The Rise Of The Quants On Madison Avenue

alanizenmanData-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 Alan Izenman, chief digital officer at Active International.

The programmatic revolution has created a new class of advertiser. They develop strategies based on analyses of large amounts of customer data, while using algorithms to buy and place ads across digital media outlets.

Their success is based on data quality and the ability to respond quickly and efficiently to changes in consumer activity across multiple locations. Helping them navigate this increasingly complex landscape is a small but growing army of quants.

Wall Street quantitative analysts, known as quants, revolutionized the securities industry with data-driven, computerized trading strategies. Similarly, the rise of the quants on Madison Avenue is beginning to transform the advertising world by bringing specialized analysis to agencies and advertisers.

A New Breed Of Quants

Unlike advertisers of the past, Madison Avenue quants use sophisticated systems to determine the right time and place to deliver highly tailored advertising content to specific consumer demographics. Quants rely on data analysis and advertising models that more closely mirror their target audiences’ lifestyle and routines.

Tomorrow’s advertising quants will look increasingly different from today’s advertisers. They will be equal parts savvy marketer, strategist, trader and analyst. This rapidly changing role may impact who decides to go into advertising. Students and young professionals who would have once considered careers in Silicon Valley or on Wall Street are increasingly attracted to the idea of managing sophisticated advertising models on programmatic desks within the creative industry.

At the core of the programmatic approach to advertising is a fundamental shift in how ads are purchased and placed. Consequently, the skills advertisers need to be successful are also changing. While there is still an emphasis on high-level strategy that focuses on consumer behaviors, the execution of that strategy is growing more sophisticated and becoming highly technical. As time goes on, executing advertising strategies will look and feel much like that of an equity trader in the stock market.

Just as Wall Street quants trade stocks in a constantly changing market and adapt strategies in real time, advertising quants, armed with consumer data and sophisticated algorithms, will apply the same approach when targeting audiences and buying ads.

Needed Skills

While quants must have a solid grasp on marketing fundamentals to be successful, they also need to expand their skill set and expertise to thrive in this new landscape. Entry- to mid-level quants are expected to make intelligent use of data and technology to identify, develop, implement and measure ad campaigns.

In response to this demand, undergraduate students on the advertising track will see more requirements for statistics, mathematics and business courses. At the graduate level, programs covering marketing analytics, marketing analysis and related subjects will become increasingly common. I expect centers focused on the merging of advertising and technology, such as Carnegie Mellon’s Center for Marketing Technology and Information, to play an influential role in redefining the advertising professional in the 21st century.

By applying these new tools and expertise to the advertising trade, quants can move beyond just delivering timely ads to consumers based on location and browser history. They can also develop predictive advertising models tailored to the individual based on a much broader data set, including online activities, geolocations, social media posts, purchasing histories and brand loyalty. They can also track the impact of ads on consumer purchasing behavior for longer periods of time.

By capturing and analyzing this data, quants can increasingly target customers with the highest statistical probability of purchasing within the shortest time frame. And while the online and digital space is the first domain of advertising quants, programmatic ad buying strategies have moved to TV and radio as traditional and digital channels continue their convergence.

Programmatic ad buying and the quants driving those strategies represent a sea change in the advertising profession. This shift will impact every aspect of the advertising world, including advertising team structures, agency roles, data and technology providers and, ultimately, consumers.

While the full impact of this new direction remains to be seen, one thing is certain. The quants have arrived on Madison Avenue and they are intent on revolutionizing the advertising industry.

Follow Active International (@ActiveIntl) and AdExchanger (@adexchanger) on Twitter.

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