Basis has been named Ad Age's #1 Best Places to Work in its 2024 rankings, leading all companies with over 200 employees. The annual list honors companies that are "quantifiably ahead of the pack", factoring in everything from pay, to benefits, to corporate culture and leadership.

The list for 2024 is particularly notable, showcasing 50 companies after a year in which advertising businesses faced the joint challenges of an unsettled economy, a changing media market, and a tight talent pool.

In its story, Ad Age recognized Basis for its industry-leading benefits and culture, including its popular Flex Friday initiative:

"Throughout 2023," it notes, "Basis offered a program of flexible Fridays, during which employees were allowed a respite from the normal wheelspin to take time as they saw fit, such as completing personal errands, learning new professional skills or getting a head start on the weekend. Basis tinkered with the format, alternating each week between a full day and half day of flexibility in order to find the right balance of productivity and relaxation. The program became a win-win for employer and employees...and the company is continuing it in the form of weekly half-days of flexibility through 2024."

To find out more about what this recognition means to Basis, we spoke with Michelle Michael (VP, Talent Acquisition) about the honor and what makes Basis such a special place to work.

Let's start with a big one: Why do you think Basis is such a special place to work?

Michelle Michael: Everyone always says, “It’s the people.” And even though it sounds cliché, it’s true. We treat people like human beings, and we encourage everyone to be their whole selves at Basis. 

I’ve been here for 10 years, and I’ve never seen an attitude of “This isn’t my problem,” or “I'm too busy to help you,” or “I don't care what's going on with you”. In my experience, it's been the opposite of a toxic culture, and people feel cared for. They feel supported. And that's true regardless of whether it's about work or in your personal life.

When it comes to perks and benefits, what do you think people most value about working at Basis?

MM: I think people really value Basis’ emphasis on flexibility and support.

Our flexible paid time off policy, Flex Fridays, and the ability to work remotely allow our people to work and use their time in ways that are best for them. Basis’ contributions to employees’ health savings accounts, 401k accounts, and student loan payments allow for financial freedom and for employees to accomplish more with their money. Flexibility with time and money is always going to be a top benefit for people!

When it comes to support, Basis offers amazing resources like access to mental health apps such as Ginger and Headspace, an annual wellness and benefits event called Wellnesspalooza, and custom training and education programming. We always try to take the extra step at every opportunity to support our people.

Support at Basis also goes beyond traditional “benefits”. It’s a part of our culture: It’s getting a gift in the mail after you have a baby with your partner, it’s getting flowers if you're going through a challenging time in your life, it’s a virtual party thrown by your coworkers for your 10-year anniversary—that’s the kind of culture we have here at Basis.

What does this recognition mean to you, and to Basis?

MM: It’s very validating. So many people here work really hard to make Basis special. From the tech teams making a product that is changing the industry for the better, to the services teams that put clients’ needs first, to the Talent & Development team that is constantly curating a wonderful experience for our employees. It definitely feels validating to have that sort of work, care, and culture recognized and celebrated.

Why do you think being a great place to work makes a difference for Basis as a company, what do you think it means for our clients/users?

Basis subscribes to the belief that the happier our employees are, the better we can service our clients, and the happier they're going to be, too.

It's all connected. Our founder, Shawn, knew this from day one, when he said that happy employees lead to better ROI, meaning happier clients and more success. Because you're not going to have a successful company or a successful product (at least, not for long!) if you have miserable people working for you. This type of recognition and celebration only motivates us to do more—to be more innovative, to be more supportive, and to continue to listen closely to our employees so that we can continue to create the type of environment that makes Basis so special.


At Basis Technologies, we believe we're most successful when our employees feel like the best version of themselves. To celebrate this recognition, we asked a few members of our incredible team to share what working at Basis means to them:

What’s new in the realms of paid search and social media? This month, Nick Tuttle, Director of Search Media Investment, and Lauren Brown, Director of Social Media Investment, compiled all the latest news, trends, and resources for easy access.

