THE PROGRAMMATIC GIANT some opportunities are too big to keep secret

Preface

A new operating system for advertising The evolution of communication on the basis of data and knowl- edge is as old as communication itself. Today however, self- Programmatic Advertising is the future of advertising – it is with- learning algorithms and real-time measurement are regulating out doubt not clear if it is evil or good, but the bottom line is that this development. Unbelievable efficiency and speed is intro- knowledge of Programmatic is mandatory. We therefore set out duced into our classic customary processes – the reason why it to write a paper, which shines some light on the agency market, is a nuisance to some. But at its core, it brings virtually inconceiv- sets a direction, and puts the topic on everyone’s agenda. A paper able opportunities for the evolution of communication. Program- that is easy to read, understandable, and uses as few acronyms matic Advertising introduces new players to the industry and and technical terms as possible. After all, the speculations sur- opens up new possibilities for established players. Genuine rounding Programmatic extend from the death of media agencies relevance, real impact, and brilliant storytelling with individual to algorithm-only based creative. The Armageddon of advertising meaning instead of one-size-fits-all in the amorphous ambient – the exitus of Mad Men. Time to give this subject some serious noise of advertising. thought. The rules of engagement are being realigned, but the game re- When we started researching for this white paper, we were very mains the same – to convince, to surprise and, yes, to woo. skeptical (admittedly) about whether this was not just a new Charming. Impressive. Relevant. Advertising is getting a new hype, of which nothing remains in the end – just as with count- operating system. less other digital niche topics. But we were seriously wrong be- cause Programmatic currently is like e-commerce was in 2000. Barely a serious option, far from being the new normal. "Too expen- sive," "technically much too demanding," "only interesting to a handful of pioneers." These excuses sound familiar? Precisely!

3 Contents

Management summary p. 05

Why you should be making Programmatic Advertising your business now p. 08 Programmatic Advertising is not just a hype. We are facing a fundamental transformation of advertising. To stay ahead you need to act today.

Programmatic Advertising – venturing into a new advertising age p. 10 Real time data, algorithms and interconnected touchpoints usher in a new era of advertising. Within the next few years Programmatic Advertising will establish itself over four development stages.

Why Programmatic Advertising will prevail p. 23 Complex markets, media and brands can only be managed with the aid of digital means. The infrastructure exists already.

What Programmatic Advertising means for agencies p. 31 There will be new markets and fields to grow in for creative, media and performance agencies. As agents of the transformation, they will pave the way for others in the advertising market of tomorrow.

Still hesitant? Four excuses, four responses p. 42 Programmatic Advertising is complex but will soon be up and running. Make sure that you and your business keep pace with it.

Conclusion p. 47 The new operating system of advertising is coming. Check your compatibility, develop new applications and prepare to upgrade.

4 Management Summary

Why you should make Programmatic Advertising Many agencies have already taken the plunge and are invest- your business ing in Programmatic Advertising. They are building up expertise and services. Soon others will need to catch up. Those who Programmatic Advertising is not some abstract topic of the future. simply close their eyes are at risk. Competitors, both new and The new operating system of advertising is already being in- old, are in the starting blocks to win business for themselves. stalled and ensures that advertising is gradually being gener- Opportunities are still virtually equally available and it is not ated and run with far more automation. This transformation pro- advisable to simply jump in headfirst. One thing is clear – Pro- cess is accelerating more and more rapidly, and its side effects grammatic Advertising will not come overnight. The new system are changing the structures, processes, business models, and will be continually improving its performance through four devel- power balances of the market. opment stages. We have already tackled the first stage. But we still have a way to go until we arrive at the final vision of a The transformation facing the entire industry can be anticipated self-learning advertising system, which puts together modular by the success achieved from Programmatic Buying. The auto- elements to create individual messages, and leads consumers mation of media planning and placement, more accurate ways through the marketing funnel in a straightforward manner. of measuring success, changed payment models, and increas- ing transparency are transforming a key part of the advertising In the end, we will not live in a dystopian future in which pro- world. Many other areas, such as strategy and creation, will fol- grams reign over communication and take on the work of adver- low. The rate at which the changes are taking place is breath- tisers. Equally we will not have an advertising paradise in which taking. According to a forecast by Magna Global, Programmatic mass media claims attain an accuracy of n = 1. Instead, Program- will handle a third of advertising space in Germany by 2017. 1 matic Advertising will be a new way of thinking, acting, and Programmatic Advertising is something nobody can ignore – operating. It provides a chance to perfectly align the unique capa- least of all agencies (who are playing a key role in the transforma- bilities of people and programs. tion process of the industry). As change agents, they are paving the way and creating new options.

5 Why Programmatic Advertising is becoming the Programmatic Advertising eco-system. The technical capabili- new operating system of advertising ties are in place, albeit not able yet to provide cross-channel selling, omnipresence, or comprehensive coverage. The expan- Marketing and advertising are starting to show their limitations sion of technological infrastructures for Programmatic Adver- in the highly complex and dynamic environment in which they tising will be shaping the agenda of decision-makers in the operate. It is becoming ever more impossible to control the years to come. But this is not nearly enough. The development faster moving global markets, our more differentiated society, of a clear-cut Programmatic Advertising strategy and the search and the complex media using the standard processes and for a business model that is sustainable in the future is much mechanisms – let alone analog. The installation of a new advertis- more important. ing operating system is a matter of urgency if we wish to con- tinue to operate successfully in the future. The good news is that Programmatic Advertising is already showing its effects What needs to be decided now today, because all prerequisites are already in place. Appropriate data on the social, consumption, and informational habits of According to a collaborative study by advertising technology people are being collected in quantities and qualities never platform AppNexus, the IAB association, and the Warc Insti- seen before. Powerful hardware and software, learning algo- tute, Programmatic Advertising has already been explored rithms, and scalable cloud infrastructure are helping with the by every second German advertiser. 2 This is the right move, analysis of data in real-time and converting this information because now is the time to set the strategic direction of the directly into instructions for implementation. At the end of the future. The transition within the industry offers enormous op- process, there will be a programmatic infrastructure able to gen- portunities for growth. These will include offers of new services erate individual messages. This is undergoing continual enhance- in connection with established aspects. Creativity will expe- ment. After computers, smartphones, and tablets, we will soon rience a Renaissance – programs cannot simply replace creative see OOH, television, and radio becoming integral parts of the performance.

6 What is needed now are designs related to the new challenges Now, you need to answer two important questions in prepara- and possibilities. These include new context-sensitive crea- tion for the new redistribution of tasks, services, and budgets. tions, and intelligent campaign mechanisms for network infra- Firstly, which Programmatic Advertising options are you willing structures – with new touchpoints such as wearables, virtual to offer your customers? And secondly, how can you benefit reality gadgets, and smart cars. The role of consultancy and from the changes and distinguish yourself from the future com- strategy support will also gain much more relevance (be it petition? media or brand strategy, CRM or planning). It is about skill- fully guiding customers through the transition and managing The aim of this white paper is to support your understanding of automated processes with clear-cut objectives and rules. and assess Programmatic Advertising. Therefore, this white Knowledge of brands, people, campaign mechanisms, per- paper reviews the topic in all its operative and technical niches formance models, and the entire bandwidth of digital technol- and highlights opportunities, challenges, and calls for action. ogies are of inestimable value.

New services and options, some of which, already visible today, are also being established in the advertising market. These in- clude data analytics, algorithm tuning, target group segment- ing in real-time, and consumer journey architecture. Next to algorithms, new colleagues such as data scientists, mathema- ticians, and computer scientists will appear in agencies. Pro- grammatic Advertising will also bring new payment models. Programmatic agencies will be able to directly pinpoint their contribution to a sale, and will take part more directly in the success of the customer.

