Beating The Competition In Programmatic Media

tonyeffik“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Tony Effik, managing director of media and connections at R/GA.

I believe that smart machines will ultimately perform the vast majority of media’s routine tasks. We’ll spend most of our time writing algorithms that run these machines. That means the type of competition we face has changed.

It’s strange, however, how few companies think competitively about media. I’d call that media madness. In the same way that doing the same thing over and over while expecting a different result is a definition of madness, I’d argue that applying the same strategy as the rest of the market while expecting a winning result might define media madness.

The New Clout

When you move from thinking of individual publishers and placements to buying on an impression-by-impression basis in real time and serving different creative to different types of people, the complexity level explodes. But so do the opportunities for competitive advantage.

In the past, clout was your negotiating power. In programmatic media today, clout is your ability to exploit data to capitalize on new and hidden segments, undervalued media, allocation and trading strategies, algorithms and optimization models. You can now outsmart, rather than outspend, the market. Remember, growth doesn’t come by just meeting an internal goal; it comes from meeting goals that beat the competition. Moving forward, if your algorithms aren’t smarter than your competitors, you lose. It’s a zero-sum game.

This is an innovator’s dream, but only if you lean forward and capitalize on the opportunity. With this new form of clout, how do you compare to the competition? Do you even know what the competition is doing? What metrics do you use to make comparisons and what are the data sources? Are you capturing share from your competitors — or are they capturing share from you?

Segment, Target, Position

In classic marketing, competitive strategy was driven by the process of segmenting the market, targeting the right segments and then positioning correctly within those segments. In programmatic, we can start applying the same process to beat the competition.

So we’d segment the market into data sets that represent your existing customers, potential competitor conquests and the unaligned prospects. Target the best performing segments with custom creative and prioritize budgets against these segments. You’ll need to meticulously track and optimize, segment by segment, impression by impression. You’ll need deep market insight into your data segments and clear, logical rationale for targeting them.

But we do have a problem: Many people in programmatic media don’t really understand what sits behind the data segments they target.

As an industry, we’ve started to disembody people from their data. What’s the real difference between the “Ford owner” and “Ford loyalist” data segments? How do we treat them differently and how much should we invest in each? What’s the lifetime value? What sequence of creative should we use and at what frequency? How does display work with the other tactics we are deploying?

All of us in the business need to staff our teams with the right skills to truly understand the motivations, interests and behaviors of the data segment we are targeting, along with their potential for profitability. Too often in today’s market, people are essentially throwing dice with their media budget.

To better understand data segments you’ll need a learning agenda that uses tests to progressively make your campaigns smarter. You’ll need to allocate segments to test cells with hypotheses that explore likely behaviors and performance levels. A learning agenda, over time, will help you get past just seeing what worked, to understanding why it worked.

The asylum door has flung open for those who want to escape the madness of spending client money on ineffective media. But outsmarting the market is hard work and takes the right team and strategic discipline.

Not every brand or agency has the appetite for it, which is great news for those who do. It would be madness not to try. Media madness.

Follow Tony Effik (@aeffik), R/GA (@RGA) and AdExchanger (@adexchanger) on Twitter.

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1 Comment

  1. Good piece, Tony. I agree that a learning agenda is essential to gain an edge. One could extend your argument further, into bidding strategy. Very few advertisers, in my experience, can accept that mechanically bidding exactly what you want to pay is an optimal strategy only for the publisher on the receiving end of your budget. A smart auction participant aims to influence competitors to bid down or not at all on what he values most.