The termÂ programmatic appears oftenÂ in discussions of digital marketing and advertising. It’s most commonly deployed in compound form as programmatic mediaÂ or programmatic buying,Â referringÂ to the collection of information about consumer preferences, publisher inventory and pricing, advertiser goals, and the use of software programs toÂ automate the dependent processes of data collection, purchasing, ad trafficking and performance management.
The big idea here is aboutÂ efficiency,Â bothÂ in the sense that the software can performÂ calculations and make decisions at a scale and speed that eclipsesÂ human media buyers, and in the senseÂ ofÂ efficient markets. As of the first half of 2015, the use of programmatic media, or programmatic buying, has become not just all the rage, but an expected component of the digital marketer’s toolbox.
Given all the focus on efficiency, it’s curious that few of the participants engaging in programmatic media ever speak about what happensÂ after the ad is clicked. While the value for the publisher comes fromÂ the placement of the ad, the value for the advertiserâ€”and hopefully, the consumerâ€”emerges from the post-ad-click activity, or what we might broadly callÂ conversion.
Conversion is the thing that the intent behind the advertisement ultimately wants to service.Â It’s a sign-up, an inquiry, a registration, a subscription, a purchase. It’s the actionÂ to which we are being called.Â Conversion isÂ the payoff for both the buyer andÂ the seller, and the thing upon which all the attention and intentionÂ being captured in programmatic media ultimately depends. It’s the real money.
So where is the automationâ€”where is the programmaticâ€”for that part?
Some would suggest that the automation in this arenaÂ comprises activities like A/B and multivariate testing, or targeting and personalization, or the use of tag management softwareÂ to confirm that conversion events are actually taking place. These are all eminently useful, even critical activities for digital marketers to pursue. And they make use of software-based data collection and implementation at a scope exceeding human capabilities. But are theyÂ programmatic?
They are point solutions, albeit extremelyÂ useful ones, attempting toÂ solve for individual elementsÂ of a broader cyclical process. Their equivalent, in the programmatic media space, would be solutions that served only publishers, or only advertisers or even just the function of trafficking ads. We have had those for some time, and while they helped to create all kinds of localÂ efficiency, the huge (efficient) markets for programmatic ad spending developed their size only when the automation comprised theÂ full ecosystem.
So let’s define whatÂ programmaticÂ should mean in the conversion landscape. Deep breath.
Programmatic Conversion is a system in which the automated collection of dataÂ across the domains of digital media, consumer preferences, devices and behavior isÂ used to build models and rules for actively customizingÂ theÂ resulting exchanges of informationÂ between a consumer and a brand in a data-driven, customized and orchestrated set ofÂ interactions intended to produce a commercial outcome. These interactions mayÂ occur on a device, in an application, in a voice call, in a store, or when the first month’s bill arrives. Howeverâ€”and this is the crucial bitâ€”true programmatic conversion only occurs when the connection between the process of data collection, modeling and rule-definition and its specific implementation across consumer interactions is continuous, cyclical, and self-referential. Simply put, the system feeds itself with its own results. This is what some have called aÂ closed loop.Â
The technology to do this exists across a diverse set of vendorsÂ in the business-to-consumer software-as-a-service space, and has for quite some time in the business-to-business software space. And yet for the most part,Â the technology existsÂ in fairlyÂ disjointed parts, even where a ‘marketing cloud’ or ‘suite’ is purported to exist. Building a Programmatic Conversion solution is above all else about true integration, the kind that can be messy, time-consuming and requires customization, which SaaS players have little economic incentive to undertake. Programmatic ConversionÂ requiresÂ integrating pieces of software and non-software operational processes inÂ a highly instrumented fashion, especially the grittier aspects of digital marketing operations. These are less glamorous things Â like call center switch data or the provisioning of internal reference and tracking numbersÂ in an enterprise marketing logistics system, or the accuracy of pricing and product dataÂ across a highly localizedÂ market footprint when rendered on a multitude of devices and formats. Programmatic ConversionÂ includes observing and acting on not only theÂ shiny objects like display and social and mobile, but the unglamorousÂ locations where leaky pipesâ€”a broken consumer experienceâ€”all too often emerge. It is certainly not for the faint-hearted.
At the risk of spawning a whole new category,Â let me clarify by saying that what it takes to make Programmatic ConversionÂ happen is not merely software, but a teamÂ of people adoptingÂ a thought process. It’s defined byÂ curiosity, operational diligence, and above all else, a willingness toÂ ask questionsÂ and let the data decide.Â I’ve had the pleasure of working with such a team over the last several years to build a business-to-consumerÂ Programmatic Conversion system. While we continue to iterate and improve upon what we built,Â it’s already delivering meaningful returns for large brands.
What connection exists between Programmatic Media and Programmatic Conversion?Â They are essentiallyÂ the same concept, applied across two relatedÂ domains. Audience insights drive efficient media campaigns, which produce efficientÂ conversion, which generates furtherÂ audience insights and media optimization, which drives further consumer behavioral insights and conversion optimization, in a continual, virtuous cycle.Â This is not just a concept, but a reality.Â At my employer Leapfrog, weÂ have deliveredÂ remarkable value to clients byÂ connecting our programmatic conversion platform with a partner’sÂ programmatic media platform. We’re going to keepÂ improving it, because we think it’s a Big Deal.
The answer to that has a lot to do with the tectonic shift towardsÂ Digital TV.Â DeclarationsÂ of impatience notwithstanding, the big money is already bettingÂ on the $84 billionÂ opportunity associated with introducing audience-levelâ€”maybe even household-levelâ€”targeting to what will soon cease to beÂ ‘traditional’ TV advertising. What has yet to be described is what happens when you attach not only programmaticÂ techniques forÂ media buying but programmatic techniques forÂ conversion to a market of that size. The answer is: a fundamental shift in the way marketing occurs. BrandsÂ haveÂ the ability to target consumers across devices at an unprecedented scaleâ€”and not just in terms of reach and frequency. They can actually convertâ€”close the deal, generate revenue, make moneyâ€”right there in the midst of your multi-deviceÂ Digital TV experience, whether linear, over-the-top, direct or otherwise. You see it on TV, you like it, you buy it. All in one clickstream. The sheer size of the data generated will fund an entirely new generation of marketing data science. The logic appears, as they say, inevitable.