7 //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 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//////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////Why you should be making //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////Programmatic Advertising your //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////business now //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////Programmatic Advertising is not just a hype. We are facing a fundamental //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////transformation of advertising. To stay ahead you need to act today. //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// This is not simply the next white paper The programmatic trend has long been and customers wanted personal advice on Programmatic Buying, with confusing a topic of discussion in the industry. Cer- instead of anonymous packages. The abbreviations and complex technical tain exorbitant customer expectations, playing field was left to agile players details. Instead, this paper shows that strong interest from specialist media, who shared the market amongst them- the automated purchasing of online and uncertainties within agencies go selves. Whilst Amazon, eBay and Alibaba media inventory is only the beginning of hand in hand. There is a huge discrep- are now earning billions, some former something huge – advertising is getting ancy between perception and truth. The giants have already vanished from the a new operating system. It is called Pro- truth is that the many benefits and oppor- market. Programmatic Advertising is a grammatic Advertising and ensures that tunities, which will be provided by Pro- revolutionary system in the advertising the advertising of the future is generated grammatic Advertising, are not yet actu- world – just like e-commerce was for the re- and run to a far higher degree with auto- ally operationally available. The digital tail sector. Those who do not act today are mation. Nobody will be able to escape the and automatic operating system will not at risk of becoming irrelevant tomorrow. consequences. Everyone will sense the simply complete its conquest overnight, changes – be it marketing departments, but will gradually reveal its power. This white paper is targeted at decision- publishers, or agencies. Programmatic makers of the agency world. The aim is Advertising is set to turn business models, Programmatic Advertising is a complex to help you assess the future relevance processes, and structures upside down. topic, not particularly sexy and not read- of strategic Programmatic Advertising. There will be changes to budgets and ily available free of charge. Those want- And so we take a look into the future of hierarchies. ing to benefit from opportunities must advertising to explain the need and po- invest in infrastructure, time, and man- tential of Programmatic Advertising, and Agencies will play a key role in trans- power. Many decision-makers are hesi- provide initial recommendations of ac- forming the industry. As agents of trans- tating. But today Programmatic Adver- tions for media, creative and performance formation, they set the course, pave the tising is now at the same stage at which agencies that are not vanguards of the way, and create new propositions and e-commerce was about 15 years ago. programmatic world just yet. markets. At the same time, they are en- People dreamt of the possibilities, but dangered. If they join the revolution, Pro- especially established corporations were grammatic Advertising will challenge running behind on implementation. The their right to exist as facilitator between barriers appeared to be too large. The company and consumer. logistics were too complicated and too expensive, broadband internet was a scarcity, online payment unimaginable,

9 //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 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//////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////Programmatic Advertising – //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////venturing into a new advertising age //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////Real time data, algorithms and interconnected touchpoints usher in a new //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////era of advertising. Within the next few years Programmatic Advertising will ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////establish itself over four development stages. //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// The new operating system of advertising create elements that later will be assem- humans and technology together per- is called Programmatic Advertising. It is bled to build personalized individual ad- fectly, once it is proven possible to ac- more databased, digital and automatic vertising. This advertising will be aligned cess the potential. Programs will take than the infrastructure with which ad- with the corresponding recipients and over where their abilities are superior vertising has previously been generated delivered within the right time and con- – such as in the processing of large and executed. This new system that has text. Feedback collected will than enable volumes of data and responses in real- been running for a few years already subsequent optimization in real-time. time. Advertisers will manage the auto- provides proof of an inconvenient truth Advertising is becoming a partially auto- matic systems by, i. e., defining clear- – computers can simply do many things matic and self-learning system. It is be- cut objectives and rules and developing better or more efficiently than humans. 3 coming more potent, more efficient, and unique campaign mechanisms and crea- For this reason they are also executing quicker because the perception of it being tive ideas. The best thing about this is cognitive tasks and processes. Algorithms a distraction is no longer there. Adver- that advertisers will save time – thanks are to a larger extent becoming familiar tising is no longer a nuisance but turn- to technology. Time for the things algo- friends in marketing departments and ing into relevant content. When content rithms cannot master and things that agencies. They provide assistance and is being recognized as having multi-value, make advertising unique. Soon, creativ- undertake, i. e., the collection and analysis current problems such as advertising ity and inventive vigor, emotional intelli- functions for consumer, market, and blockers resolve themselves virtually gence, strategic management of brands, campaign data, in targeting, and in media and autonomously. 4 But until this vision and marketeers’ consultation will once planning and placement. Development becomes reality, serious upheavals will again be at the heart of what agencies is driven by technologies, software solu- occur in the system and the industry will think and do – thanks to Programmatic tions, and tools from the fields of Big Data, have to adjust to new ways of thinking Advertising. Ideas and strategies are Predictive Analytics, High-Frequency and working. becoming USPs again. Trading, and Deep Learning. We are not heading towards the perfect, They form the backbone of Programmatic automatic advertising paradise or an evil Advertising. Once the new operating sys- advertising world in which machines as- tem is fully installed, the realm of possi- sume the sovereign right to analyze brands bilities will grow exponentially. In the and communication. Instead, Program- ideal world of Programmatic Advertising, matic Advertising provides the oppor- data will be processed automatically to tunity to bring the unique capabilities of

11 Into the future – the status quo Programmatic Advertising will reach new and evolution of Programmatic levels when the instruments are not just Advertising deployed in niches (such as for large- scale market launches, for important social events and award nominations), but extensively and routinely in every- day advertising. This means when about Programmatic Advertising will not come a third of the advertising budget is allo- overnight. The new operating system of cated accordingly, many brand name advertising will establish itself on four companies will run their campaigns ac- levels of development. The capabilities cordingly and agencies will offer the for automatically supported generation, necessary consultancy and implementa- management, and distribution of adver- tion services. But what can be said with tising are gradually being broadened. certainty is, that Programmatic Adverti- The four levels (Programmatic Online sing will grow exponentially, just like in Buying, Programmatic All-Media Buying, the past months and years. This applies Programmatic Creation, and Programmatic equally to its shares of the market and Orchestration) build on one another. But revenue, as well as to its significance they will not necessarily replace each within the industry. other, and will exist simultaneously de- pending on communication objective, budget, target group, and context. It is not possible to make a sweeping statement on when the individual levels will become the modus operandi of advertising.

The forecast presented here is based upon market forecasts, 5 industry insights, and a strategic summary of current micro- trends in advertising.

12 PROGRAMMATIC 2021 ORCHESTRATION LEVEL 4

PROGRAMMATIC 2019 CREATION LEVEL 3

PROGRAMMATIC 2017 ALL-MEDIA BUYING LEVEL 2

PROGRAMMATIC 2013 ONLINE BUYING LEVEL 1

13 Programmatic Advertising and the relevant display ads, rich media, The costs of clicks and views dropped by Level 1: Programmatic and video formats are displayed in the almost 70 %. 6 Programmatic Online Buy- Online Buying browser of the target groups addressed. ing has become a multi-billion dollar In addition to precise targeting, Program- business within a short period of time. matic Online Buying also enables indi- Annual global turnovers are already at vidual and dynamic pricing. Real Time US $ 21 bn – a formidable 15 % of the Bidding is a sub-area in which online in- digital advertising budget. 7 And the mar- Programmatic Online Buying is the auto- ventory is auctioned automatically and ket is still growing, predominantly in mated booking of online advertising in- in real-time. Meaning, if two brands want the US. The trend is also well advanced ventory. This is made possible by the to advertise for similar people, the inter- in the UK, France, and the Netherlands. data we store when using our computers, ested party with the highest bid wins. In these countries, about 60 % of online smartphones, and tablets on the Inter- advertising is booked through programs. net. To simply put it, Programmatic On- Programmatic Online Buying is not a In comparison, Germany is lagging be- line Buying works as follows: website vision of the future but already reality. hind. Magna Global is predicting that operators and online publishers know The system and the infrastructure have 33 % of advertising will be run through their users very well, thanks to tracking been established for years. Millions of programs by 2017. 8 methods cookies for example or, browser advertising messages are booked and information, by saving search histories, run programmatically every minute world- and login information. From this data wide. The glorious procession is no acci- they generate anonymous profiles and dent and is instead attributable to the offer their ad spots on Programmatic On- unparalleled efficiency of Programmatic line Buying platforms. Online Buying. As a study by Boston Con- sulting Group shows, the desired inter- This way advertisers are able to place action with campaigns has risen by an targeted ads and purchase target groups. average of 32 %. To do this they define whom they want to reach and where. Once all necessary information is in the system, the algo- rithms take over and ensure that offers and demands are linked to one another,

