It’s hard to get away from the terms “programmatic marketing” and “big data” these days. But what does today’s CMO really to need to know to be “in the know”?

1. What Big Data & Programmatic Marketing Actually Mean & What They Don’t

For me, the concept of big data is the most misleading. Marketers have been using big data in their marketing since marketing began — just ask Sears, Amex or Walmart (or Tesco, for our UK readers) about the massive wealth of data they have on almost every consumer and what they do with that data.

Big Data

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Yet, when we read about big data in our industry’s press, it usually comes with the connotation that it is something new, something recently discovered, and (more alarmingly) something that will solve every need the marketer has ever had.

For today’s CMO, big data in digital is best thought of as “lots of data” about your prospects and customers, its promise being that the more you know, the smarter your decisions can be.

The CMO’s definition of big data should also include a layer of complexity, an understanding that it is not easy to bring it all together and make it actionable. Beyond that, definitions and promises are just noise.

Because it’s difficult, we need a solution for digital marketing like the systems marketers have been using offline for decades. This is where “programmatic marketing” comes into play. Programmatic is the net that captures all this data, hauls it together in one place, and therefore makes it actionable.

Put them together, and you have smarter programs.

One word of caution, though: it is appealing to let one’s imagination run wild and start combining many data points together to find your ultimate prize. But, layer too many points together and the sample size shrinks close to zero, or the cost of the data outweighs the returns. Yes, as a retailer, you should consider combining past purchase history with children’s age in household for a targeted back-to-school program — but do not expect to have many people left if you also add geolocation, household income, car type and ethnic background into the equation.

2. Understand The Basic Mechanics

Have you ever had a problem with your car — some sort of rattle that you weren’t sure about or a cryptic warning light flashing on your dashboard? You know you need to take it to a garage, but you go with some degree of trepidation because you don’t know what it will cost, and most importantly, what it should cost. When the moment comes to collect it, you learn they “really had to change the rusty phlanges,” and their hand is out for $1,000. You pay it because you don’t really know any different.

Ignorance causes us to make poor decisions, particularly when it comes to how much to pay. To the expert, the combustion engine is quite a simple beast, and with a little background and explanation, it is clear enough to the layperson, too.

Programmatic marketing is actually quite simple. Companies like Chango have the ability to buy media at the time it is needed (RTB, or Real Time Bidding), and that media is for an individual prospect. That means we don’t have to commit money upfront, or shout at large crowds, but instead, we get to look at every person who is looking at the ad space, and decide if that person is going to have value to our advertisers.

That decision of value is where the data comes in. As the advertiser, you might bring your first-party data (which is known by most as “site retargeting”), or the company can supply you with third-party data (such as keywords searched, demographics, geo tags, etc.).

Technology handles the basics, which, in turn, are reliant on sets of rules known as algorithms, and people are used to translate a marketer’s real needs into those rules. This type of technology takes a lot of financial investment to build, and smart people don’t come cheap, and so we expect to be compensated for both of those. Up until now though, marketers have not really understood what they were paying for, allowing some companies to charge a fee that is beyond reasonable, sometimes to the detriment of the advertiser.

With this understanding, you would know that the rusty phlanges didn’t really exist, and instead pay a more reasonable fee for the work done.

3. Marketers Are Really Doing “Programmatic”

Many marketers have made the switch to the programmatic-way, for new customer prospecting, for smarter site retargeting and for branding/awareness generation.

Prospecting is exciting again with data. When I had a media planning team, we would have to rely on broad statements such as demographics and make large buys that would shout at big crowds in the hope that some of our desired audience sat within them. My current company happens to have more search data than Yahoo! and Bing combined in a month, and we use that to find specific individuals that align perfectly with what advertisers are looking for. Search data on that scale is a great example of third-party big data.

Site retargeting may seem mainstream, but more than 75% of CMOs are throwing away dollars because they don’t understand the basics. I met with one a few weeks ago that was paying $5.50 CPM on a budget of $3.5m per year. Based on knowing the raw cost of media in the exchanges and service costs, I was able to demonstrate that 68% of that spend was pure profit for the vendor; her budget could have been reduced to about $1.4m and still target the exact same number of individuals and generate the same revenue.

The brand marketers have been the last to arrive in digital because real-time media started off as being very low quality, and not deemed suitable for their big buys where context mattered greatly. The media exchanges have evolved significantly since those early days, and all types of media, including premium, are available for purchase. Further, tools built into buying platforms screen out impressions that would run on undesirable sites, and as such, the brand dollars have started flowing.

Be Programmatic

The Programmatic CMO knows that programmatic marketing is about adding “right price” to the idea of “right person, right time, right message,” using data to make you smarter. It does not over complicate it.

The Programmatic CMO understands the mechanics of how it works, and is therefore paying a fair price for the service they are getting.

The Programmatic CMO fights the rusty phlanges.

Opinions expressed in the article are those of the guest author and not necessarily Marketing Land.

Related Topics: Channel: Display Advertising | Display Advertising | Display Advertising Column | Display Advertising: Programmatic Media Buying

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About The Author: is the Chief Strategy Officer at Chango, the solution to programmatic marketing and "big data", and is based in San Francisco and London. You can follow him on Twitter @DaxHamman.



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