Guest blog: Programmatic Advertising for SMEs
According to the World Bank, small and medium enterprises (SMEs) account for about 90% of businesses and more than 50% of employment worldwide. A significant part of economic growth comes from SMEs in emerging markets, and a key part of this growth is closely related to marketing budgets. The internet has democratised advertising by offering the opportunity for SMEs to grow with effective marketing. The measurability and efficiency of online advertising at low costs, compared with traditional advertising, has made it a crucial way for SMEs to increase sales.
In recent years, programmatic advertising has offered advertisers another channel to reach their existing and potential audience. According to eMarketer, advertisers are expected to spend nearly USD$233bn , or 78% of their total digital display ad budgets, on programmatic advertising in 2017. The programmatic share of total US digital video ad spending is expected to rise to 75% by 2018. Currently Almost eight in 10 US mobile digital display ads are purchased programmatically—a portion that will rise to 85.2% by 2019.
The numbers show that programmatic advertising has become the preferred method for buying and selling digital ads and not all this ad spend comes from big brands. All advertisers aim to get the best out of their advertising efforts but especially SMEs, as they are grappling with limited budget and they expect a higher ROI. According to research from Deloitte in 2013, the advertising return on investment for an SME is eight times higher than the advertising ROI of a large advertiser. Digital advertising helps SMEs to scale up both locally and globally.
The different types of online advertising open to SMEs, including organic search, paid search, or premium display advertising, help SMEs to grow sales but they aren’t without challenges. Search engine optimisation is getting more competitive; CPCs in paid search are becoming more expensive, and the premium inventory space is becoming more crowded with big brands and media agencies. Buying inventory programmatically in the open marketplace allows for granular targeting and doesn’t require SMEs to purchase vast volumes of inventory at once. Instead, programmatic advertising helps them target their specific audience and prevents their ads being seen by audiences deemed to be less relevant; the net result being increased engagement and reduced costs.
Although programmatic advertising has a reputation for being expensive, technically complex, and only really suitable for branding campaigns for larger advertisers, simplified programmatic solutions are being developed by ad tech companies specifically to serve the SME market – otherwise known as the long-tail market segment. These solutions offer SMEs simplified tools to plan, buy, and target in real-time.
It’s important for SMEs to know the different transaction methods available in programmatic advertising and understand which method is most suitable for their business models. Private marketplaces and programmatic direct can be costly and involve complicated processes, yet an open exchange method through a public RTB auction allows buyers or sellers to participate with few restrictions. Self-serve platforms allow SME advertisers access to pre-segmented audience data across the full inventory available within a DSP, meaning there are limited barriers to entry if SMEs want granular targeting, but don’t have their own data to bring to the table. However, where an SME is sitting on a large pile of data, it’s not out of reach for them to create their own simple data management platforms through the integration of their first- and third-party data with the self-serve DSPs.
Self-serve DSPs are designed to be as easy as possible to use, requiring limited experience and offering features to make campaign management easy, including budget controls based on a number of different criteria. They also aren’t limiting when it comes to data targeting – geography, interest, or context across desktop, mobile or tablet through display, video, mobile or native ad formats. Pricing needn’t be restrictive either. While DSPs run campaigns based on a CPM pricing model, the option for CPC pricing is available. CPMs can be deemed expensive for SMEs, so the option to convert allows the smaller advertiser to keep control over performance, based on necessary metrics and KPIs.
The adoption rate for programmatic advertising among SMEs and smaller agencies is lower compared with the big brands and media agencies, but it needn’t be. Programmatic shouldn’t just be a luxury afforded by the big guys. The technology exists for programmatic to be a completely viable form of advertising for those with significantly smaller budgets and even those counting on a return from that budget. Training and education is also vitally important and can yield significant improvements in campaign performance – any decent self-serve platform should offer this to its smaller clients. SMEs are eager to learn new methods and are open to new opportunities for growth. Since their decision-making processes are faster and more flexible, once they get the logic behind programmatic, it becomes a core element of their marketing strategy.