14 How does Real Time Bidding work?

1 Publishers and 2 The publisher 3 Through a virtual 4 The advertisers 5 The highest offer 6 All of this website operators offers these user pro- auction house (the ad on the other hand are is accepted and the happens a million analyze their visitors files and the available exchange), the sell- using a demand-side winner’s ad is trans- times in fractions of using tracking meth- ad spots through a sell- side platform offers ad- platform (DSP) to de- ferred by its ad server seconds whilst the ods (such as cookies) side platform (SSP). vertisers the oppor- termine the ad impres- to the visitor's website. user is loading the and utilize them to This way, he can spe- tunity to acquire the sions of interest. Here website – without generate user profiles. cify minimum prices visitors. they can define the re- noticing a thing. for an ad version. quired target groups Algorithms do the and surroundings, and work. whether or not and how much they want to pay for visitors.

15 Programmatic Advertising as smartwatches, and new developments Instead of static billboards for weeks, Level 2: Programmatic in the fields of virtual reality and net- they are able (fitted with face recogni- All-Media Buying worked cars. A programmatic media eco- tion and other sensors for example) to system guaranteeing automatic place- display appropriate advertising depend- ment of advertising at the right time at ing on age 9, or gender 10 of target groups, the right touchpoint is emerging step depending on the context 11, weather 12, by step. up-to-date news 13, time of day, or flows At the second development level, Pro- of passersby. This leads to highly rele- grammatic Buying extends its influence It will make no difference whether the vant communication, for example, in the beyond the browser and becomes the desired recipient is surfing the internet, form of a digital billboard created by standard for media buying for almost all on a run through town, watching televi- Porsche, which is only displayed to touchpoints. The prerequisite here is sion on the sofa, or using a tablet. Pro- Porsche drivers with the help of intelli- that the mass media and other channels grammatic All-Media Buying ensures gent cameras. 14 are digitalized, classified, and connected that advertising arrives in a targeted and to programmatic platforms (such as ad efficient manner, thereby raising the exchange). Then their users can be identi- flexibility and efficiency in the planning fied and addressed everywhere. The trans- and placement of campaigns to a new formation process has already started. level. Once the system is fully available Radio is increasingly becoming web radio, and established, cross media net reach television is moving towards IPTV, and can be developed and planned, and outdoor advertising is getting digital en- targeting and frequency capping can be hancements. deployed across media. Another door is opening – context is becoming a highly Even print media is experimenting with interesting influencing factor. This is be- the programmatic sale of its advertis- cause, with the networking infrastructure ing inventory. New touchpoints being and automatic systems, advertising can added to the media mix now and in the react to the environment everywhere future will be connected to the program- and in real-time. Digital OOH billboards matic world as products of the digital are already showing where we could be era. Included here are wearables such heading.

16 Programmatic All-Media Buying

Laptop / Smartphone Tablet OOH Television Digital Print Smart Car Smart- Virtual PC Radio Media watch Reality

17 Programmatic Advertising different target group segments with story in a different context depending on Level 3: Programmatic Programmatic Buying. Programmatic the TV format (e. g. thriller or comedy). Creation Creation means advertising will become truly modular. Messages, content and Programmatic Creation's promising tonality are created in freely defined start can be experienced today by using combinations and then merged in line a Rich Media browser. It provides the with the recipients’ touchpoints by in- ability to interact with users as well as But not only media planning and place- telligent software systems. to merge text, audio, and video elements. 15 ment is becoming programmatic. Strat- In international campaigns for example, egy and creation will also benefit from This requires smart mechanisms and text is generated in different languages the assistance of automatic systems in creative excellence, as a simple example to then be inserted automatically into the future. Efficient tools are being used shows: A set of four motifs and four head- the relevant language, and in real-time for planning, such as algorithms that lines provide 16 combination options into dynamic displays (always with the run data-driven target groups segment- for a display. Two people may see the same motif). It is mainly the big players ing or collecting automated consumer same motif at the same time, but with in the field of e-commerce and interna- insights. At the same time, a new form different messages. The decision about tional big brands who are using dynamic of individualized advertising is evolving who gets to see what and when is made creatives extensively in the field of Rich that spurs creation. This is made pos- by algorithms on the basis of defined Media, thereby forming the spearhead sible by identifying users at almost all objectives and rules based on data avail- of Programmatic Creation. touchpoints, and through sufficient and able about target recipients. Target groups relevant data being available, as well as don’t turn into target people (n = 1) – but programs and algorithms reaching the the targeting conflict between 1-to-1 and next evolutionary level. mass communication is resolved thanks to Programmatic Advertising. The creation Advertising nowadays is becoming of a modular toolbox for display ads, more and more individual. But Program- digital billboards and smartwatches can matic Creation extends far further than be easily imagined. Programmatic Crea- previous targeting measures, A / B test- tion for moving images is more compli- ing of campaigns, and a toolbox of cated but not impossible. A TV spot could campaign motives – which is run for have different endings or tell the same

18 Programmatic Creation

TouchPoint SET-UP PROCESSING MODULAR CREATION PLAY-OFF

KNOWLEDGE OF ALGORITHM CONTEXT HEADLINES VISUAL TEXTS ¶ WORLDS H1 B2 USER T2 ¶ INFORMATION H 1 B 1 T 1 ¶ SITUATION

H 2 B 2 T 2 ¶

STRATEGY H3 H 3 B 3 T 3 ¶ B3 T3 ¶ GUIDING CREATIVE IDEA

AIMS H n B n T n ¶ COMMUNICATION

In the foreseeable future, efforts and But using Programmatic Creation will of high-margin products (such as cars, costs for concept, creation, production, make it worth it – especially for brands travel and furniture), and for communi- and rollout of these types of campaigns addressing a broad and more heteroge- cation with the brands most loyal users will be way higher. neous target audience, for the advertising and brand ambassadors.

19 Programmatic Advertising No longer does external content rely To reach the final level of Programmatic Level 4: Programmatic merely on data such as place and time Advertising a few more obstacles need Orchestration of day for automatic content generation. to be tackled. For example, the contin- If the relevant data is available, the uing expansion of the technical infra- funnel stage (point of interaction in the structure – such as cross channel net- sales process) will be taken into con- working of touchpoints and establish- sideration, determining which advertis- ing of data standards. The identification Programmatic Orchestration is the ing message is seen by him or her. A of users outside the reach of devices is final development level of Programmatic simple example: If a user is watching of crucial importance. Facebook is taking Advertising. It turns full circle and trans- an ad to the end and rates it positively, its first successful steps with its Atlas forms advertising into a self-learning it will have an effect on the advertising advertising network in the US. These and iterative system. Once the users’ message at other touchpoints. These activities cannot be transferred to Europe response to advertising can be captured can then be i. e. aligned towards more that easily. Because legal and social at almost all touchpoints, advertisers interaction, making specific offers, concerns need first to be adequately and algorithms get to know their users offering more in-depth story elements, addressed. It is conceivable that it may and target groups better and better over or emphasizing other product benefits. take a few years until the final level of the course of the customer journey. It is This intensifies the relationship with the maturity of the new advertising opera- possible to channel targeted actions in user and elevates it to the next level in ting system is reached, and Program- real-time. Messages and offers can be the sales- or communications funnel. matic Orchestration finds its way into adapted to address individuals, and the If another user navigates away from the the everyday life of operative advertising. strengths of the individual touchpoints same ad after just a few seconds, an can be put to use. By incorporating and alternative storyline, tonality or message processing feedback, Programmatic is presented with the next interaction. Orchestration can achieve transmedia The self-learning system can also deter- storytelling, i. e. the managed, cross- mine at which point a user is no longer platform storytelling of branded stories addressed (because it is no longer worth aimed at target recipients. it, for example). Programmatic Orches- tration also means detecting resistance and accepting it.