TikTok Is Exploring a Partnership with Google to Drive Search Traffic [:03]

TikTok and Google are exploring a new partnership that would integrate Google’s search prompts and web-based search results into TikTok’s own search stream. Clicking or tapping a result would open a web browser within TikTok rather than opening Chrome or another app. This initiative arose from studies that, according to Google SVP Prabhakar Raghavan, show “almost 40% of young people, when they’re looking for a place for lunch, they don’t go to Google Maps or Search. They go to TikTok or Instagram.”

X Considers Removing All Engagement Counts and Buttons on Posts [:03]

All of X’s interaction counts and action buttons—except the views counter, added back in December—may soon only be visible within the post details (viewable once users click into or expand the post). When Instagram tested something similar in 2019, post engagement declined, so this will likely cause a drop in X’s reposts and quotes. However, analysts suggest this could also slow the spread of misinformation and may lessen competition for vanity metrics.

A GIF of John Travolta from the movie "Pulp Fiction" looking around trying to find something.
No likes? Replies? Nothin’?

X is Looking To Launch New Tiered Premium Pricing Packages [:04]

X appears to be close to launching new pricing tiers for X Premium, including an ad-free subscription option. Recently surfaced back-end code suggests there may be three tiers: X Premium Basic, X Premium Standard, and X Premium Plus. X owner Elon Musk claims that encouraging users to pay for the app is a way to combat the rise of bots and AI-generated spam.

Meta Proposes $14-Per-Month Charge for Ad-Free Facebook [:03]

The Wall Street Journal detailed pricing for Meta’s proposed ad-free Facebook and Instagram subscriptions, based on Meta’s submission to European Union officials. The impetus for these ad-free options is the EU’s evolving data privacy regulations, which put more strain on Meta’s capacity to personalize ads and content based on user activity. According to WSJ, Meta’s plans would cost around $14 per month for an ad-free Facebook or $17 per month for both Facebook and Instagram.

A GIF of Jon Stewart wiping away fake tears with a $100 bill.
Hope X and Meta get the boost they need.

6 Microsoft Audience Ads Product Updates [:03]

Microsoft kicked off the fall with a series of new product updates for Audience Ads. The tech giant said these updates will help advertisers achieve better results with less effort and create more engaging ads that are served to a higher-value audience. Expect to see ads in new markets, within more games, on additional video platforms, and in the free consumer version of Microsoft 365. Predictive targeting and new AI bid strategies are also part of the rollout.

Microsoft CEO: AI Will Make Google More Dominant [:05]

Despite investing $100 billion in Bing, the search engine says it simply can't compete with Google due to its monopoly position, according to Microsoft CEO Satya Nadella. The ongoing US vs. Google anti-trust trial has already uncovered behavior from Google like raising ad prices to meet revenue targets. The trial’s outcome could potentially reshape the company and the search landscape.

A GIF of Thanos adding the yellow stone to his infinity gauntlet and becoming even more powerful.
“Just a little AI here, and…oh yeah, that’s the good stuff…”

3 Key Trends Reshaping YouTube Marketing Today [:10]

As the world's largest video sharing platform, YouTube is ripe for data analysis on its users, content, and performance metrics. A look at the current state of AI-generated content, user and creator demographics, and expectations for multiple languages for accessibility has uncovered trends that could soon impact YouTube creative development and audience targeting.

Meta Debuts Generative AI Features for Advertisers [:02]

Meta is rolling out its first generative AI-powered features in Ads Manager for ad creative—Text Variations, Image Expansion, and Background Generation—to enable the creation of ad variations quickly and automatically, with the system optimizing to the best-performing ads.

Amazon Planning Major AI Revamp That Will Change the Search Experience [:03]

Amazon is set to roll out upgraded generative AI capabilities that offer a more conversational, detailed, and personalized user experience. Shoppers will be able to compare products in real time and seek additional details, reviews, and recommendations tailored to their search context. Advertisers may need to reassess campaign strategies to maintain visibility among AI-powered results.

