Why Creative Programmatic Ads Are Attracting Brand Marketers and Tech Investors

It’s all about targeting copy and images.

Originally published on AdWeek.

Believe it or not, 100 variations of the same ad are not enough for some digital marketers anymore. That’s one of the reasons the stars appear to be aligning for tech vendors that have been developing systems for what they call creative programmatic advertising.

Creative and programmatic once seemed incompatible, but here’s what is helping bring the two together. The long-called-for movement for makers of display ads to evolve from using Flash software to HTML5 is finally upon us, underscored by Amazon’s switch to HTML5-only promos and The Washington Post committing to publishing its content on Facebook with the software.

On desktops and mobile, ads via HTML5 work better than those made with Flash, improving campaign deliverability by as much as 50 percent and bolstering marketers’ willingness to budget for creative programmatic—defined as the science of targeting images and copy at individual consumers.

Now, advertiser and investor money is flowing to creative programmatic startups like PaperG, Persio and Spongecell, among others. For instance, PaperG this week announced a fundraising round of $5 million after picking up publishing clients including Hearst, Charter Media and Tribune.

“With Flash, you could have 10 different creatives with 10 different ways, so you’d have in the order of magnitude of about 100 different versions of the ad,” explained Scott Cunningham, svp at the Interactive Advertising Bureau and general manager of the IAB Tech Lab, which on Monday updated its display-ad guidelines to address what marketers need to know about HTML5.

“With HTML5, you are breaking apart the creative assets,” he added. “Therefore, you can dynamically insert different content for different targets and parameters. And that’s more cost-effective to produce.”

Cunningham’s not kidding. Spongecell has been running these kinds of promos for Australian supermarket chain Coles, which places 80 quintillion different programmatic ads weekly. Coles’ example is extreme, but other marketers are being drawn to similarly hyperpersonalized tactics. As another example, Persio has attracted clients like H&M, Kellogg’s and Hilton to creative programmatic with a focus on mobile. PaperG has signed up Sears, Bank of America, InterContinental Hotels Group and OptiShot.

“What we focus on and what I think the promise of programmatic creative is, is matching the creative to the hundreds or thousands of audience segments being created by data-management platforms like Oracle’s BlueKai,” said Victor Wong, CEO of PaperG.

According to Anagram, OptiShot’s agency, PaperG’s creative programmatic ads increased sales by 565 percent for the client. “Our conversion rates improved by 85 percent, and the message-testing campaign overall delivered a 1.5 [times the average] return on investment,” said Adam Cahill, who founded Anagram four months ago as a creative programmatic specialty shop.

There are those who believe there can be too much hyperpersonalization in ads.

“It’s not a long-term strategy,” said PopSugar’s evp of marketing Anna Fieler, who added that—while her publisher offers some programmatic ads—it mainly sells custom packages organized by actual people. “Video and native are what we are putting our efforts in,” she said.

Brands are increasingly bullish on programmatic. In the CPG category alone, 63 percent of digital display ads, representing $2 billion, will be purchased programmatically this year, according to eMarketer. It projects that programmatic will go from a $15 billion business this year to $27 billion in 2017.

Cunningham said that agencies in particular should prepare for how HTML5 may shake up programmatic while redefining creativity.

“For a lot of shops, it’s an adjustment,” he said. “The nuances of creativity that you can explore within HTML versus Flash are different. Any kind of transition or migration is going to have some pain points.”

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