20 Programmatic ORCHESTRATION

MODULAR LEARNING TouchPoint SET-UP PROCESSING DISPLAY REACTION CREATION AND ACTING

KNOWLEDGE ALGORITHM OF CONTEXT VIDEO ♫ AUDIO STORY CONTINUING INTERACTION  USER + INFORMATION V2 ♫ A3 S3 NEW SITUATION V1 ♫ A1 S1 MESSAGE  FUNNEL LEVEL +/– NEW V2 ♫ A2 S2 TOUCH POINT  STRATEGY

NEW V3 ♫ A3 S3 STORY  GUIDING CREATIVE IDEA – TV TV NEW AIMS V n ♫ A n S n CREATION  COMMUNICATION

ITERATION

21 THE EVOLUTION OF PROGRAMMATIC ADVERTISING

Stage of development Definition What it can do How advertisers benefit

aS OF 2013 Automated purchase of media inventory ttadvertising messages displayed in ttincreased efficiency through and automated insertion of advertising browser in precisely targeted way; decreased wastage Programmatic on the Internet. aim for data-based target-group elements ttgreater flexibility in media planning Online Buying ttshort-term and flexible media buying ttindividual negotiation of prices for in quasi real time online media inventories ttspontaneous testing of various ttperformance optimisation through campaign motifs A/B tests validated learning

aS OF 2017 Automated purchase of media inventory ttprogrammatic media buying in almost tttarget groups can be reached at and automated insertion of advertising all mass media; can address new almost all touchpoints Programmatic at almost all touchpoints. programmatic touchpoints such as ttmore efficient deployment of All-Media Buying wearables, connected cars, and TV media budgets ttcontext-based advertising over ttincreased relevance of advertising and beyond browser through reference to the latest events, situations, time, and place

aS OF 2019 Strategy and creation are programmatic. ttautomatically generated insights ttmore effective advertising through Advertising can be generated modularly, and target-group segmentations more individual approach Programmatic in the form of text, picture, film, and ttconception, design, and display ttany number of target groups can be Creation audio elements, and then assembled of modular advertising addressed at the same time automatically at the touchpoints. ttmore individual messages, offers, ttplanning in real time and tonalities

aS OF 2021 Advertising is a learning system and ttlearning from the recipient’s reaction tttarget individuals are addressed dynam- an iterative process. Users’ reactions ttpersonalised advertising at almost ically and in the best possible way Programmatic can be recorded at almost all touch- all touchpoints ttconsumers are steered purposefully Orchestration points. Story-telling, campaign mechan- tttrans-media story-telling – automated through the sales funnel ics, messages, and creative elements and self-learning ttorchestration of all advertising can be adjusted automatically in the ttaddressing concrete funnel levels campaigns course of the customer journey. with the right messages ttoptimum budget deployment

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The infrastructure exists already. //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// WHY IT IS NEEDED WHAT IS POSSIBLE

tt suitable data is tt target-group models available no longer reflect social reality tt the technical pre- requisites and efficient tools are ready and tt acceleration of global markets putting pres- waiting sure on advertising tt all touchpoints can be reached tt the media landscape Programmatic is exploding Advertising programmatically

You may think that Programmatic Adver- On one hand there are market needs, On the other hand, the structural pre- tising sounds like something that will which cannot be dismissed. The diversity requisites are already in place. It is pos- be with us tomorrow rather than now. of challenges facing advertising, calls sible to use Programmatic Advertising But, when observing global develop- for new solutions. in day-to-day business. ments and trends, tomorrow is clearly not so far away.

24 Advertising needs a new decisions are being made depending and so called look-alikes using 2nd and operating system – the necessity on the situation. Marketeers and adver- 3rd party data are used in e-commerce for Programmatic Advertising tisers are attempting to confront these for identification. Comprehensive sur- is increasing issues. This is because old, tried-and- veying can be conducted virtually at any tested tools such as classic target group time in the digital and networked world. models, market-media studies, and seg- Information and consumer behavior, for menting of third party suppliers have example, can be closely monitored, mea- reached their limit. They no longer accu- sured, and polled randomly. An automat- The environment in which advertisers rately represent the diversity of attitudes, ically generated data-base forms the basis operate is multi-layered and becomes requirements, needs, and the dynamics for up to date and accurate target group more and more confusing by the minute. of change − even if the methods are segmenting – which can be formed in Markets are becoming more global and undergoing fine-tuning. Likewise some real-time with distance analyses. dynamic than ever before. Society and customer typologies established by com- the media landscape are continually panies are often no longer sustainable. The acceleration of global markets puts diverging. The requirements being im- The overhead required to keep them up pressure on marketing and advertising posed on advertisers are becoming to date is on the up and its ability to be stricter. valid is falling. The product ranges to be advertised are growing all the time. More than Classic target group models no longer Basically there are two facts: Data col- 800,000 brands are registered with the reflect the reality of society today lected in the past becomes relatively Patent and Trademark office in Germany quickly obsolete, and the structuring of alone. 17 Every year new ones are added. People’s lifestyles are becoming increas- society into static clusters generates an A glance at the product portfolio of larger ingly fragmented and are developing apparent reality that does not actually brands shows that there has never been dynamically. Milieus as well as social exist. For marketing, advertising, and so much choice. adidas for example is categories and conventions are vanish- market research, understanding con- listing more than 2,100 different shoes ing. This also has an effect on consumer sumers at all times is becoming the key in its webshop. 18 A supermarket in Ger- habits. Brand loyalty is falling, 16 appar- to survival. The automated collection, many now has an average of 25,000 items ent paradoxes (such as the combination combination, and analysis of data is the in its product range. 19 The dynamics of of designer furniture and IKEA) are nor- right track for the future. Already today, markets are also reflected in the short pro- mal, and more and more purchasing methods similar to dynamic segmenting duct development and product life cycles.

25 The fashion industry, for example, no individual and available any time. The It accompanies these developments, longer produces collections according to web has long been addressing a target drives them forward (partly by itself), and seasons. 20 The Gerry Weber label is now audience made up of all age groups, not finds solutions. Excellent media strate- offering 21 collections over the year; 21 even just the younger generation. But in partic- gies, which combine touchpoints intel- H & M has 24 22. A new dimension of com- ular for the generation that has grown ligently in the media mix, and targeting plexity is currently being added with the up with the new media, it is normal to techniques, help to achieve excellent capability of dynamic pricing. 23 This tool decide what they consume and when. results. Programmatic Buying is showing is nothing new to e-commerce compa- the way for the continued, growing re- nies, but now even the stationary retail To them, the linearity of television as a quirements of the future. When it gets sector is experimenting with it. Classic medium feels like something from an- difficult (even for experts) to understand infrastructure and campaign planning other era. Only about half of the younger who can be contacted where and when, of advertising is reaching its limitations generation watches television every day, or to act competently at all times, soft- in this environment. A new operating as opposed to 81 % who are on the inter- ware systems and learning algorithms system capable of processing large, net every day 24 – switching expertly back help to provide assistance and make the dynamic data volumes in real-time and and forth between Facebook, YouTube, media landscape manageable again. translating them into actions is necessary. WhatsApp, Instagram, Snapchat, Tumblr and et al.25 Something new arrives continu- The media landscape is exploding ously – grabbing plenty of attention only to be replaced by the next wave of hype. Advertisers are confronted more than ever before with a highly complex media Mobile Internet means we use our tab- world. Channels and touchpoints are lets and smartphones more, even when replicating at rapid speed. Today there watching TV. Around 43 % of those in TV are more television and radio channels, households have a second screen. This and more newspaper and magazine means it will become even more difficult titles with more content, than ever before. to guarantee reachability. A highly dy- A new content giant has also arisen in namic and complex media landscape is form of the Internet. This attracts the nothing new to advertisers. attention of the masses, and fragments it at the same time with offers which are

