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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