Although Covid-19 has been a global disaster of epic proportions, a few good things have come out of it and the old dog did end up learning a few new tricks. For example, I learned how to roll the perfect roti and mastered the ‘dab’ (a hand gesture that means you are celebrating something awesome). Leaving a video of a dab on your kids’ social media feed is not a good idea as I discovered much to the horror of my teenage girls. Ostracised for embarrassing them, it turns out I became very popular among their friends… which, as it turns out, is an even bigger, unforgivable sin. Go figure.
Speaking of good things coming out of a pandemic, I connected with a lot of old friends, which brings me to the topic at hand. My friend, Saad Zaki, is a bit of an expert on the subject. He works for OLX Pakistan as Manager Digital Sales (Programmatic & Traditional Deals). Post the pleasantries, we talked about programmatic advertising in Pakistan. However, before coming to that, let me quickly catch you up on the basics.
What is Programmatic Advertising?
In the simplest terms, programmatic is buying digital ad space using AI in real-time. Unlike traditional media or traditional display advertising (Google Display Network), programmatic uses AI to buy ad space and no humans are involved in the buying process unless you want them to be. Programmatic does this in real-time, meaning that as soon as a viewer clicks on a website, the user’s data is shared with advertisers worldwide and brands bid via AI to display their ads – all within a fraction of a second (the time it takes to click on the link and when the page finishes loading on the screen). Keep in mind that not all programmatic advertising is done in real-time as it should nowadays.
How Big is Programmatic?
To frame the picture, total global advertising spend in 2020 is estimated to be $692 billion with digital accounting for $342 billion (half of all the advertising in the world). Of this, according to Statista.com, digital ad spend using programmatic is predicted to be $127 billion at the close of 2020. Therefore, every third ad you see on digital is bought programmatically, an insane exponential growth for a mechanism no one had even heard of a decade ago! GroupM has even a dedicated company called Xaxis for the sole purpose of the handling of programmatic globally.
As a result, brands are adding programmatic to their arsenal in order to benefit from six advantages.
1 Protection Against Fraudulent Practices By Publishers and Agencies
Let’s face it; even major publishers like YouTube have been caught misleading advertisers. In fact, a few years ago, they were deceiving advertisers by declaring a video as ‘seen’, even if the viewer left after the first three seconds. Agencies are no better; they tend to gain more margins by overpricing inventory to advertisers – which brand has the time to check the price of every banner in every size with every publisher? Programmatic tackles this by taking humans out of the act of buying space from the agency or the publisher. It also monitors the performance of the ad in real-time.
2 More Efficiency
Thanks to the kind of real-time performance reporting that comes out of programmatic, brands can fine-tune their media strategy until they get a clear improvement in ROAS (Return on advertising spend). Xaxis claim to deliver two times the ROAS for their clients, 25% efficiency savings on display on average, and an amazing 80% improvement in conversion rates – all by simply removing human decision-making and replacing it with AI.
3 More Transparency
Since advertisers are now informed about the performance of the ad inventory they have purchased, they are aware of the quality of decision making by the media buying unit. Publishers and agencies can no longer dump poor performing inventory on a brand without being caught.
4 Real-Time Data
In traditional media buying, results are reported at the end of every week or month. There is no exact method of knowing the accuracy of these reports because there has been too much human intervention by the time they reach the advertiser. In programmatic, the performance results are live and transparent, allowing advertisers to fine-tune delivery to get the maximum bang for their buck down to the level of every single ad impression.
5 Advanced Targeting Capabilities
It is beyond the capability of the human mind to process every row and every column when accessing Big Data from ad exchanges. AI can do this efficiently and in less than a blink of an eye, making highly efficient ROI on campaigns seem like child’s play. Unlike traditional media, advertisers can buy inventory based on the demographics of the target audience as well as use contextual advertising to refine their target audience. For example, if you are selling low-fat milk, you can find people who are reading about healthy recipes in different publications automatically in real-time.
6 Brand Safety
Advertisers have the option to broadly define the kind of publications they want and more importantly, those they want to avoid altogether by using blacklists and whitelists at the Demand Side Platform (DSP)/Advertiser end. I remember installing a mobile app for my uncle that gave accurate prayer timings and other religious information. My uncle uninstalled it because it kept showing ads for lingerie! The publisher rented the space to Google Ads and they sold it to whoever wanted it without any filtering system. (It made for an awkward conversation with my uncle.)
