Understanding the alphabet soup of programmatic advertising for pharma marketers

October 26, 2016

Author: Erin Warner, VP Strategy, Matt Arnold, Principal Analyst

In many industries, brands are wrestling with the degree to which programmatic should be handled in-house or delegated to agencies. Because pharma lags other industries on the programmatic adoption curve, most are leaving the execution to their agencies without much involvement. But it might be time pharmas better understood the business of programmatic buying, so that they can make some decisions about where to play. Doing so means untangling an alphabet soup of ad tech industry acronyms and terminology.

Here are some of the basics to get up to speed:

1)  Ad servers (a.k.a., "the ad delivery guy) deliver the advertiser’s creative assets (ads) to the publisher’s (website’s) inventory. For most advertisers, an ad server is already in place and is used to power traditional publisher-direct display, video, and native ad campaigns on both desktop and mobile inventory. Advertisers can use this same ad server for programmatic buying, enabling centralized management of creative assets across the advertiser's entire digital media footprint.

2) Demand Side Platforms (DSPs) (a.k.a., the ad auctioneer​) enable the advertiser to participate in biddable auctions for programmatic ad inventory. The DSP's core function is to assess the value of each available ad impression to the advertiser, calculate a value-based bid price, and submit that bid on behalf of the advertiser. At peak times of day, the DSP might process more than 1 million auctions per second, enabling the advertiser to buy only the impressions that best meet its marketing objectives. Advertisers can centralize all programmatic buying through a single DSP or utilize multiple DSPs for specialized functions like retargeting, video buying, or cross-screen targeting.

3) Data Management Platforms (DMPs) enable the advertiser to design and target custom audience segments based on their own first party data, as well as data purchased from third party data brokers. The DMP integrates the marketer's website visitation logs, app usage data, and offline CRM file into a single repository of audience profiles. The marketer can combine data points in flexible ways to define precise audience segments and then syndicate these segments to one or more DSPs for ad targeting.

4) An attribution system measures the effectiveness of paid digital media. The attribution system should at a minimum track all programmatic ad delivery and might also track user exposure to publisher-direct digital ad campaigns. Additionally, the attribution system measures business outcomes, which might include visits to the advertiser's website, foot traffic to real world places of business, online purchases, or offline purchases. The attribution system matches ad exposure data with business outcomes to assess how effectively paid advertising drives marketing KPIs.

 

 

The only must-have component of an ad tech stack is a Demand Side Platform (DSP) to actually execute the bidding and buying. However, we believe DMPs and attribution systems are critical investments for pharma marketers, who can use DMP-generated audience data to inform the buy and attribution systems to measure its reach and effectiveness. Perhaps more than any other category, targeting is uniquely challenging for pharma marketers. Pharma's target audiences can be narrow and tough to access, and are always subject to highly-regulated privacy requirements. DMPs can provide models of audiences that look like your target population to help you decide where and when to buy.

Measuring business outcomes also comes with substantial technical and privacy challenges. While agencies are best suited to manage programmatic media execution, we believe pharma marketers should look to an attribution vendor to fine-tune their spend. When properly integrated with the DSP, these custom targeting and measurement systems enable the marketer to more successfully plan and optimize programmatic buying activities.

To learn more about the programmatic landscape for pharma and to discuss any questions you may have, reach out to us at digital@teamdrg.com.

 

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