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The Rise of Customer Acquisition: 3 Ways Programmatic is Shifting to Performance

The rise of programmatic, along with accompanying buzzwords like scale and reach had marketers’ ears perking up from the start: I can reach how many people? Across how many websites? For how much? But, hindsight is 20/20, and perhaps we were asking the wrong questions. Is scale the be all and end all of customer acquisition? What about quality? Transparency? Brand Safety? Thankfully, we’re beginning to see the light.

Anyone in the industry will tell you, there is no one-size-fits-all when it comes to customer acquisition, but there is no denying that technology can & must play a key role if a brand plans to survive in the digital age.

That’s why programmatic isn’t going anywhere anytime soon. According to eMarketer, “Investment in programmatic ad buying in the US may be nearing its peak, but spending continues to rise. By 2019, programmatic ad outlays will reach $45.94 billion, accounting for 84.0% of all US digital display ad dollars.”

This stat isn’t surprising. After all, the automatic buying and selling of ad space is what keeps inventory from laying dormant all across the internet, and allows advertisers to granularly target customers who have shown intent.

But all of this focus on efficiency led to some fairly bad habits early on:

  • Cheap as dirt bid prices
  • Broadest reach possible without regard for site quality
  • Sketchy third-party data
  • Lack of control for publishers and advertisers alike

Media giants are under fire for low quality or inappropriate ad placements; Advertisers are irate at a lack of transparency: Where are my ad dollars being spent? Which domains will my carefully crafted advertisement be placed on? How are demand-side-platforms ensuring viewability and brand safety?

Luckily, things are changing across the programmatic landscape. Advertisers are beginning to look at effectiveness over efficiency, and demand customer acquisition out of their efforts. Industry standards will follow.

Here are 3 Ways the Programmatic Marketplace is Shifting Towards Performance

1. Increase in Private and Guaranteed Deals

The shift from efficiency to effectiveness is perhaps most proven by the increase in private market and guaranteed deals: “Whereas programmatic was once just used for real-time bidding (RTB) in the open markets or to access social network ads via APIs, buyers and sellers can now transact programmatically using a number of private setups—including private marketplaces (PMPs) and programmatic guarantees.”

This is proving especially useful for programmatic videos looking to achieve maximum viewability. Private market deals mean higher bid prices for advertisers, but as the saying goes, you get what you pay for, and quality placements often mean increased customer acquisition.

2. Header Bidding

Header bidding is on the rise. There is nothing wrong with traditional waterfall bidding per say, but it feeds into the idea that programmatic is a complex and opaque technology. The original intention was to ensure publishers didn’t leave money on the table, but as programmatic budgets increase, keeping new players out of the game may do more harm than good for publishers struggling to generate revenue.

In waterfall bids, ad exchanges are ranked first to last in the bidding process, with high performers being called first. It follows the same philosophy as being picked first (or last) in gym class—if you prove your worth, you get called first in the future.

Header bidding, on the other hand, is an equal opportunity auction. All ads, across all exchanges, are allowed to compete with buys within a publisher’s ad server. This means the highest bid gets the placement—no special treatment. It means a more straight-forward world for advertisers seeking customer acquisition through programmatic, and rewards higher bids for their investment.

3. Demand for Customer Acquisition

The success of any campaign is of course, reliant on the intended goal. Traditional KPIs for programmatic tend to revolve around awareness (via CPM) and engagement (CPE, time on site). Lately, however, our team has been seeing a slow but steady shift in the mindset of our clients:

“For the most part clients are looking to measure ROI on their end and they understand digital marketing is a great channel to measure this,” says our Customer Success Team Lead, Michelle Hart, “Many clients start shifting from awareness to conversion by measuring “soft” conversions. They start moving away from user time on site and towards user actions on site. This type of measurement could be a page load, a second click from the landing page or a download of a document that does not require any information.”

Then there are the forward thinking clients driven by customer acquisition: “Typically, clients that have conversion goals from the start are looking at driving “hard’ conversions. This is usually a purchase and includes the collection of key information. They tend to have their CPA (Cost-Per-Customer-Acquisition) goal calculated and their site tagged.”

This shift towards a hard CPA goal is new to programmatic and advertisers are still working out how to achieve success. But digital marketers are nothing if not persistent, and if we desire to achieve a more fair, transparent and accurate programmatic landscape, there is no question of it becoming a reality. The key is to keep reforming the technology that shapes us by using it with intention.

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