Performance marketing, which relies on the use of software to purchase digital advertising, is one of the most hotly tipped developments in the marketing world.
It has clear benefits, not least allowing marketers to replace the laborious and expensive process of media buying, while providing the ability to target an audience more precisely on a range of ever evolving channels.
Since its birth, these changes have been primarily led by digital-first brands, due to the relevance of programmatic advertising to online and mobile channels.
However, traditional brands are increasingly following suit, with companies such as Coca-Cola and Johnson and Johnson now getting in on the programmatic advertising action.
Particularly in mobile, digital first companies are increasingly seeking out traditional advertising channels to support this.
For example, Clash of Clans, an online multiplayer game, recently sponsored the 2015 EuroBasket Championship and Airbnb sponsored ESPN’s NBA broadcast.
As a result, there seems to be two directional shift, with digital brands investing in traditional channels and traditional brands investing in digital channels.
Programmatic advertising cannot be considered a ‘cure all’ solution.
It’s important for all brands to ask the question: why are digital brands diversifying if programmatic is so effective?
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For the most ambitious digital brands, there has been a realisation that although programmatic advertising has its benefits, it cannot be considered a ‘cure all’ solution — even if the brand and product lives purely on digital channels alone.
Firstly, increasingly sophisticated ad blocking, which means the cost per install attributed to advertising is becoming much more expensive, is making a positive ROI more difficult.
More importantly, although programmatic advertising can ensure that a message gets to the right audience at the right time, there is little to ensure this is truly resonating with the consumer and building the brand as a whole.
In many cases, this is precisely what is holding them back.
To give an example in the mobile gaming industry, marketing at the majority of companies has come to stand for user acquisition (UA), which essentially describes paid advertising on mobile devices, mostly driven through programmatic advertising.
The main focus for these companies has therefore been myopic, with the ratio between the cost per install (CPI) and quality of retention seen as the barometer of success.
Although on a purely sales-led basis this makes sense, the problem arises when this becomes the sole marketing activity, with little to no effort in building the brand outside the product itself.
In the mobile industry in particular, where over a million apps are competing for share of voice by using the same tactic, this approach alone is preventing brands from reaching the top.
Having said that, some game producers are having great success by looking to traditional channels to support their UA efforts. For example, Clash of Clans, was regarded as one of the best adverts during the Super Bowl, beating brands such as Budweiser and T-Mobile.
In addition Game of War has had huge success by employing model Kate Upton to support its marketing efforts.
Of course, not all app developers have the same marketing spend to pull this off, but smaller providers can still take lessons from this in order to succeed.
The most important thing to learn about these success stories is that rather than seeing themselves as a purely digital brand, they have realised that building brand equity is equally important whether on or offline.
For any brand that is looking to get the best out of their advertising, it makes sense to see user acquisition as part of a wider strategy. Digital brands would see more success by replicating a traditional customer acquisition (CA) strategy, which focuses on winning new customers by using all available marketing techniques.
While programmatic marketing should certainly form a part of this, digital businesses must also asses what means are available to strengthen their brand whether through PR, ATL campaigns, social media or video content.
However, for businesses with an ingrained UA culture, the leap to diversify marketing strategies can be daunting, primarily due to questions around ROI.
For companies used to receiving accurate and exact data, down to the precise number of click-throughs that the advertising generates, a less scientific approach can be disruptive.
Therefore, in order to make the transition, it’s important to establish clear metrics to work out what success means for the brand. In addition to tools that can help to measure how advertising is influencing organic installs and other factors, meaning that old school concepts such as brand perception and brand equity must be considered too.
Programmatic marketing is an essential and effective tool for marketers to target specific messages to a specific audience. For both digital and offline brands, despite the hype surrounding it, it should not be used as a standalone tool.
Regardless of the technology and how this develops, the importance of building a solid brand will always remain essential.