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programmatic_creative_report

What’s real.

What’s next.

© 2014 CPXi


What’s real.

What’s next.

INTRODUCTION

In an increasingly connected world, digital is gaining a greater share of total

media ad spending, topped only by television. Last year, US online advertising

spend soared to $42 billion. i As the digital industry grows, so does the need

for innovation and technological advancement. For the past few years,

programmatic media buying was the answer.

According to the Interactive Advertising Bureau (IAB), 85% of advertisers and

72% of publishers participate in programmatic, a number that is expected to

grow in the next two years. ii Those participating in programmatic can leverage

sophisticated targeting tactics and real-time media optimization to improve

the performance of their campaigns. But now that such high efficiency is

becoming the norm in media, the creative portion of the process is having

trouble keeping up. Advertisers cannot produce the array of creative assets

required to take full advantage of digital within the timeframe necessary to

optimize campaigns in real time and are therefore losing out on the benefit

that programmatic media has created.

Additionally, another opportunity of programmatic digital advertising is

that advertisers can rapidly test and iterate campaigns, allowing them to

optimize their placement and targeting tactics. Advertisers need to take a

similar approach to testing the ads themselves, and they should assess best

performing creative against those placements and audiences. The most

successful campaigns find the optimal message, design, and mix of ad units.

“Programmatic advertising has turned media buying on its head, and created

an ecosystem in which online advertising is both more efficient and more

effective,” says Jeff Hirsch, CMO of CPXi. “The next challenge for brands is to

be able to iterate high-quality creative on-the-fly that can keep up with the fast

paced world of real-time bidding.”

This special report will examine the scope of the problem facing advertisers,

as well as the potential benefits that the digital advertising ecosystem can

reap when employing an automated approach to the creative process, which

we term Programmatic Creative. We will explore how Programmatic Creative

enables advertisers to strengthen their position in the market with regards to

the new four Cs: cost, competition, coverage, and capability.

To conduct the research, CPXi looked to AppNexus. The AppNexus

technology platform powers the world’s most innovative trading solutions and

marketplaces for internet advertising. AppNexus’ industry leadership position

afforded CPXi the most accurate picture of the internet advertising landscape

as it exists today. Their data equipped CPXi with deep insight into how

advertisers can better position themselves within the existing environment.

© 2014 CPXi

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What’s real.

What’s next.

OBJECTIVES &

METHODOLOGY

The purpose of the study was to understand the performance of particular

ad unit sizes and identify areas of opportunity for advertisers to take a

more competitive position and make more educated decisions within the

programmatic environment.

Analysis was done on two distinct data sets representing an extensive

combined pool of industry trends and performance data. To understand

the current state of digital advertising and the programmatic environment,

we looked at a month’s worth of global AppNexus data (December 2013).

Each day, AppNexus sees over 80 billion impressions and transacts over 20

billion impressions. The company’s huge scale provides a macro view of the

distribution of display impressions and the granular performance insights to

reveal where opportunities for efficiencies may exist. Additionally, in order to

make conclusions around campaign performance, we looked at a year’s worth

of data from CPXi’s proprietary AdReady database (January – December 2013).

Overall, the analysis included:

AppNexus

CPXi

Total

Accounts

1,387

167

1,554

Campaigns

104,414

4,327

108,741

Impressions

137.26 billion

3.63 billion

140.88 billion

KEY

TAKEAWAYS

The more ad sizes a campaign uses, the better the performance.

Campaigns using the top three display sizes have a CPM less than half

that of campaigns using only the 300x250 unit, and campaigns with seven

display sizes have a CPM 60% lower (all while CTR increased).

Non-traditional display units, such as the Full Banner (486x60) and the

Square (250x250) had the lowest bid price for both CPM and CPC.

To compete effectively in today’s programmatic media landscape,

advertisers need to be able to leverage as many ad sizes as possible, but the

cost and time associated with creative development make this unattainable

for most.

