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What’s real.<br />

What’s next.<br />

© 2014 CPXi


What’s real.<br />

What’s next.<br />

INTRODUCTION<br />

In an increasingly connected world, digital is gaining a greater share of total<br />

media ad spending, topped only by television. Last year, US online advertising<br />

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

for innovation and technological advancement. For the past few years,<br />

<strong>programmatic</strong> media buying was the answer.<br />

According to the Interactive Advertising Bureau (IAB), 85% of advertisers and<br />

72% of publishers participate in <strong>programmatic</strong>, a number that is expected to<br />

grow in the next two years. ii Those participating in <strong>programmatic</strong> can leverage<br />

sophisticated targeting tactics and real-time media optimization to improve<br />

the performance of their campaigns. But now that such high efficiency is<br />

becoming the norm in media, the <strong>creative</strong> portion of the process is having<br />

trouble keeping up. Advertisers cannot produce the array of <strong>creative</strong> assets<br />

required to take full advantage of digital within the timeframe necessary to<br />

optimize campaigns in real time and are therefore losing out on the benefit<br />

that <strong>programmatic</strong> media has created.<br />

Additionally, another opportunity of <strong>programmatic</strong> digital advertising is<br />

that advertisers can rapidly test and iterate campaigns, allowing them to<br />

optimize their placement and targeting tactics. Advertisers need to take a<br />

similar approach to testing the ads themselves, and they should assess best<br />

performing <strong>creative</strong> against those placements and audiences. The most<br />

successful campaigns find the optimal message, design, and mix of ad units.<br />

“Programmatic advertising has turned media buying on its head, and created<br />

an ecosystem in which online advertising is both more efficient and more<br />

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

be able to iterate high-quality <strong>creative</strong> on-the-fly that can keep up with the fast<br />

paced world of real-time bidding.”<br />

This special <strong>report</strong> will examine the scope of the problem facing advertisers,<br />

as well as the potential benefits that the digital advertising ecosystem can<br />

reap when employing an automated approach to the <strong>creative</strong> process, which<br />

we term Programmatic Creative. We will explore how Programmatic Creative<br />

enables advertisers to strengthen their position in the market with regards to<br />

the new four Cs: cost, competition, coverage, and capability.<br />

To conduct the research, CPXi looked to AppNexus. The AppNexus<br />

technology platform powers the world’s most innovative trading solutions and<br />

marketplaces for internet advertising. AppNexus’ industry leadership position<br />

afforded CPXi the most accurate picture of the internet advertising landscape<br />

as it exists today. Their data equipped CPXi with deep insight into how<br />

advertisers can better position themselves within the existing environment.<br />

© 2014 CPXi<br />

1


What’s real.<br />

What’s next.<br />

OBJECTIVES &<br />

METHODOLOGY<br />

The purpose of the study was to understand the performance of particular<br />

ad unit sizes and identify areas of opportunity for advertisers to take a<br />

more competitive position and make more educated decisions within the<br />

<strong>programmatic</strong> environment.<br />

Analysis was done on two distinct data sets representing an extensive<br />

combined pool of industry trends and performance data. To understand<br />

the current state of digital advertising and the <strong>programmatic</strong> environment,<br />

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

Each day, AppNexus sees over 80 billion impressions and transacts over 20<br />

billion impressions. The company’s huge scale provides a macro view of the<br />

distribution of display impressions and the granular performance insights to<br />

reveal where opportunities for efficiencies may exist. Additionally, in order to<br />

make conclusions around campaign performance, we looked at a year’s worth<br />

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

Overall, the analysis included:<br />

AppNexus<br />

CPXi<br />

Total<br />

Accounts<br />

1,387<br />

167<br />

1,554<br />

Campaigns<br />

104,414<br />

4,327<br />

108,741<br />

Impressions<br />

137.26 billion<br />

3.63 billion<br />

140.88 billion<br />

KEY<br />

TAKEAWAYS<br />

The more ad sizes a campaign uses, the better the performance.<br />

Campaigns using the top three display sizes have a CPM less than half<br />

that of campaigns using only the 300x250 unit, and campaigns with seven<br />

display sizes have a CPM 60% lower (all while CTR increased).<br />

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

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

To compete effectively in today’s <strong>programmatic</strong> media landscape,<br />

