If you are involved in digital advertising, you’ve probably heard about programmatic buying over the past couple of years. Your ears perked at the notion of automating your digital ad spend. Why? You could skip worrying about negotiating ad prices with a publisher and waiting on an insertion order before you ever get your ad out there.

Instead, you can execute media buys through digital platforms such as ad exchanges (OpenX, AppNexus, DoubleClick, etc.), ad networks or trading decks where you bid on available ad spaces from multiple publishers on demand. Perhaps you marveled at the concept of using algorithms to help determine the best path for the greatest ROI, based on an endless supply of data available about potential customers. With the ability to purchase ads in real time and the opportunity to show one ad, to one specific customer, in one specific context that fit your needs, you no longer need to generally blanket the ad to anyone who might be interested. This sure does sound like the future. But then again, you work in pharma marketing—nothing is that easy.

“In the past, pharma has tried to shy away from real-time and programmatic buying because these methods rely so heavily on cookies and could violate patient privacy,” explains Jeff Bander, the President of media technology company Sticky. “However, as these programmatic channels mature, we are seeing innovative players bring much more transparency to the market. The industry is moving towards complete transparency in targeting methods, data leveraged and inventory source.”

That’s good news for pharma marketers. It becomes clearer by the day: Programmatic buying is, in fact, the future. According to Magna Global research, the share of programmatic spend in U.S. digital media (display-related) transactions, will expand from 38% in 2012 to 53% this year and then 83% by 2017. Meanwhile, a September 2013 survey by Winterberry Group and the Interactive Advertising Bureau revealed that U.S. marketing executives plan to significantly increase their use of programmatic approaches in several areas over the next two years: To automate the back-end process, to develop insight,  to automate the “premium” digital media buying processes, to optimize content and more.

“Marketing automation as a whole is increasing,” says Jim Lefevere, Global Head of Digital Marketing at Roche. “However, in the short term I think raising awareness of this trend is necessary because it is becoming easier to put more marketing dollars to work through programmatic buying, which is traditionally outsourced to an agency. Long term, I think this is more disruptive to agencies because media buying is no longer a ‘black box.’ There will be more pressure on agencies to prove value.”

Considering that programmatic buying is steadily increasing (and not likely to go away) and that new technology is allowing pharma to join the party, here is a guide to what pharma marketers should know about programmatic buying, how it can make their lives easier and where this is all headed.

Pharma’s First Step

“Programmatic buying is indeed a major disruptive force, but pharma has not yet capitalized on it fully,” says R.J. Lewis, President and CEO of eHealthcare Solutions. “Programmatic presents interesting challenges for pharma—and their agencies—because the notion of buying audiences—not brands—is disruptive to the way many pharma agencies operate today.”

For instance, Lewis cited Publicis’ recent upfront deal with Google as an example of the way pharma marketers tend to operate. According to Lewis, Publicis, presumably acting on their client’s needs, agreed to pay more than they would pay on the open auction market in order to secure fixed quantities of inventory at a known price. And right now, that might be pharma’s best course of action.

“Most programmatic buying is occurring on lower quality websites, which represents challenges in a highly regulated industry,” explains Lewis. “Most premium publishers, while dabbling, are not committing major inventory volume to programmatic bidding.”

However, pharma has started to take advantage of cookie-driven retargeting, which Lewis describes as what happens when an ad is delivered to a user based on their past surfing behaviors, i.e., if consumers go to a page about allergies then, on a different page, they will find an allergy advertisement.

“Retargeting historically presents some privacy challenges for pharmaceutical companies, but we are seeing increasing adoption of retargeting as a tactic,” adds Lewis, “particularly with the physician/HCP audience, since it works so well.”

Ratko Vidakovic, Senior Director, Product at SiteScout, a self-serve advertising platform, calls retargeting the “filet mignon” of display advertising and the easiest way for pharma marketers to leverage programmatic platforms right off the bat. Additionally, Vidakovic suggests using contextual targeting since it does not require cookies and still allows advertisers to target ad space only on pages that relate to a specific topic or category.

Achieving Greater Efficiency

One of the biggest advantages of programmatic buying is having the ability to achieve more effective campaigns, while spending less of your budget and wasting less of your time. For example, Vidakovic says that you can say goodbye to outdated tools like Excel, Word and fax machines when executing ad buys, which makes for an easier workflow. And of course, there is the pricing efficiency that comes as a result of improved targeting. According to Vidakovic, you can expect greater ROI. Why? Because you only buy the ad space impressions you want, so ad spend is used much more efficiently. But overall, more power is shifting to the advertiser.