© 2014 CPXi

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What’s real.

What’s next.

THE SCOPE OF

THE PROBLEM

Less Common Ad Units Deliver Superior Performance

Due to limited budgets, time and fear of the unknown, the majority of

advertisers only employ the three most common unit sizes: Leaderboard

(728x90), Medium Rectangle (300x250), and Wide Skyscraper (160x600). We

found that 96% of impressions are reserved for these top three sizes (see

Figure 1), and 92% of campaigns use only these top three sizes (see Figure 2).

Figure 1: Impression Volume by Unit Size

Source: AppNexus, Global, December 2013

THE VAST MAJORITY

OF IMPRESSIONS

ARE RESERVED FOR

THE THREE MOST

COMMON AD

SIZES

Figure 2: Campaigns by Unit Mix

Source: AppNexus, Global, December 2013

ADVERTISERS

STICK WITH WHAT

THEY KNOW, AS

EVIDENCED BY THE

FACT THAT 92%

OF CAMPAIGNS

EMPLOY ONLY

THE THREE MOST

COMMON SIZES

© 2014 CPXi

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What’s real.

What’s next.

NON-COMMON

DISPLAY SIZES

(SUCH AS 250X250

AND 468X60)

PROVIDE THE

GREATEST AREA

OF OPPORTUNITY,

WITH THE LOWEST

CPM, CPC & CPA

Figure 3: Cost Per Performance

Metrics by Unit Size

Source: AppNexus, Global, December 2013

Contrary to popular belief, limiting

unit size can actually hurt campaign

performance. Despite the fact that

the vast majority of impressions

go to the three most common

unit sizes, millions of uncontested

impressions go to additional display

sizes. By deploying only minimum

standard units, advertisers are

placed in a crowded environment,

fighting with competitors for the

most common placements. Within

an RTB environment, this increased

demand encourages advertisers to

outbid one another and, as a result,

pay more to reach their target

audience (see Figure 3).

We found that advertisers who

utilize IAB standard and additional

ad sizes often get the most bang

for their buck, regardless of

performance metric:

Non-traditional display units,

such as the Full Banner (486x60)

and the Square (250x250) had

the lowest CPM, CPC, and CPA

When looking specifically at CPA,

the common three units had

some of the worst performance,

with CPAs 3 to 4 times higher

than the additional display units.

Diversified Campaigns Outperform the Norm

Diversification often delivers superior results in finance and other auctionbased

industries. The display advertising industry is no different. Our research

© 2014 CPXi

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What’s real.

What’s next.

has found that campaign performance significantly increases when an

advertiser goes from one to three unit sizes, and even more when they go to

seven (see Figure 4):

Figure 4: CPM and CTR by Campaign Units

Source: CPXi / AdReady, 2013

ROI DRAMATICALLY

INCREASES WHEN

MORE AD SIZES

ARE USED IN A

CAMPAIGN, WITH

CPM DECREASING

UP TO 60% AND

CTR INCREASING

UP TO 85%

Campaigns using only the standard Medium Rectangle (300x250) unit had a

CPM more than double that of campaigns using all three common units, and

more than one and a half times higher than campaigns using all seven display

units. All the while, click-through rates grew with the number of ad unit sizes,

with campaigns utilizing all seven units performing significantly better.

THE SOLUTION

Programmatic Creative Delivers Scale & Efficiency

Once advertisers understand the unit performance in the marketplace,

they need to know how to compete within this environment. As mentioned

earlier, advertisers need their creative development to keep up with their

programmatic media. Programmatic Creative enables advertisers of any size

to use technological solutions to manage and streamline the development of

thousands of variations of an ad in a small period of time efficiently, and in

many cases, for free. These ads are then available to the advertiser whenever

they are needed, and the same sophisticated optimization opportunities are

now available for the creative, as well as for the media.

© 2014 CPXi

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What’s real.

What’s next.