advertisers need to be able to leverage as many ad sizes as possible, but the<br />

cost and time associated with <strong>creative</strong> development make this unattainable<br />

for most.<br />

© 2014 CPXi<br />

2


What’s real.<br />

What’s next.<br />

THE SCOPE OF<br />

THE PROBLEM<br />

Less Common Ad Units Deliver Superior Performance<br />

Due to limited budgets, time and fear of the unknown, the majority of<br />

advertisers only employ the three most common unit sizes: Leaderboard<br />

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

found that 96% of impressions are reserved for these top three sizes (see<br />

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

Figure 1: Impression Volume by Unit Size<br />

Source: AppNexus, Global, December 2013<br />

THE VAST MAJORITY<br />

OF IMPRESSIONS<br />

ARE RESERVED FOR<br />

THE THREE MOST<br />

COMMON AD<br />

SIZES<br />

Figure 2: Campaigns by Unit Mix<br />

Source: AppNexus, Global, December 2013<br />

ADVERTISERS<br />

STICK WITH WHAT<br />

THEY KNOW, AS<br />

EVIDENCED BY THE<br />

FACT THAT 92%<br />

OF CAMPAIGNS<br />

EMPLOY ONLY<br />

THE THREE MOST<br />

COMMON SIZES<br />

© 2014 CPXi<br />

3


What’s real.<br />

What’s next.<br />

NON-COMMON<br />

DISPLAY SIZES<br />

(SUCH AS 250X250<br />

AND 468X60)<br />

PROVIDE THE<br />

GREATEST AREA<br />

OF OPPORTUNITY,<br />

WITH THE LOWEST<br />

CPM, CPC & CPA<br />

Figure 3: Cost Per Performance<br />

Metrics by Unit Size<br />

Source: AppNexus, Global, December 2013<br />

Contrary to popular belief, limiting<br />

unit size can actually hurt campaign<br />

performance. Despite the fact that<br />

the vast majority of impressions<br />

go to the three most common<br />

unit sizes, millions of uncontested<br />

impressions go to additional display<br />

sizes. By deploying only minimum<br />

standard units, advertisers are<br />

placed in a crowded environment,<br />

fighting with competitors for the<br />

most common placements. Within<br />

an RTB environment, this increased<br />

demand encourages advertisers to<br />

outbid one another and, as a result,<br />

pay more to reach their target<br />

audience (see Figure 3).<br />

We found that advertisers who<br />

utilize IAB standard and additional<br />

ad sizes often get the most bang<br />

for their buck, regardless of<br />

performance metric:<br />

Non-traditional display units,<br />

such as the Full Banner (486x60)<br />

and the Square (250x250) had<br />

the lowest CPM, CPC, and CPA<br />

When looking specifically at CPA,<br />

the common three units had<br />

some of the worst performance,<br />

with CPAs 3 to 4 times higher<br />

than the additional display units.<br />

Diversified Campaigns Outperform the Norm<br />

Diversification often delivers superior results in finance and other auctionbased<br />

industries. The display advertising industry is no different. Our research<br />

© 2014 CPXi<br />

4


What’s real.<br />

What’s next.<br />

has found that campaign performance significantly increases when an<br />

advertiser goes from one to three unit sizes, and even more when they go to<br />

seven (see Figure 4):<br />

Figure 4: CPM and CTR by Campaign Units<br />

Source: CPXi / AdReady, 2013<br />

ROI DRAMATICALLY<br />

INCREASES WHEN<br />

MORE AD SIZES<br />

ARE USED IN A<br />

CAMPAIGN, WITH<br />

CPM DECREASING<br />

UP TO 60% AND<br />

CTR INCREASING<br />

UP TO 85%<br />

Campaigns using only the standard Medium Rectangle (300x250) unit had a<br />

CPM more than double that of campaigns using all three common units, and<br />

more than one and a half times higher than campaigns using all seven display<br />

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

with campaigns utilizing all seven units performing significantly better.<br />

THE SOLUTION<br />

Programmatic Creative Delivers Scale & Efficiency<br />

Once advertisers understand the unit performance in the marketplace,<br />

they need to know how to compete within this environment. As mentioned<br />

earlier, advertisers need their <strong>creative</strong> development to keep up with their<br />