In fact, Nicky McShane, European Managing Director at the marketing solutions company 24/7 Media, believes that “programmatic buying gives control to the advertiser.” One reason for this: The advertiser’s new ability to bid per impression. This can be key for pharma companies as it will give them full transparency and allow them to monitor their campaigns in real time. Vidakovic points out that the other advantage of bidding on each individual page view is that pharma can now target each ad view based on the dozens of—if not more—characteristics available about the person viewing the page, which makes it easier to reach very specific audience segments.

This technology also offers advertisers less hassle when purchasing ad space because they no longer have to deal with intermediaries. Instead, pharma marketers deal directly with the publisher, which can also make it easier to monitor the budget of campaigns in real time, and track exactly how much spend is being allocated to reach a target audience.

“As programmatic buying becomes more widely adopted, it will increase both the volume and the quality of inventory that pharma is able to access,” explains McShane. “Increasingly, publishers are looking to programmatic buying as an efficient way to sell their inventory. Spend is naturally moving to this way of trading due to its transparency and efficiency. This is a trend that will not be sector specific.”

Reaching the Right Audience

Built on data-driven optimization and algorithms, programmatic buying can analyze both page-level content on one end and the human experience on the other. This type of insight makes it easier for advertisers to find either the right place or the right person with whom to start or continue a conversation.

“There’s always been a degree of sensitivity to the way data is used for targeting in pharma. We’re talking about real personal and private information, as opposed to selling diapers to someone we’ve identified as a mother through data,” explains Andrea Palmer, Vice President/Group Director Media at Publicis Health Media. “However, consumer’s expectations are set outside of healthcare and certainly outside of pharma, so it’s increasingly critical to continue to evolve alongside the technology available to us as marketers so our communications are meaningful to the right people.”

Eric Bader, the Chief Marketing Officer at RadiumOne, says his company has developed a proprietary methodology for matching anonymous registration data from billions of online and mobile users. This would allow pharma marketers to target tailored messages to consumers without using cookies or other questionable “fingerprinting” tactics. Not only would these anonymous audience targeting techniques allow pharma marketers to precisely track audiences across sessions—from the web to social to mobile—but it also provides marketers with real-time impressions and consumer behaviors.

“Marketers shouldn’t stop at just programmatically buying media across different channels, but should start using the anonymous data insights they collect during their campaigns to become progressively more accurate,” says Bader. “They should look for those vendors using cross platform approaches that house all those insights in a single place to optimize their analytics. That gives them a more complete picture of their customers and the power to target with extreme accuracy to generate increasingly successful campaigns.”

Palmer agrees that the real opportunity will be figuring out how to use the long tail of data already available to marketers in terms of finding out where people are in their patient journey, and then being able to deliver more resonant content to the most receptive audiences.

“The ability to look at the consumer’s behavior over an extended period of time,” says Palmer, “and evolve with them based on where they’ve been and what information they desire, will help pharma truly become consumer-centric.”

Where Programmatic is Headed

Greg Cohen, Sr. Manager, Social Media & Influence at UCB, believes that programmatic buying will be a terrific way for standardizing/simplifying the purchasing process for online pharma advertisers, just as it has improved the process in other industries. But he doesn’t think that programmatic buying will completely take over online advertising.

“Just as in the programmatic purchasing of stocks, purchasing advertising is similarly based on the analysis of quantifiable data,” explains Cohen. “What we may see, as a result, is the Pareto Principle coming to online advertising buying: Allow 80% of the advertising purchased to be done by programmatic purchasers, but reserve 20% of the total purchase to experiment with emerging media platforms and publishers. That 20% will need to be based on real insight derived from qualitative sources (i.e., patients, physicians, payers) that may look unattractive in a traditional programmatic schedule of purchasing.”

However, Cohen does think that programmatic buying will help to level the playing field a bit, because the technology is just too good to actually set apart any specific purchaser. This means that agencies will need to evolve and find creative ways to package and deliver pharma campaigns that go outside of the “new normal” bounds of programmatic purchasing. According to Cohen, that could mean bundling offline and online creative packages, creating more immersive experiences, or even enhancing emphasis on social media as a creative source, since those activities cannot be programmatically developed and delivered.

“Pharma companies will need to reshape the way they view social media and online content as a whole,” says Cohen, “since that may become the only differentiating opportunity for them to effectively message to various online target audiences.”

Bander also believes programmatic buying has the potential to change the buying landscape by allowing Rx brands to target ideal consumers in lieu of purchasing inventory based on assumed behavior at a set price, giving the pharma industry a cost effective opportunity to deliver the right advertisement to the right user at the right time.

“At the end of the day, pharma will truly embrace programmatic, as the industry sees the following issues begin to subside: Brand safety, fraud, viewability and targeting accuracy,” says Bander. “Of course, the landscape is unique and the privacy concerns are real, but with contextual targeting to establish intent, and care taken with regards to HIPAA, the pharma industry can embrace these methods.”

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