In other words, Programmatic Creative enables advertisers to leverage

automation technology to generate, iterate, and optimize creative assets to

promote high-touch engagement regardless of digital strategy or budget.

“This isn’t dynamic display. Programmatic Creative is the ability to create and

iterate ads in real-time, giving brands more control than they’ve ever had

in the past,” says Jeff Hirsch, CMO of CPXi. “This tactic offers a tremendous

opportunity for the travel and entertainment industries, among others.”

The best way to understand the concept of Programmatic Creative is to adapt

a lesson taught in every Marketing 101 class across the country to the current

technological digital landscape. There is a new set of factors to think about –

the 4 Cs of Programmatic Creative:

Cost Competition Coverage Capability

COST:

The Crippling Cost of Creative

One debilitating factor preventing many advertisers from taking full advantage

of programmatic is the exorbitant cost of developing the required creative

assets. Some advertisers and agencies try to sweep the cost issue under

the carpet by allocating creative development to a different budget than

their media spend. This only leads to inaccurate Return on Ad Spend (ROAS)

calculations and an unclear bottom line. Margins and performance metrics are

actually significantly less attractive once all costs, including creative, are taken

into account.

Let’s assume that the media spend for a campaign totals $30,000. The

typical cost of creating a single ad unit is approximately $2,000. To run a

campaign with three ad sizes, the creative costs total four times the media

cost. But it doesn’t end there. As we saw before, to leverage the full benefit

of a programmatic environment, advertisers should run as many ad sizes as

possible and build various versions of each unit to personalize their message to

the specific target audiences. We have found that, on average, advertisers who

successfully leverage programmatic creative have more than three versions of

each ad size per campaign. When you add all of these costs together, the price

of a campaign skyrockets. This causes Return on Ad Spend (ROAS) calculations

to look a lot less desirable, even bringing them into the red (see Figure 5).

© 2014 CPXi

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What’s real.

What’s next.

Figure 5: Cost of Creative Development

Source: CPXi / AdReady, 2013

WHEN CREATIVE

DEVELOPMENT

COSTS ARE TAKEN

INTO ACCOUNT,

CAMPAIGN COSTS

SKYROCKET,

LEADING TO LOWER

RETURN

COMPETITION:

Leveraging “Just In Time” Inventory

A second reason that many advertisers limit themselves within a programmatic

environment is because they do not have the flexibility to respond to

market or competitive forces at the moment that they arise. It is often too

expensive or time consuming to produce effective creative, so advertisers miss

out on opportunities.

Borrowing from proven manufacturing processes, Programmatic Creative

brings “Just In Time” inventory to the creative market. By leveraging

automation technology, advertisers can develop a variety of creative assets

and instantaneously change messaging and offers to respond to last-minute

advertising needs.

This benefit is particularly advantageous in industries with a limited, timesensitive

offer, such as the airline industry, hospitality, and sports and

entertainment. Now, when advertisers have unsold inventory, or when a

competitor deploys a last-minute discount campaign, they can make creative

adjustments in real time.

© 2014 CPXi

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What’s real.

What’s next.

Travel Advertiser Case Study

CHALLENGE: A national airline had a tight marketing budget but wanted to reach an

increasing number of markets while providing unique creative offers to highly-targeted

groups. It needed an affordable, easy-to-use, comprehensive system to manage its display

advertising programs.

APPROACH: The company used a programmatic creative solution to quickly and easily

set up hundreds of localized ads in a wide variety of sizes and formats. Instead of weeks,

campaign development took just minutes.

RESULTS: With programmatic creative, the airline increased its ROI by 125%. It also

experienced improvements in CPM, CPA, and ROAS. Additionally, the solution was

significantly less expensive than the company had paid for comparable services in the past.

COVERAGE:

Achieve Full Scale and Reach

Once an advertiser has the necessary creative assets, they need to work within

an environment that can combine these creative pieces with programmatic

media. By deploying only minimum standard units, advertisers lose access

over 3.5 billion impressions monthly (see Figure 6), all while paying more

for each impression. We have also found that in campaigns employing

programmatic creative have seen increases in scale more than 10 times what

the general population experiences.