26 The prerequisites for Appropriate data is available Companies and brands have been col- Programmatic Advertising are lecting mountains of data for decades. already in place Never before has data been available in Be it customer details collected with such quantity and quality. 90 % of data analog methods, sales figures, studies, available worldwide has been generated or digital CRM systems, many are sitting in the last two years. 26 Digitalization and on a treasure trove, which is utilized by the triumph of the mobile Internet are Programmatic Advertising. To improve Three conditions must be satisfied for giving rise to an explosion in the num- their own data, companies are able to Programmatic Advertising to develop its ber of internet-capable devices and net- employ the services of 3rd party data full potential. The new operating system worked sensors. The hardware and soft- suppliers. They have set themselves the for advertising requires appropriate data ware all around us is already collecting task of collecting, and then selling, data on social, consumer, and information data on a continual basis – mostly in from various sources. The new, major habits of people, which need to be col- the background. And every one of us is players are already one step ahead in lated on as individual a basis as possible. helping – knowingly or not. Social media 27, the game with data. This data must be analyzed in a mean- online search queries, e-commerce, ingful way and be translated as quickly and quantified self-data are ensuring Facebook, Google, UIM, Netflix, Apple, as possible into instructions for action. that information about our habits and eBay and Amazon (and many others) Powerful tools are required for this, in preferences can be collected and pro- not only have access to much more data, other words, hardware and software so- cessed. The algorithms and systems get they also have better analysis systems lutions but most of all specialized and to know us better with every interaction. to generate insights from the data. They learning algorithms. To convey adverti- know how they can identify and contact sing messages in an individualized man- Analog information is also becoming a their users across devices using logins. ner to customers at all times, as many greater part of the system. This applies for This capability is highly relevant in the touchpoints as possible must be con- example to purchases that are undertaken world of Programmatic Advertising. In nected to the digital system, and be through stationary transactions but which the ideal world of marketing and adver- accessible digitally. are recorded digitally by means of a cus- tising, all details would refer to individ- tomer card or as part of a bonus scheme. uals and be linkable to each other. But The quality of data is also improving as given the legal framework conditions quantity increases. It can be captured in and the fact that data is collected from real-time and linked using software. different players, this is not the case.

27 The German Federal Data Protection Act What is new is that programs are becom- the advertising industry is set to see a is an important factor in our free society. ing more autonomous and increasingly similar transition. The success of Pro- But data protection is by no means an capable of learning. Start-Ups that devel- grammatic Advertising is not a question obstacle to Programmatic Advertising. op deep-learning solutions are the new of technology but a question of time. For one thing personal details are not stars of Silicon Valley. Many solutions are available today. The necessarily needed to learn something infrastructure for Programmatic Online new and develop new product offers. Companies such as Narrative Science 32, Buying has been set up and accepted Secondly, customers are willing under Aexea 33 and Polarr 34 are working on algo- quickly, and is currently available. Today certain circumstances to disclose their rithms that write autonomous texts and online advertising would be unimagi- needs and preferences, specifically when learn the aesthetic likes of users. Cur- nable without mechanisms and tools this is associated with added value. 28 rently the creative performance of auto- for the automatic buying and selling of Payback 29 and Facebook Connect 30 are matic programs is still limited, but the media inventories (such as sell-side and examples of relevant options. massive investments in these companies demand-side platforms) and for trading and their visions mean that we can hypo- (real-time bidding and ad exchange), The technical prerequisites and power- thesize on what will be possible in the and they can essentially be transferred ful systems are already in place future. Algorithms are becoming the new to other media and channels. Those not advertising superstars. Today they aid connected to the new system today are In addition to increasing transfer rates and conquer media planning and market already running the risk of being ex- and storage capacities, the computing research – soon it will be planning and cluded tomorrow. performance of hardware is growing creation. We just need to take a look at exponentially – and with continuously stock markets to see where this trend is falling prices. This is making the analy- heading. There, algorithms are already sis of big, heterogeneous, and dynamic assuming trading functions and are auto- data volumes possible, in real-time – an nomously managing 70 % of American essential requirement for Programmatic stock trading. 35 Advertising. Software is also becoming increasingly powerful, and algorithms It is quite apparent what this means for are being fine-tuned and becoming more the creative industry. Just like financial complex. The Google algorithm, for exam- experts are being greatly assisted by ple, is optimized 500 to 600 times a year. 31 computer scientists at stock exchanges,

28 Even the underlying technologies and Their televisions are connected to the in four years 17 % of the TV advertising tools for Programmatic Creation and Pro- Internet – be it in the form of Smart TVs, budgets (US $ 10 bn or so) will flow into grammatic Orchestration are already via set-top boxes, through streaming digital campaigns. 41 Mass media other available. They do however need to be boxes/sticks such as Amazon Fire TV, than television (such as print, radio and improved, scaled, and networked in Google Chromecast and Apple TV, or out-of-home) are opening up for Program- years to come. game consoles such as Sony PlayStation matic Advertising. and Microsoft Xbox – or they consume All touchpoints are digitally accessible classical television content via a com- Since the beginning of the year, the puter, tablet, or smartphone. But the largest US publisher (Time Inc., which To place advertising messages in a tar- German market is only moving at a slow reaches millions with titles such as geting, variable, and punctual manner, pace. Whilst the RTL Group has partici- People, Sports Illustrated, and InStyle) Programmatic Advertising requires a pated in Programmatic TV Start-ups has also been selling its printed ads digital and networked infrastructure, SpotXChange and Clypd 38, and ProSieben- digitally. 42 First Out of Home advertis- which connects all touchpoints to pro- Sat.1 39 has conducted initial digital ex- ers, such as Ströer 43 and Goldbach Ger- grammatic buying and selling platforms. periments, it is not possible to speak of many 44 are starting to roll out advertis- This is already the case on computers, a general transition yet. The majority of ing via ad server. The ball is also rolling tablets and smartphones. Classic mass broadcasters, distributors, and media for online radio. Major players such as media is gradually moving towards the agencies are not yet willing to invest in Pandora 45 and iHeartMedia 46 are already programmatic future. Television plays the transition because the old system offering programmatic advertising. Join- a special role here. With over 40 % 36 continues to be highly profitable. But ing the spearheads are specialists such of the media split, it continues to be the pressure of marketeers and agencies as Jelli 47 and Xaxis Radio 48, who develop a highly relevant sales driver for the ad- will increase. The transformation process programmatic solutions for classic radio vertising sector. is already in full swing in the US. stations. In addition to the many stand- alone solutions, there are also initia- Programmatic Advertising will dominate The success is already speaking for it- tives that show that the comprehensive, commercial breaks as soon as the major- self and will, soon here too, convince digital media eco-system is no longer ity of televisions are fitted with return the sceptics. From 2014 to 2015, the far away. Back in 2013 IPG Mediabrands channel enabled network connections. figure for TV advertising booked digitally in the US formed the Magna Consortium, Theoretically, already a third of German in the US will increase from 1 to 5 % 40. an unprecedented merger for Program- households can be reached digitally. 37 According to a forecast by Magna Global, matic All-Media Buying.

