A Look at How Programmatic Buying is Revolutionizing the Advertising Industry
Programmatic ad buying, driven by the rapid fragmentation of the media marketplace, is creating a revolution in the advertising industry. Advertisers are still expected to deliver the right content to the right consumer at the right time as in years past. Only now, advertisers are equipping themselves with data and technology that enables them to target audiences with extreme precision and engage in a more meaningful dialogue with consumers. And it’s having a positive impact on advertising ROI.
The revolution is creating a new class of advertiser. This new breed of marketer will develop strategies based on in-depth analysis of large amounts of customer data and then use algorithms to purchase and place ads across a broad range of digital media outlets. Their success will be based on data quality and their ability to respond quickly and efficiently to changes in consumer activity across multiple locations simultaneously.
Much like Wall Street quantitative analysts, known as quants, have revolutionized the securities industry over the last decade with data driven, computerized trading strategies, the rise of the quants on Madison Avenue will transform the advertising world by bringing specialized analysis to agencies and advertisers.
Unlike the advertisers of the past, Madison Avenue quants will use sophisticated systems that will help them determine the right time and place to deliver highly tailored advertising content to a specific consumer demographic. To be successful with this new advertising style, quants will rely on data analysis and advertising models that more closely mirror their target audiences’ lifestyle and routines. The advertising quants of tomorrow will look quite different from today’s advertisers. They will be equal parts savvy marketer, strategist, trader and analyst. This rapidly changing role may also impact who decides to go into advertising. Students and young professionals who would have once considered careers in Silicon Valley or Wall Street will increasingly be 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 and, consequently, what skills advertisers will need to be successful. While there will still be 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 must adapt their strategies in real-time, advertising quants, armed with consumer data and sophisticated algorithms, will apply the same approach when targeting audiences and buying ads.
While quants will still need to have a solid grasp on marketing fundamentals to be successful, they will need to expand their skill set and expertise to thrive in this new landscape. Entry- to mid-level quants will be expected to make intelligent use of data and technology to identify, develop, implement and measure ad campaigns. Undergraduate students on the advertising track will see more requirements for courses such as statistics, mathematics and business. At the graduate level, programs covering marketing analytics, marketing analysis and related subjects will become increasingly common. Centers focused on the merging of advertising and technology, such as Carnegie Mellon’s Center for Marketing Technology and Information, will 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 will move beyond just delivering timely ads to consumers based on location and browser history. They will be able to develop predictive advertising models tailored to the individual based on a much broader data set: online activities, geo-locations, social media posts, purchasing histories and brand loyalty, to name just a few. They will also be able to track the impact of the ad on consumer purchasing behavior for a longer period of time. By capturing and analyzing that data, quants will be able to target customers with the highest statistical probability of purchasing within the shortest time frame. And while the online and digital space will be the first domain of advertising quants, TV and radio will also become driven by programmatic ad buying strategies as traditional and digital channels continue their convergence.
Programmatic ad buying and the quants who will drive 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 the consumers. While the full impact of the industry’s new direction remains to be seen, one thing is certain. Like on Wall Street more than a decade ago, the quants have arrived on Madison Avenue, and they are intent on revolutionizing the advertising industry.