A constant stream of packages coming down a conveyor belt.
Keep ’em comin’, Amazon… keeeeep ’em comin’…

Want a monthly digest of all the best digital marketing articles, POVs, and reports delivered straight to your inbox? Sign up for the Basis Scout newsletter!

Think back to the last time you registered for a webinar or downloaded an e-book or whitepaper. Had you been actively searching for material around its themes? Was it recommended to you by a colleague? Or were you roaming the web and a business ad persuaded you to register or download right there in the moment?

If that last scenario applies, you were enticed by the company’s direct response marketing—a form of advertising designed specifically to elicit an immediate response from a prospect. Such tactics may not pull at the heartstrings quite like big-budget brand-building initiatives—the ones you might see illuminating Times Square or running throughout the Olympics—yet for many advertisers, they are the bread and butter of growth and nurture campaign programs. When rolled out correctly, direct response marketing can be a highly effective means of quickly generating leads and guiding target audiences through the sales funnel.

So, what are the components of direct response marketing? What benefits does it offer brands? On what channels is it best to deploy? And what are some examples of direct response marketing and best practices advertisers can apply to their campaigns? Read on for answers to all these questions, and more!

What is Direct Response Marketing?

Consumers today want trustworthiness, personalization, and more control throughout their buying journey. They like to independently navigate their way to a purchase decision (particularly those in B2B) and expect brands to educate and inspire them on their journey rather than simply market their commodities and value propositions.

Of course, direct response marketing can (and often does) directly solicit audiences to make a purchase, but a large part of this tactic is getting prospects to engage with your brand in a way that feels less aggressive and more organic. Some common examples of direct actions that marketers can inspire—beyond promoting specific products or services—include registering for an event, downloading a piece of content, visiting a website or specific webpage, reading a blog post or press release, signing up for an educational program, requesting a product demo, listening to a podcast, or subscribing to a newsletter. Ultimately, a direct response campaign is the advertising equivalent of starting a meaningful conversation with your potential customers and setting up your brand to drive more conversions in the long-term.

There are occasions when the boundaries of direct response marketing become blurred and overlap into the realm of traditional brand-building. Indeed, both look to foster engagement, build brand affinity, and strengthen brand reputation. The major distinguishing feature between the two, though, is prioritization—direct response ads aim to drive an instant action with a focus on generating quick results. Typically, they feature three core components:

The Offer Itself

Direct response marketing works best when you make one specific offer to prospects. In other words, you should be driving them to download one e-book, register for one webinar, sign up for one educational program, buy one product... You get the idea.

The key here (as with all marketing, really!) is to know your target audience—to fix your offer on a buyer persona and then craft something that will appeal to their wants and needs. 72% of consumers expect businesses they buy from to recognize them as individuals, and 78% are more likely to repurchase having received tailored communications. In essence, creating personalized experiences matters now more than ever before. Consumers are demanding them, and they respond positively when brands demonstrate their investment in developing a relationship—not just getting the transaction.

The Message

Whether it’s a clever tagline or something clear and direct, creating a compelling message that really sells the offer is critical to the success of any direct response ad. Advertisers generally have just a few seconds to attract and engage consumers, so it’s important the language is equal parts persuasive and straightforward in order to encourage them to react immediately, and to elicit the desired action.

The Call-to-Action (CTA)

The piece that brings everything home: the CTA. This is the directive you’re giving the prospect after having (hopefully) made the case for why they should engage with you. Above all, a CTA should be easy to understand and readily accessible. Aside from that, there are numerous ways to optimize and iterate on your CTA, from testing different action-oriented text options to experimenting with color and playing around with button shapes. It can be all too easy to get stuck with the status quo when it comes to CTAs, but by staying abreast of best practices and trying out new ideas, you can better position yourself to drive higher conversions.

The Benefits of Direct Response Marketing

It’s Trackable

Since direct response ads have dedicated correlated actions, it’s simple to track the engagement you’ve generated from each campaign. The resulting data can empower you with a sense of how successful it was—insights that can help you understand the effectiveness of your copy and the attractiveness of your offer in terms of delivering value and inciting action.

