The 3 Influences On Programmatic CPMs — What Happens When You Ignore Them
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The programmatic media market breathes and fluctuates much like the forex or securities markets. They all have trends that traders seek to leverage for big gains.
The big differences are in what we’re trading & what influences our ability to trade effectively.
What we’re trading = Audiences
Programmatic traders are seeking to buy the media/ad space (“inventory”) in front of the right audiences for their ad campaigns, and the owners of that space (think web publishers, for example) are looking for the best price to sell their space because that’s where the audiences are.
So while we buy and sell different types of inventory, it’s the audience seeing the ads (and their assigned value) that we’re really trading with each other.
There are 3 factors that broadly influence how we trade audiences programmatically:
1) Consumer Behaviour
As the general public pottering about on the internet, we all display predictable patterns of behaviour that can be spotted and used intelligently. For example, the most obvious are usually the seasonal trends we show.
You buy way too many expensive gifts for Christmas.
You get bored of the cold winter so you book your holiday somewhere hot as something to forward to.
When you’re out and about during a bank holiday weekend you’re not sat at your computer (but you may still be browsing on your phone…).
When it’s absolutely pissing it down you’d much rather the pizza be delivered to you than you have to venture out and get drenched.
Most advertising teams are aware of such common trends, and these extend to programmatic trades as well given we can choose these micro-moments for showing you the right ad. The focus for traders then becomes using the right data sets for deciding which moments and trades lead to maximum return. The market reacts to the traders’ decisions and prices of certain audiences alter according to momentary demand.
2) Advertiser Habits
The team trying to reach you the customer also fall into their own rhythms, as does the industry as a whole. This means the market fluctuates based on daily activites of the advertising industry en masse, such as spending more on mobile ads during commuter hours.
Just like in the City, large movements affect the current prices significantly. If you’re a small fish in a big market, your campaign could risk being swamped if you lazily buy media only at the same times as the much bigger fish with the larger budget.
To employ more guerilla strategies you need to dig deeper into who your customers are, where they really spend their time and derive custom strategies that are unique to you to reach them first. This is where you can really leverage data for an advantage over your industry competition.
3) Technology Capabilities
All ad buying platforms (or “Demand Side Platforms/DSPs” to use the jargon) were not created equal. Like most industries, you won’t be able to pull off the smartest strategies without the smartest tools.
For example, different platforms have varying access to the market. A select few can trade on almost every source of inventory, where some younger systems might focus on the major exchanges, and some will specialise. But different access means different pricing based on the information each platform can offer. The volume of supply affects the available spread of prices, impacting your ability to choose the best value inventory.
It is up to each advertiser to determine the best setup for themselves. Just like Formula 1 teams tuning their cars, eeking out the slightest of performance boosts, marketers now need to be software and data savvy on a granular level.
But such technology is designed to help you control more at higher speed and make this all less scary, if you take the time to learn how to use it. Those who don’t invest in education and support risk ignoring how their media investment could be affected by the market, a costly mistake.