the ad server Deal ID Data Usage Transparency to buyer Price floors 1 Reserved inventory is advertising space on a publisher s site that is put aside for a specific advertiser for an agreed site. 2 Fixed Price is any arrangement where the buyer & seller agree on a flat price that the buyer pays rather than the highest bid in an auction environment. Source: Interactive Advertising Bureau 2013 Be the Expert 26

27 Section 03 Deal Types 3.4 Automated Guaranteed These deal types involve reserved inventory (set aside for a particular seller) that s sold at a pre-negotiated fixed price, and occur between one buyer and one seller. Automated Guaranteed campaigns are essentially direct deals that are executed programmatically, meaning inventory is purchased one impression at a time. 3.5 Unreserved Fix Rate These transactions involve unreserved inventory sold at a pre-negotiated fixed rate. These transactions occur between one buyer and one seller. This buying model is chosen when advertisers are looking for a specific type of user for a campaign, such as a particular demographic. This model gives the buyer first Be the Expert 27

28 Section 03 Deal Types dibs on desired impressions, and the fixed price helps publishers protect their yield. Other names for Unreserved Fixed Rate transactions include Preferred Deals, Private Access and Right of First Refusal. 3.6 Invitation-Only Auctions These transactions involve unreserved inventory sold at auction-based prices (i.e. the buyer that bids the most wins). Typically, invitation-only transactions involve one seller and a handful of buyers. This buying model is often chosen when advertisers want to selectively purchase premium inventory, and publishers want to place limits on who may access inventory. Other names for Invitation-Only Auctions include Private Marketplaces, Private Exchanges, Private Auctions, Closed Auctions and Private Access. 3.7 Open Exchange Buys In open exchange buys, any qualified buyer can purchase any inventory, as long as it meets the publisher s price floors and brand-safety criteria. Pricing is auction based; the publisher hopes to get the highest price possible. Be the Expert 28

29 About OpenX About OpenX OpenX is a global leader in digital advertising technology. We create highly efficient, high quality programmatic advertising markets that deliver optimum value to buyers and sellers. OpenX s programmatic advertising platform combines an ad server, a real-time bidding ad exchange and an SSP to deliver the highest revenue across every digitally connected screen. OpenX is headquartered in Los Angeles with offices in New York, San Francisco, Tokyo, London and Munich. The company is backed by leading investors including Accel Partners, Index Ventures, SAP Ventures, Samsung, Mangrove Investments and DAG Ventures Be the Expert 29

30 Neal Street Contacts OpenX Contacts and General Info How Much Does It Cost? The School of Programmatic is completely FREE to attend. You will also receive a complimentary subscription to the online resource which will be available later in the year. FREE How To Book Your Place Please visit: openx.com/school and choose the session you would like to attend. You can also book by ing your choice of sessions and full contact details to: susannah.wisz@openx.com Location and Timing The School takes place at the Hospital Club, Covent Garden. 8.30am School opens for breakfast/networking 9.00am Class Begins 9.45am Break 11.00am Class Finishes Hospital Club 24, Endell Street London, WC2H 9HQ Tottenham Court Road High Holborn New Oxford Street Charing Cross Street Monument Street Endell Street Holborn Long Acre Coven Garden Be the Expert 30

31 Agenda School of Programmatic Agenda 16 th February Session 02 Programmatic on the Go Audience: Publishers, App Developers, Trading Desks, Media Services, Advertisers, Agencies. Planning for cross device campaigns: mobile, tablets and wearables Programmatic buying considerations unique to mobile Exploring the best mobile ad formats Building apps into your media mix Measurements & KPI s Content presented by Justin Re, Director of Mobile, OpenX Stephanie Emmanouel, General Manager, Somo Jason Cooper, GM Mobile, Integral Ad Science Yoni Argama, VP Marketing & Business Strategy, Inneractive 11 th March Session 03 Strategies for Success: Supply Side Audience: Publishers Understanding revenue, pricing and yield optimisation strategies Getting to grips with inventory pricing: remnant vs premium How to better manage your inventory Using data to deliver impact while protecting your IP Reporting on campaign performance Audience extensions what/how/why What technologies do I need to use and why? Pan-regional campaigns and performance Content Presented by Qasim Saifee, SVP Monetisation, OpenX Phuong Nguyen, Director of Advertising, ebay Be the Expert 31

32 Agenda School of Programmatic 14 th April Session 04 Fundamentals of Money & Measurement Audience: Publishers, App Developers, Trading Desks, Media Services, Advertisers, Agencies. Defining core measures and metrics for supply and demand side Defining CPA, CPM, CPI etc How to budget in programmatic Creating transparency in demand and supply side business models Core reporting processes and models: what do brands care about? Content Presented by John Harvey, Director Partner Services, OpenX James Bourner, Head Of Display, Jellyfish Ben Price, Head of Commercial Operations, Future Publishing 12 th May Session 05 Selling Models for Publishers Audience: Publishers Integrating programmatic within your direct sales organisation: ensuring not to cannibalise existing accounts The inventory conundrum: remnant versus premium Establishing effective pricing models: CPMs, ecpms, CPC, RPMs and how to increase revenues Defining viewability metrics Understanding yield and revenue optimisation Scaling programmatic for niche publishers Programmatic Best Practice: Case Studies for Supply Side Content Presented by Richard Ottoy, Commercial Director UK, OpenX Steph Miller, Head of Media Sales, Zoopla Be the Expert 32

33 Agenda School of Programmatic 14 th June Session 06 Strategies for Success: Demand Side Audience: Trading Desks, Media Services, Advertisers, Agencies. Understanding pricing and budgeting. Managing and using data to make better targeting decisions Reporting on campaign performance PMP s how to make the most out of your existing deals Overcoming brand safety, fraud and non-human traffic concerns Content presented by Ian Davidson, Senior Director Platform Demand, OpenX Edward Thomas, Head of Audience, Skimlinks Be the Expert 33

34 uk.openx.com/school-of-programmatic