<strong>programmatic</strong> media. Programmatic Creative enables advertisers of any size<br />

to use technological solutions to manage and streamline the development of<br />

thousands of variations of an ad in a small period of time efficiently, and in<br />

many cases, for free. These ads are then available to the advertiser whenever<br />

they are needed, and the same sophisticated optimization opportunities are<br />

now available for the <strong>creative</strong>, as well as for the media.<br />

© 2014 CPXi<br />

5


What’s real.<br />

What’s next.<br />

In other words, Programmatic Creative enables advertisers to leverage<br />

automation technology to generate, iterate, and optimize <strong>creative</strong> assets to<br />

promote high-touch engagement regardless of digital strategy or budget.<br />

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

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

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

opportunity for the travel and entertainment industries, among others.”<br />

The best way to understand the concept of Programmatic Creative is to adapt<br />

a lesson taught in every Marketing 101 class across the country to the current<br />

technological digital landscape. There is a new set of factors to think about –<br />

the 4 Cs of Programmatic Creative:<br />

Cost Competition Coverage Capability<br />

COST:<br />

The Crippling Cost of Creative<br />

One debilitating factor preventing many advertisers from taking full advantage<br />

of <strong>programmatic</strong> is the exorbitant cost of developing the required <strong>creative</strong><br />

assets. Some advertisers and agencies try to sweep the cost issue under<br />

the carpet by allocating <strong>creative</strong> development to a different budget than<br />

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

calculations and an unclear bottom line. Margins and performance metrics are<br />

actually significantly less attractive once all costs, including <strong>creative</strong>, are taken<br />

into account.<br />

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

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

campaign with three ad sizes, the <strong>creative</strong> costs total four times the media<br />

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

of a <strong>programmatic</strong> environment, advertisers should run as many ad sizes as<br />

possible and build various versions of each unit to personalize their message to<br />

the specific target audiences. We have found that, on average, advertisers who<br />

successfully leverage <strong>programmatic</strong> <strong>creative</strong> have more than three versions of<br />

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

of a campaign skyrockets. This causes Return on Ad Spend (ROAS) calculations<br />

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

© 2014 CPXi<br />

6


What’s real.<br />

What’s next.<br />

Figure 5: Cost of Creative Development<br />

Source: CPXi / AdReady, 2013<br />

WHEN CREATIVE<br />

DEVELOPMENT<br />

COSTS ARE TAKEN<br />

INTO ACCOUNT,<br />

CAMPAIGN COSTS<br />

SKYROCKET,<br />

LEADING TO LOWER<br />

RETURN<br />

COMPETITION:<br />

Leveraging “Just In Time” Inventory<br />

A second reason that many advertisers limit themselves within a <strong>programmatic</strong><br />

environment is because they do not have the flexibility to respond to<br />

market or competitive forces at the moment that they arise. It is often too<br />

expensive or time consuming to produce effective <strong>creative</strong>, so advertisers miss<br />

out on opportunities.<br />

Borrowing from proven manufacturing processes, Programmatic Creative<br />

brings “Just In Time” inventory to the <strong>creative</strong> market. By leveraging<br />

automation technology, advertisers can develop a variety of <strong>creative</strong> assets<br />

and instantaneously change messaging and offers to respond to last-minute<br />

advertising needs.<br />

This benefit is particularly advantageous in industries with a limited, timesensitive<br />

offer, such as the airline industry, hospitality, and sports and<br />

entertainment. Now, when advertisers have unsold inventory, or when a<br />

competitor deploys a last-minute discount campaign, they can make <strong>creative</strong><br />

adjustments in real time.<br />

© 2014 CPXi<br />

7


What’s real.<br />

What’s next.<br />

Travel Advertiser Case Study<br />

CHALLENGE: A national airline had a tight marketing budget but wanted to reach an<br />

increasing number of markets while providing unique <strong>creative</strong> offers to highly-targeted<br />

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

advertising programs.<br />

APPROACH: The company used a <strong>programmatic</strong> <strong>creative</strong> solution to quickly and easily<br />

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

campaign development took just minutes.<br />

RESULTS: With <strong>programmatic</strong> <strong>creative</strong>, the airline increased its ROI by 125%. It also<br />

experienced improvements in CPM, CPA, and ROAS. Additionally, the solution was<br />

significantly less expensive than the company had paid for comparable services in the past.<br />