For example, let’s say you’re running a promotion for your new whitepaper on Facebook, LinkedIn, and Google. Deploy a simple split test of the same ad displayed in three places. Either by running promotional codes or QR codes on the front end, implementing UTM codes on the back end, or setting up a corresponding landing page, you can measure exactly which media is prompting the most impressions and conversions in real time. From there, you can glean what’s working and what’s not, and then either quickly optimize (or remove) ads that aren’t meeting your ROI goals.

It Provides a Sustainable First-Party Data Collection Strategy

With Google’s plans to sunset third-party cookies edging ever nearer, and with Apple allowing users to opt out of app tracking starting back with iOS 14, so much importance lies in the hands of first-party data. The transparent, opt-in nature of direct response ads means that brands can quickly amass a high-value, high-quality first-party data stockpile with minimal privacy issues.

The benefits of adopting such tactics are clear: Retail brands leveraging first-party data in advanced marketing activations have shown to achieve a 3-5% revenue and profit uplift. With a treasure trove of first-party data in your arsenal, you have the key to future-proofing your marketing performance for the cookieless world.

It Helps Strengthen Customer Relationships

After a prospect has made the decision to respond to your call to action, the door is open to follow up with that person and foster a meaningful relationship built around intentional touchpoints. Having established a direct line of communication, you can continue your dialogue by providing relevant content or other products and services they might find valuable. Cross-sells, upsells, drip campaigns, free offers, discounts—these are just some of the tools you can embrace to turn a prospect into a lifelong customer and a true brand advocate.

Direct Response Marketing Channels

When building direct response advertising campaigns, marketing organizations must first identify the channels where they can amplify their reach and resonance, then work around the nuances of each in terms of execution best practices. Here’s a breakdown of the most popular for direct response ads:

Display

Digital display ads are banner or rich media ads incorporating text, images, video, and/or audio that appear in pre-determined sections of a website or social media platform—be that a sidebar, a footer, a header, or punctuating a scrollable feed. The most impactful direct response display ads will generally feature dynamic rich media elements with concise copy and a short CTA that work together to create a sense of urgency.

Search Engine Marketing (SEM) / Pay-Per-Click (PPC)

Google Ads and Microsoft/Bing Ads represent an attractive option for brands setting up direct response marketing campaigns as they empower media buyers to reach highly specific market segments through a wide range of granular targeting features. And because the ads appear when a prospect is searching for something related to the ad, it’s that much easier to grab their attention and earn a click.

Social Media

Today, in the US alone, there are approximately 178 million monthly users on Facebook, 133.5 million on Instagram, and 102.4 million on TikTok—with the likes of Pinterest, Snapchat, LinkedIn, Twitter, and Reddit all close behind. Given the sheer size of these audiences (not to mention the time those people spend on social), it’s easy to see why social channels are among the most powerful platforms for direct response ads. Much like in search advertising, social media advertising offers myriad possibilities when it comes to audience segmentation, enabling media buyers to get more personalized with their promotions.

Email

Relatively inexpensive to create, design, and test, emails allow marketers to communicate on an individual level with target audiences who have already submitted their contact information somewhere along their buying journey. Direct response email campaigns can draw attention to anything and everything: flash sales, new reports, product or service discounts, upcoming events, items sitting in an abandoned cart, and more.

Television (Connected TV / Over-The-Top / Linear TV)

The case for including connected TV in your direct response strategy is compelling, especially given that more than two-thirds of the US population are now monthly CTV users. The fact that CTV combines the targeting capabilities of digital advertising with the lean-back experience of traditional TV certainly adds to the appeal. Linear TV, too, is still a good option. In fact, during the Super Bowl in 2022, Coinbase ran one of the most notorious pieces of direct response marketing in history: a 60-second video ad featuring nothing but a bouncing QR code that led scanners to the app’s landing page offering bitcoin giveaways. It caused a huge stir across the advertising industry.

SMS (Text Messaging)

Mobile messaging has been gaining popularity, particularly over the last couple of years as brands have been scrambling to meet consumers at home on their own terms. There are many benefits that come with adopting SMS marketing, but as with email marketing, prospects need to have previously signed up to receive communication from you and you must adhere to many privacy practices or risk running afoul of both regulators and spam-weary consumers.

