Programmatic buying, or buying online advertising through a machine-to-machine digital marketplace, is changing digital advertising. Programmatic has been a staple for consumer packaged goods (CPG) companies for several years. This buying method generally exceeds 50% of the online advertising media budget today of a CPG company, but pharmaceutical brands have been slower to adapt.
The fears behind pharma’s adoption of programmatic include:
- Quality and location ad placement.
- Various restrictions that come with some pharma advertising such as competitive exclusions.
- Fear of appearing on user-generated content (next to a random adverse event comment).
- Global corporate policies restricting retargeting.
However, the market is evolving and pharma is engaging in programmatic ad buying. What is most interesting about this evolution is how this shift is likely to impact the larger media ecosystem.
A Look From the Agency Perspective
Agencies are building, buying or partnering to offer programmatic buying services. The irony is that CPG companies who spend considerable dollars programmatically often develop their own in-house media groups. That’s because execution is simpler as the tools evolve to make placing targeting to anyone you choose, anywhere online, as easy as placing a buy order for a stock trade.
Agencies that build their own exchanges, by definition create a limited marketplace since they only support a portion of buy-side. Competitive agencies are not likely to participate. Furthermore, it is the publishers who control the data around identifying doctors, targeted patient populations, and the other data that drives programmatic targeting.
Without a willing participation by publishers to give up their data to an agency exchange, agency exchanges lack quality data on which to target. An agency that is planning for a brand and spending in their own exchange is presented with a conflict of interest. The agency is neither independent nor neutral in their planning any more. Models in which the clients’ best interests are compromised typically don’t last long.
A Look From the Publisher’s Perspective
Publishers are often in no better position to create or build an exchange for the mirror image reasons. Competitive publishers are unlikely to join a competitor’s exchange, so supply is very limited. Yet publishers are drawn to programmatic because they can reduce expensive sales staffs, streamline and simplify ad operations, and plug into unlimited advertising sources. Yet, they are often disappointed in the rates they receive, since the exchanges themselves often capture up to half of the revenues by the time an ad reaches the page.
To be successful, independent programmatic marketplaces require data on which to target, widespread participation from both buyers and sellers of media, transparency, and participant controls such as buyer price caps, selling pricing floors, and identified ad placements. Programmatic media buying creates an opportunity for marketers to increase the effectiveness of their media spend by reducing much of the friction cost that comes with the media planning and buying process. It does this while also increasing the efficiency of that spend, often through paying less to reach the same high quality audience.