29 Those participating include the AOL on- line group, outdoor and radio promoter Clear Channel Media & Entertainment, print group Tribune, and TV companies such as A & E Networks and ESPN. This way the relevant and classic channels should be programmatically offered and played digitally from a single source. 49

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//////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////What Programmatic Advertising //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////means for agencies //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////There will be new markets and fields to grow in for creative, media and //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////performance agencies. As agents of the transformation, they will pave the ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////way for others in the advertising market of tomorrow. //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// Programmatic Advertising is turning ad- A harsher wind is blowing – The world's largest media agency hold- vertising into a much more data- and Programmatic Advertising is ing, GroupM, for example, combines all technology-driven industry. 50 Those who changing the market its Programmatic Advertising expertise understand how to merge their industry in the newly created "GroupM Connect" expertise and current capabilities per- Programmatic Advertising is bringing a unit. 52 When systematically thinking fectly with their technical possibilities new philosophy, new processes and this development through to the end, it benefit from this transition. Big budgets changed requirements to the advertis- becomes clear that a new form of full- are already moving in the direction of ing market. This opens up the competi- service agencies could emerge offering Programmatic and many customers are tion for budgets and clients − at large Programmatic Advertising from a single evaluating the opportunities. Their re- scale. There are currently four trends source. Large networks clearly have the quests for consultation and specific imple- that are moving the market. Firstly, Pro- advantage given their broad portfolios. mentation services are initially directed grammatic Advertising is stimulating Other players will need to acquire what towards their standard agencies. They the emergence of special agencies that they need. Thirdly, changed rules of en- must, at least understand Programmatic conquer the market with fresh ideas. gagement and requirements bring new Advertising and offer an informed stand- These companies are tailored to the players into the game. IT and software point. This would be a good starting point needs of the new era. They occupy gaps companies are becoming aware of the for all those, not currently part of the in the market, which established players opportunity to use their expertise in data programmatic spearhead. However, this do not (yet) cover, and create product and algorithms to also make money is not enough to survive. To be prepared offerings in disciplines such as analytics, in advertising. 53 in the medium term for the reallocation creative optimization, and verification. 51 of functions and budgets, all agencies Secondly, established agencies are broad- SAP, IBM, and Oracle are already official must face the facts and develop a rele- ening their portfolio along the value- partners of the marketing program for vant programmatic offering. added chain. Facebook. Through its acquisition of photo agency Fotolia, 54 Adobe is posi- To offer Programmatic Advertising ser- tioning itself in Programmatic Creation, vices from a single source, they combine and is developing the Creative Cloud in the expertise of strategy, media, creation, the direction of automated creative so- consultancy, and technology. The bor- lutions. Technical developments in the ders between agency disciplines are dis- industry are also involving management solving, and clear-cut "old school" re- consultants such as Deloitte Digital and sponsibilities are becoming blurred. Accenture Digital.

32 They want to convert the experience deploy digital platforms that automat- Just imagine what data collection and gained in the integration of IT systems ically provide the services previously analysis can possibly render in real time. in large organizations into the consul- offered by agencies. Some of the former The knowledge about information along tancy business to get a piece of the pie big budgets could be allocated inter- the funnel, the possibility to directly in- and make money with Programmatic Ad- nally in the long run. tegrate feedback, better targeting, and vertising. 55 Fourthly, the insourcing of modular creation – all this opens up a functions and processes in Programmatic New, agile special agencies, expansion giant market from which all disciplines can be observed as a clear-cut trend. of established agencies along the Pro- can benefit. Mass branding and aware- grammatic value-added chain, and the ness campaigns can also become more In the US, companies such as Procter & entry of new competitors and insourcing efficient thanks to Programmatic Adver- Gamble 56, Kellogg’s 57, and Netflix 58 are trends – the industry is experiencing an tising. 61 More than ever before, brilliant, already going their separate ways. 59 In exciting transformation phase. Who will creative media experts and consultants Germany, it is mainly leading e-com- declare victory in this transition is not are needed to guide their customers with merce companies such as Zalando and yet decided, but many are already taking assurance into the future of advertising. Otto that have got a hold of the technol- a stake in it. ogy (e. g. a separate demand-side plat- Agencies will broaden their portfolios form) and established Programmatic Participate in shaping the future − towards data refinement, customer jour- Units. The wish to own a usable in-house Programmatic Advertising wants to be ney consultation, cross-channel archi- CRM system for effective re-targeting conquered tectures, Smarketing (the merging of and cost efficiency is driving this devel- Sales and Marketing), and Programmatic opment. One thing becomes clear when The new advertising operating system Creation. For many of the new offerings, examining it closer – insourcing is not offers agencies a fantastic opportunity it is necessary to define KPIs, which mea- interesting for all customers. to develop new offers and services from sure and represent the value proposi- old USPs. The possibilities are diverse. tion. 62 In the generation of leads for ex- Establishing an in-house Programmatic From a more accurate, up-to-date data- ample, the quality of a contact attains infrastructure is anything but trivial 60 base, consumers along the entire cus- more weight 63, and the increased level and calls for high investment costs and tomer journey can be understood better of measurability of funnel stages means necessary expertise within the company. and relevant actions can be derived. that the expected sales effects can be In the future, the vast majority of adver- This applies to every interaction, for both defined for every communicative mea- tisers will therefore deploy agencies, or situational offers and the long term sure. Agencies are therefore able to be management of brand relations.

33 more directly involved in the success, with Programmatic Advertising already such as the sale of a product. To rise to on their agendas, but perhaps not with the challenges of Programmatic Advertis- a high enough prioritization. If, in your ing, new professions are required at everyday operations, you are already agencies of the future alongside the stan- familiar with terms such as DSP, RTB and dard roles, such as customer advisors, ad exchange, and your business models art directors, and media strategists. are already aligned systematically to- wards Programmatic Advertising, then Mathematicians, computer scientists, you can see our recommendations as and natural scientists in particular bring a checklist and inspirational tool. on board urgently required qualifica- tions – such as data analysis, process modelling, and programming skills. The war of talent has begun and is simulta- neously leading to a major challenge regarding corporate culture. Even estab- lished occupations need to adjust be- cause strategic knowledge will become more important in conjunction with au- tomated systems. Beforehand a precise definition is required of which formats, message, visuals, and videos will be dis- played within which frequency. Further- more, they need to learn to engage with a whole new target group: the algorithms. 64

The following section contains specific recommendations for creative, media, and performance agencies. They are aim- ed mainly at agency decision-makers

34 Implications for This is beneficial because plan- reiterations. Programmatic Advertising full-service and creative ning must be moved closer to the is ushering in a new era – for creation agencies customers. too. New fields and forms of interaction in the advertising eco-system need to The seamless link with the customer be mastered creatively. New advertis- database is, amongst other things, ing forms, formats and mechanisms providing the basis for accurate in- are required for customizable TV ads, The current service portfolio of full- sights into consumer behavior. In the personalized in-game advertising, and service and creative agencies mirrors Programmatic Advertising world, these advertising for wearables, virtual reality the linear communication process. no longer have to represent the lowest gadgets and smart cars. New possibili- This learned sequence of activities will common denominator of a target group. ties are also emerging because the sto- change, and will have a significant, For a campaign for example, appropri- rytelling is becoming more intelligent. predominant effect on planning and ate and inspiring insights relevant to Programmatic Advertising provides creation. Planning is becoming more a particular target group can be used, creative minds with the ability to link important in its role and function. It and then be translated into a high- consumers to the storyline, interactive- will be transformed from a formerly impact approach. This mainly requires ly, and across media. Campaigns run preliminary pre-stage to a relevant comprehensive data analysis skills in in a modular manner resulting in the cross-sectional function in the adver- addition to strategic expertise. implementation of many creative ideas, tising process. This is because it takes not just individual ones. comprehensive strategic and tactical Even after the creative phase is initi- expertise to successfully manage and ated, planning continues to be the How full-service and creative agen- develop digital campaigns. All planning leading function in managing the it- cies can benefit from Programmatic activities such as research and den- erative advertising process. Once the Advertising: sification are automated. Due to this, campaign is on air, success monitoring the standard tasks usually involved provides everlasting real-time readjust- Make data-driven planning your around planning and customer services ment options. This means that upfront core competence. In the world of are often no longer necessary, creat- planning is becoming less necessary. Programmatic Advertising, higher qual- ing more time for customers and the The new data scenario is readjusting ity data than ever before is available delivery of comprehensive consultancy the focus of planning by becoming when planning. It is almost impossible services. much more tactical and in need of to keep track of the sources – including