Direct Mail

It may be old-fashioned, but direct mail certainly still has its place in an omnichannel direct response strategy. With our digital footprint hitting overdrive and our email inboxes overflowing, direct mail presents an opportunity for marketers to deliver something personal and tangible—an alternative for prospects suffering from screen overload. Brochures, catalogs, coupons, digests, or newsletters are the most traditional forms of direct mail, but brands can align them with modern advertising techniques (such as QR codes) to help recipients transition seamlessly from the physical world into digital.

Direct Response Marketing Tips and Best Practices

Direct Response Marketing is a Long Game

Despite the immediacy with which direct response marketing can generate results, it’s important to remember the tactic should be part of your long game. For instance, if all your campaigns are centered around selling your products or services, that’s unlikely to fly with prospective consumers—first, they need to know who you are. The proof? A whopping 82% of customers say they prefer a brand’s values to align with their own, with many reporting they’ll avoid brands they don’t feel a connection to. To put this into practice, consider breaking up your product and service offerings with lighter calls to action: This could look like inviting your audience to read your latest blog post or to sign up for your newsletter. This is all part of building trust with consumers.

Incorporate Video

Creativity is key to engaging audiences and driving action, and one of the ways brands can strive to stand out is by incorporating video into their ads. A study by Facebook and Analytic Partners found that one advertiser who applied video advertising best practices to a campaign saw a 5.3x lift in purchase intent, a 75% uplift to margin, and a 3.8x increase in weekly revenue. The draw of video essentially lies in its ability to tell a quick story in a short span of time and impart more information than a standalone image ever could. For businesses looking to level up their direct response game, including some video alongside first-rate product shots or other visuals could make all the difference in persuading audiences to click and convert.

Get Hyper-Personalized

With research revealing that companies excelling in personalization generate 40% more revenue than average players, the importance of getting granular with your audience segmentation and targeting cannot be understated. Today there is very real pressure on brands to deliver tailored offerings and outreach that meets individuals in their moment. Those who get this wrong may see brand loyalty wane, while those who get it right can set themselves up to drive repeat engagement over time. By generating relevant, recurring interactions, you can garner more data that can be used to design ever more personalized experiences—you’re ultimately creating a flywheel effect that fosters strong, long-term customer lifetime value. Examples of personalization in action can be something as simple as triggering product or service recommendations or offering customized discounts based on past purchase behavior.

Embrace Referral Marketing Tactics

Consumers have long looked to friends and family for product and service recommendations. Indeed, word of mouth marketing drives $6 trillion in annual consumer spending, which equates to 13% of consumer sales. For this reason, one of the best outlets for direct response marketing is a referral program—say, running a campaign asking current customers to refer your brand or product in exchange for a gift, discount, or any other perk that aligns with your business model.

Examples of Direct Response Marketing

Now that we’ve defined direct response marketing, explored its benefits, and reviewed some valuable tips and best practices, want to see it in action? The examples below illustrate strong offers, messages, and CTAs—plus trackable methods for collecting first-party data—across multiple media options.

Display

A 728x90 display ad for Audible, featuring the audiobook "Becoming" by Michelle Obama, and Audible's offer to save money when subscribing.

Audible attracts new subscribers with a specific offer, a clear call to action, and creative featuring one of their most popular audiobooks—one that is likely already top-of-mind for Audible’s target audience.

SEM/PPC

A paid search advertisement with a label reading "Sponsored," a website address, a headline, and a few lines of text describing the benefit of the product.

UnitedHealthcare knows how competitive (and confusing) Medicare can be. This ad copy encourages prospects to review Medicare plan coverage and costs, references the annual enrollment period to establish urgency, addresses relevant considerations like “health and lifestyle needs,” and notes that the resource is free to download.

Social Media

A social media ad with video promoting a convenience store's loyalty program.