How Does Programmatic Work?
Programmatic may seem complex at first glance, but it is not difficult to master. Trust me. I am giving a simplified version for the sake of a general audience. Now let’s get started…
1 A Publisher is any website or app that can display ads. It can possibly be viewed on any combination of digital devices (laptops, mobiles, tablets, interactive TVs). In this example, a healthy eating website, Sadeating.com, blogs a recipe for fat free nihari. The publisher then informs his ad server about the type and size of ad spaces available on this page.
2 Sadeating.com set up their SSP (Supply Side Platform), which is the publisher side AI software that does the bidding evaluation for the publisher.
3 The Advertiser, meanwhile, with a brand called Crazy Cow has launched a low-fat milk, unknown to Sadeating.com. The Advertiser asks their agency to design the creative for all kinds of standard ad sizes and customised messages and to load them on their ad server.
4 Crazy Cow set up their DSP, which is the AI software at their end to help evaluate the ad inventory from all publishers and bids for impressions. Advertisers can carry out steps 3 and 4 themselves, or as is mostly the case in Pakistan, through large media buying houses.
5 The Publisher and Advertiser are set up and waiting for a user to visit the blog. Someone clicks on a Google link to Sadeating.com/FatFreeNihariRecipe. This is where the beauty of programmatic real-time buying takes place. All the steps below (6 to 10) take place in less than 120 microseconds.
6 The Publisher’s SSP collects data from cookies and finds out the visitor’s age, gender, income, marital status and – if your privacy settings are really, really low – if you have been lying to your wife about giving up smoking and going on a diet, plus all your late night browsing history. Armed with this data, the SSP does two things; firstly it sells your data to a data provider and more importantly, it sends it to Ad Exchange with the ad space available on the recipe page.
7 Ad Exchange informs the DSP of the availability of the space and information on the user. The Crazy Cow DSP now knows that a healthy eating blog hosting a recipe for fat free nihari is being visited by Mr Ghareeb Khan, aged 35, married with five kids, earning Rs 150,000 monthly. The DSP knows that Mr Khan has been Googling regularly for diet recipes, high blood pressure symptoms, cures for balding, couple’s therapy and heavy motorbikes (indicating a severe mid-life crisis). The DSP AI evaluates Mr Khan’s worth as a viewer and sends a bid to the publisher. That’s right; Mr Khan’s entire worth has been judged by AI software and is now valued at $0.20, which is not bad by bidding standards per single impression. The DSP sends this bid, letting it know the bid is for the left side banner on the blog (the biggest ad space on the page). Apparently, Mr Khan is just what Crazy Cow has been looking for.
8 Ad Exchange, meanwhile, has been collecting bids on Mr Khan from other brands and in a blink of an eye decided that Crazy Cow has the highest bid for the left-side banner. It informs the DSP that it has won the bid, collects the required creative in the right size and message and sends it to the publisher’s SSP AI.
9 The Publisher’s SSP AI happily forwards the creative to the publisher’s ad server.
10 Ad Server loads the ad on the left-side banner. Mr Khan sees the ad for the Crazy Cow Low-Fat Milk, which promises low blood pressure, a happy marital life, a free coupon for couple’s therapy and a bonus lottery ticket to win a Harley Davidson if Mr Khan clicks on the ad in the next 10 seconds. Delighted at how this is exactly what he has always wanted in his life, Mr Khan clicks on the link to the Crazy Cow website! Mr Khan is happy, Crazy Cow is happy, the therapist can now send her son to a private school and someone at Harley Davidson is surprised to receive a random order from a dairy company in Pakistan... in short, a happy ending, all thanks to programmatic!
Throughout this cycle, there is one quiet player. The Sneaky Weasels Data Collection Inc (SWDCI) – a data provider that works in real-time, constantly purchasing and collecting data on users worldwide. They then sell the data to DSPs, Ad Exchange servers and SSPs to help them make informed decisions. They collect data and bidding decisions from all three in order to profile users and their worth more accurately, making the data even more valuable.
Somewhere in all this, there is a class action suit waiting to happen; however, until it does let’s just raise a glass to programmatic.
Simple right? Go over the 10 steps a couple of times and you will not only understand exactly what programmatic is, you will also get an immediate urge to learn how to set your privacy settings right.
Syed Amir Haleem is CEO, Kueball and CSO,. email@example.com