35 first party data from customers; data Become a storyteller. Programmatic by means of adapting existing service acquired yourself, and third party data. Advertising is revolutionizing cross- provider APIs to your requirements. Excellent planning is required to differ- media storytelling. To generate touch- entiate between data sources that are ing (brand) stories, whose narrative Collaborate. Expertise in Programmatic unimportant and those critical to suc- remain consistent over a longer time Advertising and the technology need cess. Tools and algorithms are used as period and different touchpoints, spe- not be built up in every agency unit. a matter of course to analyze and link cial skills are required. Even algorithms Bypass high investment costs by data, and with their help it is possible will not get there that quickly. Brilliant means of smart cooperation. By their to draw important insights in regard to creative individuals with advanced very nature, agency networks have the consumers. Many tools for real-time skills are required. These will be more ideal starting point. Managed Service data analysis are available now. Most game designers than copywriters – Providers can help if internal col- of them are even available at no charge trained in user interaction, entertain- laboration is difficult. Even players like (such as Search Trends, Think with ment, and drama. Those combining Facebook and Google can introduce Google, and Topsy). the techniques of storytelling with the programmatic knowledge to agencies. possibilities of Programmatic provide a Flaunt your creative excellence. genuinely differentiated offer. Precision targeting of different target groups makes the creation of exciting Develop APIs to the customer. Tight approaches within a few campaigns dovetailing between the data of your possible, instead of watered-down customers (such as CRM, social media, campaigns for everyone. This does not sales, and pricing data) and data you only excite creative minds but is also acquire and use (such as own, from for those consuming advertising. The market research, and campaign analy- development of effective, modular sis) is becoming increasingly more im- advertising requires unique ideas and portant. This ideally results in a win-win new programmatic touchpoints call for situation – advertising has a greater creative excellence. Speed to full throt- impact and advertisers are able to tle and start surprising your customers. further refine their own data. Necessary Who else, other than creative agencies, for this are secure interfaces that you would be in the perfect starting posi- develop either yourself proactively or tion to do so?

36 Implications for of software for campaign management performance-based advertising system performance agencies is lowering entrance barriers. These tools and this will extend in the future to are becoming less expensive and more cover the entire value-added chain of intuitive to use. It is mainly media agen- advertising communication. cies that are penetrating the business areas of performance agencies by in- Give advice on data handling and refine Performance agencies are predisposed vesting in expertise and technology. In- existing data. There will be intensified to playing a key role in the world of Pro- sourcing of large online dealers is also competition when it comes to data own- grammatic Advertising. Data and algo- becoming a challenge. When performance ership and quality. Performance agen- rithms represent their day-to-day busi- agencies come under attack in their core cies are data experts and should be pro- ness, and they master the techniques business, they must offer extra benefits. viding extensive consultation services of auction and data-based advertising to their customers (also with regard to management (e. g. SEO, AdWords, and How performance agencies can benefit data collection and processing). This is retargeting). Despite this, most perfor- from Programmatic Advertising: the case, for example, when it comes mance agencies are not yet actively in- to selecting the right data management volved in Programmatic Advertising. This Broaden your product portfolio. platforms as well as providing advice on is surprising – due to the fact that their Affiliate, social media, and email market- whether CRM data is suitable or not for starting situation, on paper, is a good ing, display advertising, programmatic the different data platforms. Once the one, and because they need to continu- buying, and mobile advertising − now- relevant data is identified, it is about ask- ally keep up with technological develop- adays consumers can be addressed ing the right questions to tap into their ments if they want to keep track of the through an array of digital touchpoints knowledge. Providing interfaces to the contact points for targeted communica- using different methods. Excellently customer enables data to be refined tion with consumers. positioned performance agencies are further and be enriched with more vari- already offering their expertise over the ables (e. g. by systematically recording The ability to track every impression of entire digital spectrum. This can be a campaign results and customer journeys, media and assess it for the purposes of lucrative strategy because the current and comparing them with existing data optimal return-on-investment is essen- focus on small and individual services material). tial. Increasingly, other market players in the market will become irrelevant for are gaining ground to become special- advertisers in the medium term. They ized and the systematic enhancement require advice on the entire field of the

37 Broaden your algorithm expertise. One What role do social networks play in the To be effective beyond borders, these of the decisive factors for success in the buying process? A full customer journey companies require agency partners who new advertising system is the automated analysis across all channels and plat- feel at home on the international field. provision of algorithms on the basis of forms remains a technological challenge. Those who can service many markets will digital signals. Performance agencies But who can address this better than experience the benefits in future. can excel in this discipline because they performance agencies that have been use algorithms every day and know what working on this for years? Use the find- matters. New business opportunities ings obtained for Programmatic Buying. are opened up when performance agen- This information will deliver smarter cies broaden and market their algorithm pricing in Bid Manager. expertise. Included here (alongside the definition of parameters) are mainly the Connect previously disconnected data control, tuning, and development of algo- silos. Your customers are interested in a rithms for Programmatic Buying, Creation, consumer profile that is as extensive as and Orchestration. The fact that the new possible. But data sources from search business models focusing on algorithms engines, social networks, and e-com- are by no means far-fetched is demon- merce can rarely be linked to one an- strated by the arrival of AppNexus, an other because of their competitive situ- organization that promotes new forms ation. Even your customers themselves of data usage for companies through its store data in different areas and depart- "Bring Your Own Algorithm" concept. 65 ments. This represents unused poten- Algorithm online marketplaces such as tial. If you manage to force open these Algorithmia are also showing where we silos and aggregate the data, you create are headed. 66 significant added value.

Use the customer journey for bid man- Jump on the internationalization band- agement. Are investments in displays wagon. Large companies (operating in leading, not only to more clicks but also the e-commerce sector for example) may to increased search queries? Or is the like being headquartered in Germany, search pushing banner advertising? but they also provide services to many customers abroad.

38 Implications for to data resellers 67 to cash themselves of advertising space. Time will be clea- media agencies out on the sale of data. And for adver- red for more intensive consultation and tising agencies, it is expedient for the customer contact. Data analysis and purposes of holistic campaign manage- strategic consultation skills in particu- ment to win back ownership of touch- lar will be called for at media agencies – points. because this is where the growth poten- It is no secret that media agencies have tial lies. long been on the lookout for ways to add Media agencies, in particular the ones new revenue streams (such as consul- operating internationally, have identi- How media agencies can benefit from tancy) to their primary source of income: fied and reacted to the pressure to act. Programmatic Advertising: trading with advertising inventory. The Be it GroupM, Dentsu Aegis, Omnicom, automation of media placement, real- Publicis, Havas, or IPG Mediabrands − Obtain your orientation within the touch- time speed, more accurate ways of mea- the large networks all have the relevant point jungle. Many advertisers lose track suring success, changes to payment task forces. They are forging ahead with of the media landscape, especially in models – all of this is shaking the foun- programmatic platforms, data centers, regard to the different functions of touch- dations of a system, which has worked and technology units. Many others, how- points for individual target groups and very well for decades. Competitors both ever, are playing for time. Provided busi- funnel stages. When media agencies new and old are already in the starting ness continues to run as it has (espe- methodically broaden their knowledge blocks to battle future business with cially for TV advertising), they keep their of touchpoints and media (discontinu- media agencies. eyes shut to programmatic reality. This ities), they can strategically advise ad- can be an existential risk. To survive in vertisers, publishers, and other agencies. At the very forefront are marketeers who the market, media agencies must em- For this, they need to accompany con- want to bypass agencies (as inter-medi- ploy their media expertise and their net- sumers to a larger extent along the cus- aries for advertisers) with their own Pro- works. The changes that are occurring tomer journey, and collect, link in, and grammatic platforms. Market research with regard to expertise and activities market relevant data. companies are attacking on the data front. will also be crucial to success. The time- Cable network operators and manufac- consuming generation of reports, in- Improve the measurable results of adver- turers of smart TVs analyze the usage voicing, and clearing of individual media tising. Advertisers think that verification habits of households. Social media plat- will become automated in the medium of the impact of convergent advertising forms such as Twitter cap the connections term, as will the selection and booking impressions is one of the hottest topics.