Convenience store chain Kum & Go generates loyalty program enrollment by offering fuel discounts upon signup. Both the ad copy and the animated graphic highlight those savings, and the calls to action to “Join Today” and “Sign Up” couldn’t be clearer.

Email

An email from a weight-loss program with a logo, an image of a person motivated to get healthy, an offer to save money and a free trial, and text that explains the benefits of the program.

Weight-loss program Noom pulled no punches with this email, including a tried-and-true “don’t wait” headline for urgency, a personalized greeting, two offers for maximum value, a promo code for trackability, and a CTA to redeem before the expiration date listed below the button.

TV/Connected TV

A television ad featuring an athlete wearing athletic clothing, an offer to save money when you purchase athletic clothing, and a QR code as a call to action.

Who says you can’t get a response directly from a TV spot? Fanatics not only plays up the sports vibe by featuring athletes in their gear, but also provides a percentage-off discount and a QR code to make the shopping experience more seamless from the TV screen to the mobile device.

SMS

A coupon coming from a business via text message.

Kinda Hot Sauce leverages the trackability and convention of an SMS short code and keyword to kick off the subscription process, the enticement of a coupon via a redemption code (which is attributable back to this campaign), and the efficiency of an autoresponder to follow up with new members.

Direct Mail

A direct mail piece of marketing for a car tire store with a company logo, the recipient's first name in the text, a picture of a car driving on a road, and an offer to save money on tires and oil changes, as well as a QR code to schedule an appointment.

This local auto shop makes the most of its direct mail piece by personalizing the greeting, including three detachable coupons for in-store savings, and displaying a QR code so recipients can easily schedule an appointment using their mobile phones.

Direct Response Marketing—Wrapping Up

With competition for customers growing tougher by the day and media complexity ever-increasing, brands need to be savvy with their marketing efforts. Direct response ads can be a powerful supplement to your brand-building campaigns and help you nurture as many prospects as possible through the funnel. After all, only a tiny percentage of consumers are ever ready to buy at any given time. Direct response marketing can give audiences ample opportunities to get to know who you are, what you’re about, and what you can do for them.

Want one last example of direct response marketing? Here you go: The Basis Scout newsletter team tracks down the best articles, POVs, and reports from across the digital marketing landscape each month. Sign up today to get all that content delivered straight to your inbox each month!

In the formative years of programmatic advertising, second-price auctions were the industry standard—a crucial component in helping build the online ad marketplace as we know it today. Much like eBay, ad exchanges saw second-price auctions as a better, more accurate valuation of publishers’ inventory.

This all changed back in 2017, though, as the major exchanges began either rolling out or experimenting with first-price auctions, culminating in Google joining the pack in 2019. It was an industry-wide move largely dictated by increasing calls for greater transparency into the bidding process and reduced operational complexity. The programmatic ecosystem was essentially becoming so difficult to navigate within a second-price framework that the market needed a switch.

One of the manifestations of this evolution was bid shading—an AI-powered optimization tactic designed to help media buyers reduce wasted ad spend in the new auction dynamic. Here, we break down some of the lingo surrounding bid shading and explore how it’s applied in the digital advertising industry.

What is a second-price auction?

Second-price auctions refer to a model in which the buyer pays just $0.01 more than the second-highest bid on an impression (think the eBay model). For example, if two buyers bid $10 and $5, respectively, then the buyer who bid $10 will win the impression—but they’ll only pay $5.01. In other words, it is the second-highest bidder that determines the clearing price… in theory, that is. The problem with this bidding framework (and why it has largely been shunned by the digital advertising industry) is that some ad exchanges aren’t truly operating on the second-price framework. Each exchange has its own variation on the model with nuances that don’t offer full transparency (think price floors, hidden supply-side fees, and advertising subsidies).

What is a first-price auction?

In a first-price framework, the auction will clear at the winning bid price outright. Meaning: if a buyer bids at $10 and the next highest bid is $5, the winning buyer will pay the full $10. While this represents a more attractive model for publishers, advertisers may find themselves overspending and paying an increased average cost per 1,000 impressions (CPM). As such, advertisers need new tools that empower them to bid more effectively and intelligently.

