The Future for Programmatic…The Future for Agencies

This post is loosely based on a speech given to the ‘Programmatic Buying in Scandinavia’ Conference on 26th November.

If there is one word that can be said to sum up our industry’s love of jargon it must be ‘Programmatic’. Put 20 media people in a room and you’ll emerge with at least 25 definitions.

Which is odd, as the concept really isn’t that complex. In my mind a ‘programmatic’ way of doing things combines putting all that relevant and appropriate data out there to good use, with the automation necessary to execute the great plan that results.

What programmatic is not (and I think we can lose the quotation marks now) is a silver bullet that will answer all of advertising’s great questions. To be fair the smartest digital evangelists don’t claim that for it but you might not know that if you read the trade press, not to mention the farther reaches of LinkedIn.

It is entertaining, as an example of the press’ obsession with turning everything into some kind of competition, to read of x% or y% of total advertising being ‘bought programmatically’ by 20andsomething.

Does this mean we will reach a point at which we will be placing media whilst using data to aid our decision making? Or buying media using automation at some stage in the process (to replace the old written ledgers perhaps)? Because if that is what we mean then I think we can assume that we’ve all been working programmatically since about 1970.

Of course the ready availability of vast amounts of data coupled with some breathtakingly clever systems has already changed the way that planners plan and buyers buy, and this will continue. Indeed it will all become faster, vaster and cleverer.

Many advertisers are data rich. Just think of the number of pieces of paper you need to fill in when you buy a car. All that data goes somewhere (one hopes). Consider the processes that have for many years reduced waste at McDonald’s by allowing their head offices to analyse throughput and sales. You thought that was a McTill? It’s really a computer terminal linked to some smart technology. Think of the possibilities open to financial services businesses. Or the retail sector. And so on.

Now consider the opportunities open to advertisers to link that data to media consumption and subsequently to media buys; to be able to write plans based on a wide range of data, and to react to market-pace dynamics smoothly, efficiently and responsively.

It is hardly surprising that so many large advertisers are going down a do-it-yourself route when it comes to data analytics. Why would any advertiser hand that responsibility to any media agency – especially given the lack of trust that currently exists?

Why put yourself in a position where the agency holds all of your valuable data to do with as they like? It must be far better to control your data yourself and not be in hock to any agency. That way you can change them whenever you like, too. Large advertisers will reap the benefits.

Less sophisticated advertisers will use the agencies’ data services but will benefit less, as befits anyone buying an off-the-shelf service as opposed to building a bespoke system. Agencies will claim (and with some justification) that exposure to different industries and different models will keep their approaches fresh and relevant to all.

Agencies certainly will continue to have a key role in the development of communication strategies and plans, not least to ensure that their clients maintain a balance between long-term, profitable brand-building activities and short-term activations.

Peter Field and Les Binet have come up with a rough rule of thumb when they state that 60% of any budget should go on brand building; 40% on the activation. Of course this will vary a lot from category to category and from circumstance to circumstance but it’s a good place to start.

We’ve said it before but it’s worth repeating: the future for agencies lies in planning, and (to a lesser degree) in the establishment of umbrella deals and value adds that use their scale to the benefit of their clients.

The days of the scale buyer striking deals in dark alleyways, keeping his deal book close to his chest, and dictating to his planners how their clients should spend their money are coming to an end.

Increasingly, executional buys will be automated, using programmatic techniques fuelled by advertiser data. These will be linked through smart DMP’s to premium publishers, RTB will exist but as a cost-reducer.

Agencies need to regain the trust of their advertisers. They’ll do it through their planners, by adding value and by having the confidence to charge properly for their services.

Those that don’t will be left scrabbling for the crumbs and wondering when it all went wrong.