COVERAGE:<br />

Achieve Full Scale and Reach<br />

Once an advertiser has the necessary <strong>creative</strong> assets, they need to work within<br />

an environment that can combine these <strong>creative</strong> pieces with <strong>programmatic</strong><br />

media. By deploying only minimum standard units, advertisers lose access<br />

over 3.5 billion impressions monthly (see Figure 6), all while paying more<br />

for each impression. We have also found that in campaigns employing<br />

<strong>programmatic</strong> <strong>creative</strong> have seen increases in scale more than 10 times what<br />

the general population experiences.<br />

Figure 6: Impression Volume by Unit Size<br />

Source: AppNexus, Global, December 2013<br />

THE THREE<br />

MOST COMMON<br />

DISPLAY SIZES<br />

ACCOUNT FOR<br />

OVER 130 BILLION<br />

IMPRESSIONS,<br />

BUT THIS STILL<br />

LEAVES AT LEAST<br />

3.5 BILLION<br />

IMPRESSIONS ON<br />

THE TABLE WITH<br />

OTHER SIZES<br />

© 2014 CPXi<br />

8


What’s real.<br />

What’s next.<br />

The data in this <strong>report</strong> clearly shows that it is beneficial for advertisers to utilize<br />

multiple ad sizes to leverage the full potential of <strong>programmatic</strong> media. And<br />

it is well known that personalized, relevant content generates increased ad<br />

performance.<br />

However, many are unprepared to fully take advantage of the <strong>programmatic</strong><br />

environment. To address this issue, some attempt to use dynamic <strong>creative</strong><br />

solutions. One <strong>creative</strong> can be personalized for highly targeted campaigns<br />

at a fraction of the production costs. However, dynamic <strong>creative</strong> relies on a<br />

dynamic <strong>creative</strong> tag, which is not accepted by approximately 40% of publishers<br />

within the RTB environment. This results in limited placement options.<br />

Programmatic Creative solves this problem by offering dynamic units within<br />

a technological platform. It is easy to transform <strong>creative</strong> assets into various<br />

display, mobile and social units with minimal cost and time requirements,<br />

all using a standard ad tag that is universally accepted by publishers. This<br />

provides advertisers with full scale and coverage.<br />

CAPABILITY:<br />

Strengthen Your Position with Programmatic Creative<br />

Combining <strong>programmatic</strong> <strong>creative</strong> with <strong>programmatic</strong> media not only saves<br />

money on media, it can also significantly decrease – or even remove – the<br />

<strong>creative</strong> line item from an advertiser’s budget. This opens up the display<br />

market to a variety of local advertisers and smaller agencies that were<br />

previously priced out. Scale is no longer a differentiator reserved for the big<br />

boys. Advertisers of all sizes can access <strong>programmatic</strong> <strong>creative</strong> to compete in<br />

the vastly profitable display advertising game. By relying on technology rather<br />

than headcount, <strong>programmatic</strong> <strong>creative</strong> enables marketers to do themselves<br />

what once took a whole team of agency staffers, thus leveling the playing field<br />

and providing sophisticated display advertising capabilities to all advertisers.<br />

i<br />

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

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

ii<br />

“Programmatic Everywhere Data, Technology and the Future of Audience Engagement,”<br />

Winterberry Group and IAB, November 2013<br />

© 2014 CPXi<br />

9


What’s real.<br />

What’s next.<br />

PRESENTED BY:<br />

CPXi is a global digital media holding company with over a decade of experience connecting consumers<br />

with brands. The company has four primary divisions: bRealTime, offering <strong>programmatic</strong> solutions for<br />

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

agencies and direct marketers, Affiture, an affiliate network driving performance objectives, and;<br />

AdReady, providing a self-serve platform for <strong>programmatic</strong> <strong>creative</strong> and media placement. CPXi provides<br />

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

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

DATA PROVIDED BY:<br />

AppNexus, which offers the most powerful, open and customizable advertising technology platform, serves the<br />

largest and most innovative buyers and sellers of online advertising, including Microsoft Advertising Exchange,<br />

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

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

platform that empowers companies to build, manage andoptimize their entire online advertising businesses.<br />

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

Ventures, Microsoft, Venrock, Kodiak Venture Partners, Tribeca Venture Partners, First Round Capital, Marc<br />

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

© 2014 CPXi<br />

10

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