Figure 6: Impression Volume by Unit Size

Source: AppNexus, Global, December 2013

THE THREE

MOST COMMON

DISPLAY SIZES

ACCOUNT FOR

OVER 130 BILLION

IMPRESSIONS,

BUT THIS STILL

LEAVES AT LEAST

3.5 BILLION

IMPRESSIONS ON

THE TABLE WITH

OTHER SIZES

© 2014 CPXi

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What’s real.

What’s next.

The data in this report clearly shows that it is beneficial for advertisers to utilize

multiple ad sizes to leverage the full potential of programmatic media. And

it is well known that personalized, relevant content generates increased ad

performance.

However, many are unprepared to fully take advantage of the programmatic

environment. To address this issue, some attempt to use dynamic creative

solutions. One creative can be personalized for highly targeted campaigns

at a fraction of the production costs. However, dynamic creative relies on a

dynamic creative tag, which is not accepted by approximately 40% of publishers

within the RTB environment. This results in limited placement options.

Programmatic Creative solves this problem by offering dynamic units within

a technological platform. It is easy to transform creative assets into various

display, mobile and social units with minimal cost and time requirements,

all using a standard ad tag that is universally accepted by publishers. This

provides advertisers with full scale and coverage.

CAPABILITY:

Strengthen Your Position with Programmatic Creative

Combining programmatic creative with programmatic media not only saves

money on media, it can also significantly decrease – or even remove – the

creative line item from an advertiser’s budget. This opens up the display

market to a variety of local advertisers and smaller agencies that were

previously priced out. Scale is no longer a differentiator reserved for the big

boys. Advertisers of all sizes can access programmatic creative to compete in

the vastly profitable display advertising game. By relying on technology rather

than headcount, programmatic creative enables marketers to do themselves

what once took a whole team of agency staffers, thus leveling the playing field

and providing sophisticated display advertising capabilities to all advertisers.

i

“US Total Media Ad Spend Inches Up, Pushed by Digital,” eMarketer, August 22, 2013,

http://www.emarketer.com/Article/US-Total-Media-Ad-Spend-Inches-Up-Pushed-by-Digital/1010154

ii

“Programmatic Everywhere Data, Technology and the Future of Audience Engagement,”

Winterberry Group and IAB, November 2013

© 2014 CPXi

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What’s real.

What’s next.

PRESENTED BY:

CPXi is a global digital media holding company with over a decade of experience connecting consumers

with brands. The company has four primary divisions: bRealTime, offering programmatic solutions for

both demand and supply side partners; Simplixity, providing full service media execution for brands,

agencies and direct marketers, Affiture, an affiliate network driving performance objectives, and;

AdReady, providing a self-serve platform for programmatic creative and media placement. CPXi provides

multi-screen messaging, leveraging display, social, mobile and video advertising at scale, serving billions of

managed impressions daily. CPXi is a privately held company. For more information, visit www.cpxi.com.

DATA PROVIDED BY:

AppNexus, which offers the most powerful, open and customizable advertising technology platform, serves the

largest and most innovative buyers and sellers of online advertising, including Microsoft Advertising Exchange,

Interactive Media (Deutsche Telekom) and Collective. Led by the pioneers of the Web’s original ad exchanges

at Yahoo!’s Right Media and Google’s DoubleClick, AppNexus offers the industry’s most advanced technology

platform that empowers companies to build, manage andoptimize their entire online advertising businesses.

Based in New York City, AppNexus is backed by an outstanding group of investors including Technology Crossover

Ventures, Microsoft, Venrock, Kodiak Venture Partners, Tribeca Venture Partners, First Round Capital, Marc

Andreessen, Ben Horowitz, Ron Conway and Khosla Ventures. For more information, visit www.appnexus.com.

© 2014 CPXi

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