What Is Programmatic Conversion?

07:19 reading time


NOTE: This is somewhat of a departure from our normal nerdery, but a pretty decent indication of how and why we’re building our Conversion Platform and the reason why we think it’s going to provide some meaningful value.

The term programmatic appears often in discussions of digital marketing and advertising. It’s most commonly deployed in compound form as programmatic media or programmatic buying, referring to the collection of information about consumer preferences, publisher inventory and pricing, advertiser goals, and the use of software programs to automate the dependent processes of data collection, purchasing, ad trafficking and performance management.

The big idea here is about efficiency, both in the sense that the software can perform calculations and make decisions at a scale and speed that eclipses that of human media buyers, and in the sense of efficient markets. As of the first half of 2015, the use of programmatic media, or programmatic buying, has become not just all the rage, but an expected component of the digital marketer’s toolbox.

Given all the focus on efficiency, it’s curious that few of the participants engaging in programmatic media ever speak about what happens after the ad is clicked. While the value for the publisher comes from the placement of the ad, the value for the advertiser—and hopefully, the consumer—emerges from the post-ad-click activity, or what we might broadly call conversion.

Conversion is the thing that the advertisement is ultimately trying to get you to do. It’s a sign-up, an inquiry, a registration, a subscription, a purchase. It’s the action to which we are being called. Conversion is the payoff for both the buyer and the seller, and the thing upon which all the attention and intention being captured in programmatic media ultimately depends. It’s the real money.

So where is the automation—where is the programmatic—for that part?

Some would suggest that the automation in this arena comprises activities like A/B and multivariate testing, or targeting and personalization, or the use of tag management software to confirm that conversion events are actually taking place. These are all eminently useful, even critical activities for digital marketers to pursue. And they make use of software-based data collection and implementation at a scope exceeding human capabilities. But are they programmatic?

No. 

They are point solutions, albeit extremely useful ones, attempting to solve for individual elements of a broader cyclical process. Their equivalent, in the programmatic media space, would be solutions that served only publishers, or only advertisers or even just the function of trafficking ads. We have had those for some time, and while they helped to create all kinds of local efficiency, the huge (efficient) markets for programmatic ad spending developed their size only when the automation comprised the full ecosystem.

So let’s define what programmatic should mean in the conversion landscape. Deep breath.

Programmatic Conversion is a system in which the automated collection of data across the domains of digital media, consumer preferences, devices and behavior is used to build models and rules for actively customizing the resulting exchanges of information between a consumer and a brand in a data-driven, customized and orchestrated set of interactions intended to produce a commercial outcome. These interactions may occur on a device, in an application, in a voice call, in a store, or when the first month’s bill arrives. However—and this is the crucial bit—true programmatic conversion only occurs when the connection between the process of data collection, modeling and rule-definition and its specific implementation across consumer interactions is continuous, cyclical, and self-referential. Simply put, the system feeds itself with its own results. This is what some have called a closed loop. 

The technology to do this exists across a diverse set of vendors in the business-to-consumer software-as-a-service space, and has for quite some time in the business-to-business software space. And yet for the most part, the technology exists in fairly disjointed parts, even where a ‘marketing cloud’ or ‘suite’ is purported to exist. Building a Programmatic Conversion solution is above all else about true integration, the kind that can be messy, time-consuming and requires customization, which SaaS players have little economic incentive to undertake. Programmatic Conversion requires integrating pieces of software and non-software operational processes in a highly instrumented fashion, especially the grittier aspects of digital marketing operations. These are less glamorous things like call center switch data or the provisioning of internal reference and tracking numbers in an enterprise marketing logistics system, or the accuracy of pricing and product data across a highly localized market footprint when rendered on a multitude of devices and formats. Programmatic Conversion includes observing and acting on not only the shiny objects like display and social and mobile, but the unglamorous locations where leaky pipes—a broken consumer experience—all too often emerge. It is certainly not for the faint-hearted.

At the risk of spawning a whole new category, let me clarify by saying that what it takes to make Programmatic Conversion happen is not merely software, but a team of people adopting a thought process. It’s defined by curiosity, operational diligence, and above all else, a willingness to ask questions and let the data decide. I’ve had the pleasure of working with such a team over the last several years to build a business-to-consumer Programmatic Conversion system. While we continue to iterate and improve upon what we built, it’s already delivering meaningful returns for large brands.

What connection exists between Programmatic Media and Programmatic Conversion? They are essentially the same concept, applied across two related domains. Audience insights drive efficient media campaigns, which produce efficient conversion, which generates further audience insights and media optimization, which drives further consumer behavioral insights and conversion optimization, in a continual, virtuous cycle. This is not just a concept, but a reality. At Leapfrog, we have delivered remarkable value to clients by connecting our programmatic conversion platform with a partner’s programmatic media platform. We’re going to keep improving it, because we think it’s a Big Deal.

Why?

The answer to that has a lot to do with the tectonic shift towards Digital TV. Declarations of impatience notwithstanding, the big money is already betting on the $84 billion opportunity associated with introducing audience-level—maybe even household-level—targeting to what will soon cease to be ‘traditional’ TV advertising. What has yet to be described is what happens when you attach not only programmatic techniques for media buying but programmatic techniques for conversion to a market of that size. The answer is: a fundamental shift in the way marketing occurs. Brands have the ability to target consumers across devices at an unprecedented scale—and not just in terms of reach and frequency. They can actually convert—close the deal, generate revenue, make money—right there in the midst of your multi-device Digital TV experience, whether linear, over-the-top, direct or otherwise. You see it on TV, you like it, you buy it. All in one clickstream. The sheer size of the data generated will fund an entirely new generation of marketing data science. The logic appears, as they say, inevitable.


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Joel Grossman
Chief Technology Officer