This is the first of a two part blog series…the next blog will be…why RESEARCHERS should care.

Ted McConnell is an amazing agent of change, having led digital advertising innovation for Procter and Gamble before becoming a consultant and the lead subject matter expert on digital for the ARF. He recently authored the book “The Programmatic Primer” for WARC, the Worldwide Advertising Research Council.

The ARF has rightfully placed emphasis on programmatic buying this year at their Audience Measurement conference.

Ted’s ideas on programmatic buying are exciting to me as they are the mechanism by which marketers will upend the purchase funnel and potentially lead to a reinvention of brand research. Ted sees all the data driving programmatic as fodder for research … we just have to learn how to use it.

Joel: In a nutshell what is programmatic ad buying?

Ted: For online, an end to end buying and trafficking system that is completely computer and data driven. By “trafficking” I mean the process by which an impression gets the right creative. It’s how the creative gets from point A to point B. Before programmatic buying, digital was a very labor intensive process but now computers can do the work instead of humans. Forrester measured that it costs 7 times as much per dollar spent on working media to plan and traffic digital media vs. TV. Programmatic, in one aspect, is just machines doing work that humans used to do.

Joel: Beyond automating processes that create efficiency, how is programmatic different from traditional media buying approaches?

Ted: In traditional media buying, the advertiser is buying an aggregate portion of the audience that the media property accumulates, such as users coming to a particular page on cnn.com or those watching a certain episode of Mad Men. Usually, audiences are bought based on weak targeting variables like age and gender along with some sense or the fit between the content and the brand. For example, traditional media placement does not allow the advertiser to selectively deliver the impression to a viewer who is into upscale beauty products but not their neighbor watching the same show who does not care about such products.

Programmatic turns the process on its ear, allowing you to selectively buy impressions that actually exist, right now. The advertiser or their agent can selectively bid for an impression based on the value for the bidder … and that value depends on what that user’s profile infers about their interests. Say you want 1 million beauty interested females…now you can find them wherever they are on the internet based on behavioral evidence they care about such products from content they consumed in the past.

Joel: What is real time bidding? Is that the same thing as programmatic buying?

Ted: Programmatic for display defines the complete end to end system.  RTB is a subset of that.  The real time bidding process allows any number of demand sources to be presented with the impression opportunity.  It puts demand sources in competition with one another billions of times per day, using computers to decide on how much they want to bid for an impression, all happening in 1-2 tenths of a second! Where it gets really interesting is that advertisers are starting to build their own proprietary cookie pools so they know more about a given impression opportunity than their friendly competitor.  It is the essence of competing on data!

Joel: I see that marketers are beginning to commit to Programmatic buying in a big way.  For example, Procter recently announced that they are moving 70% of their display advertising buying to programmatic.  Why should marketers get so excited about programmatic buying?

Ted: The promise, and reality is that you can improve relevance and ROI … often by 5x. Beyond that, programmatic buying is a blueprint for holistic media. You can now bid for behaviors and surrogate behaviors that deliver an audience that is very much like the audience I want from my research rather than watering it down by demographic buys. Furthermore, marketers can now measure impact more precisely with attribution analysis and actually do in-flight optimization. Programmatic give options to publishers too.   They can actually buy their own inventory on the exchanges and resell it based by adding value using their first party data.  For example, a Forbes reader is always a Forbes reader even if they are on a different site at that moment.

Joel: Are there words of caution regarding programmatic buying?

Ted: A lot of the value has to do with how you execute.  If you aren’t careful, you will buy absolute crap.  You want to work with a leading agency, network or DSP.

Joel: What do you see over the next 3 years in terms of shifting money to programmatic buying and in terms of how programmatic buying works?

Ted: Over the next 3 years— Programmatic will overtake traditional buying. It will improve ROIs and be more measurable and reliable. Your data will become your strategic advantage—translated into media advantage.

Joel: Thanks so much for your  time and great insights!!