39 Neither associations nor committees Return to consultancy. If media agen- Excellently positioned media agencies have yet managed to obtain a consen- cies were traditionally consultants, who on the other hand, are at the forefront sus. The fragmentation of the media ultimately made purchases, today they of the market. They can assess which landscape is playing into the hands of are wholesalers with add-on consul- equipment and service providers their media agencies. Research into adver- tancy services. Given that more and more customers require, and offer expertise tising impact must be holistic to reach customers understand they only require for establishing a managed service. reliable conclusions. This is something software for purchasing, agencies have neither publishers nor customers can to return to consultancy – a task no com- Invest in creation expertise – in the do. Only media agencies are able to con- puter can replace. Every programmatic era of Programmatic, it is important to solidate individual media KPIs to achieve purchase is only as good as the media consider data holistically. In the ideal an impact and success KPI that provides strategy developed previously. Know- scenario, creative and media agencies valuable information. Agencies having ledge of campaign strategies, target group use existing target group knowledge of specialist departments for market media research, effect models, and the entire the customer and publisher for cam- and consumer research at their disposal, bandwidth of digital technologies are of paign planning, they then supplement are at a good starting point. inestimable value. Make it visible. this with their own or external market research. This, however, is usually Develop and market insights. No other Provide consultation services on the different in practice since information players in the advertising eco-system forefront of Programmatic – trading is only passed on in fragments. As new are currently as close to consumers as desks, sell/deman-side platforms and types of full-service providers and media media agencies. Benefit from this con- big data companies. Industry knowl- agencies have the opportunity of taking venient situation and convert this know- edge and manpower are required to on this data hurdle they thereby offer ledge into revenue. The creation of di- coordinate the diversity of suppliers and the customer added value. Some media verse and powerful consumer insights is service providers. Neither is available agencies are therefore already ponder- set to gain in significance − even if the at medium-sized companies or digital ing the acquisition of creative digital way they are identified changes. Instead late-followers, or even to some degree agencies. This takes them beyond pur- of long-term studies and interviews, at large corporations. The market is so chase-only issues and opens up access data must be collected in real-time and dynamic that it is impossible for those to very new budget offers. analyzed. interested to follow developments.

40 Implications – an overview

Full-service and Performance Media agencies creative agencies agencies providing orienta-  developing APIs  expanding the  tion in the touch- for customer data product portfolio point jungle

exploiting the advising on data  making the im- strengths of  refinement pact of advertising  modular creation more measurable developing algo-  making data- rithm expertise offering advice driven planning a  on the digital  core expertise linking data silos  infrastructure

offering improving expanding  transmedia  collaboration with  creative expertise storytelling other players

improving promoting the collaboration with  agency's own  other players internationalization

41 //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////5 //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////Still hesitant? Four excuses, //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////four responses //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////Programmatic Advertising is complex but will soon be up and running. //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////Make sure that you and your business keep pace with it. //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 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//////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// There is, of course, no guarantee that you will actually profit from Programmatic Advertising. Those looking to benefit from the changes will have to leave their comfort zones and tackle it. There are reasons not to do it, but many of them can be counteracted and simply sound like excuses. The following four main con- cerns have emerged from discussions within the community.

"Should I be investing in Programmatic Advertising now? It is far too expensive and does not pay for itself."

Those playing with the idea of sitting out the change until Programmatic Advertising is fully established, competitively priced tools are available on the market, and the majority of customers request corresponding services, are on the wrong track. The digital world has its own laws and late-comer strategies rarely benefit. The time to act is now. This does not mean going out on a hectic spending spree.

First, invest in a sound Programmatic Advertising strategy, and evaluate the chal- lenges and opportunities for your company. There are powerful partners inside and outside the industry from whom you can learn and with whom you can network.

This applies in the case of technical infrastructure as well as Programmatic Adverti- sing expertise. You cannot and do not need to set up everything yourself. Service providers and managed services for Programmatic Advertising are already out there.

43 "My customers aren’t asking for Programmatic Advertising services. I am not even sure they know what it is."

The impact of Programmatic Advertising, such as greater efficiency in using a media budget, more accurate targeting, and more individual communication, are unparal- leled arguments that should convince your customers. This applies across industries – for B2B and B2C, for corporations, for mid-sized companies, and for local busi- nesses. True, it has mainly been big brand name companies who have been sound- ing out the opportunities of Programmatic Advertising.

But demand is developing exponentially. Programmatic Advertising will be a mass market in two to three years’ time. By then at the latest, you will require the services and expertise to respond adequately to the requests of your customers. You need to make them aware of the possibilities of Programmatic Advertising now and assist them in a consultative capacity.

44 "Where can I hire Programmatic Advertising experts? There is hardly anyone out there with the necessary expertise, and the few there are cost too much."

Programmatic Advertising is not rocket science and the skills are certainly out there. There are already many capable employees in the industry who are well versed in SEA, SEO, Programmatic Buying, and AdWords, for example. They are mainly currently employed by performance and digital agencies.

In the meantime, the next generation of digital experts is currently undergoing train- ing at universities. AdWords and the like are now on the marketing curriculum and algorithm experts complete their courses in the Mathematics and Computer Science faculties. For the latter, agencies have to put themselves forward as potential em- ployers – this is because mathematicians and developers have always been attracted to engineering careers, the finance industry, and software forges.Y es, Programmatic Advertising experts want to earn good money, but overall personnel costs will not rise exorbitantly. This is because an inconvenient truth about automation is that soft- ware assumes many functions at agencies, thereby reducing overall working hours.

45 "Why should I be investing in a system change that could potentially reduce my profits over the long term, for example, as a result of increased transparency?"

It is true that Programmatic Advertising will affect some established payment and billing models. Those mainly living on discounts in the purchase and sale of media services are not going to welcome the new era. But it will not necessarily be the case that agencies will earn less.

Quite the opposite in fact: The Programmatic Advertising world is giving rise to new business segments, services and skills – for which your customers are willing to pay. This includes, for example, automated market and insight research, conception and implementation of cross-channel architectures along the customer journey, and modular creation. New participation models are also conceivable. An example: If it is more readily possible to evaluate the success of an agency in terms of campaign objectives (leads, image, conversion in the funnel, closures, etc.), the reward offered to the agency can be more clearly defined.

46 //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////6 //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////Conclusion //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////The new operating system of advertising is coming. Check your compatibility, //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////develop new applications and prepare to upgrade. //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// Conclusion

Programmatic Advertising will become advertising’s new oper- In at least three years’ time, we will clearly see who has missed ating system and it will undermine the established structures, out on a future offered by Programmatic Advertising today. Agen- expertise, and processes of the agency world today. There are cies that are still not able to cope with the new digital adver- huge potential and numerous opportunities behind the trans- tising system will lose credit in the eyes of their customers formation. But these are only available to those who act at an and their own star employees. This is why Programmatic Ad- early stage. This is because Programmatic Advertising is growing vertising must become a concern of top management. exponentially – one upheaval is following the other, and assump- tions become outdated before standards can be established. Identifying and elevating potential is not simply an IT operative issue. It is about the core of the business, the enhancement of The good news is that there is still a level playing field out there. your corporate strategy, the structure of your service portfolio, This is because only a select few understand how Programmatic and the competitive edge in the future. The question as to Advertising works, and every agency discipline has specialist whether business models will change is invalid – it is about the associated skills. All players still have the opportunity to emerge how and where the change will occur. For this reason Program- victorious, by the process of metamorphosis. But it is necessary matic Advertising should be very high on the strategic agenda to make a start and not to wait around. Even sceptics sworn to the – especially today, but certainly no later than tomorrow. traditional course can clearly make out what is just the tip of the iceberg of change on the horizon. Those who don’t change their course are at risk of sinking.

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