Enter bid shading.

What is bid shading in programmatic advertising?

A compromise between the two models, bid shading is an optimization tactic available in most enterprise demand side platforms (DSPs). It works by analyzing historical bid data, then automatically forecasting a winning bid that is lower than the default bid (though likely more than just $0.01 above the next highest bid). For instance, if buyer A bids $10 and buyer B bids $5, buyer A might pay $7.50 rather than the full original value of their bid.

What are the main benefits of bid shading?

Before this tactic emerged, advertisers bidding in first-price auctions needed to either bid high and potentially overspend on an impression or bid conservatively and potentially lose the impression. By activating bid shading, media buyers can unlock two critical things:

Who should use bid shading?

Easy: any agency or brand (regardless of industry) looking to gain more efficient CPMs.

Does bid shading work with other programmatic optimization tactics?

Yes, bid shading works with a range of other optimization tactics, including algorithmic optimization (AO), machine learning optimization (MLO), and group budget optimization (GBO). Bid shading aims to decrease the bid price without changing what any of those tactics are optimizing towards. This keeps the probability of winning the auction high enough that it will not compromise pacing and target budgets. Additionally, if advertisers have manual optimizations on domains and placements, the manual bid price applies first, and then bid shading takes effect.

How does bid shading factor into supply path optimization?

Supply path optimization (SPO) is another name for the algorithms that DSPs use to make sure they're bidding on the most relevant, highest-quality, and most valuable inventory available from supply-side platforms (SSPs). When it comes to the economic facets of of SPO, bid shading can be a key tool, helping DSPs ensure they are paying the lowest possible amount on any given bid and, potentially, eliminating SSPs that don't provide second-price auctions—all to ensure optimal value.

Can advertisers use bid shading with private marketplaces (PMPs)?

Yes, digital advertisers can use bid shading with PMP deals.

Do media buyers need to buffer ad serving fees?

Bid shading generally leads to a more efficient CPM, delivering more impressions and potentially increasing ad serving fees and impact pricing. As such, buffering ad serving fees is recommended.

Is there a minimum CPM required to use bid shading?

No, though advertisers that use a default CPM of $1 or greater are more likely to see positive results.

What factors inform bid shading logic?

At the most rudimentary level, bid shading algorithms analyze past placement clearing prices, compare them to what a buyer is willing to pay, and then make their best estimation at the lowest price the buyer could submit to win the auction. That said, there are many other factors that could inform the logic—including ad size, floor prices, domain information, time of day, win rates, placement on page, and user data—and every DSP goes about determining the final bid in a different way.

Bid Shading and Advertising Automation—Wrapping Up

As the programmatic advertising landscape continues to evolve, so do the problems that come with it. The industry’s broad shift from second- to first-price auctions was one such problem that media buyers needed to contend with, and DSPs had to move quickly to assuage the price surges that surfaced from the move. Bid shading was the result.

Today, the tactic is widely adopted, and it represents a great example of just how important automation is in modern advertising. It helps advertisers save time, reduce menial manual tasks, and optimize eCPM leads to deliver better results.

Want to learn more about advertising automation? Check out our guide to see why automation is essential to the future success and long-term growth of the media buying industry.

Throughout programmatic advertising history, brands have largely entrusted its execution to agencies and trading desks. But today, in a world of high consumer expectations and constantly shifting market dynamics, many brands are searching for an alternative to the traditional brand-agency model as they look to gain greater transparency into their media buys, more holistic control over their data, and greater assurance of compliance with privacy regulations.

The result: programmatic in-housing.

Numerous heavy hitters have already brought elements of their programmatic operations in-house, including Marriott, Colgate-Palmolive, Procter & Gamble, Coca-Cola, Bayer, EA Games, Wayfair, American Express, Unilever, Anheuser-Busch, Netflix, Target, Deutsche Telekom, and Ally Financial. Now, as those groundbreaking programs mature and their outcomes come into view, more brand advertisers are peering over with interest and beginning to question whether they, too, should take control of their own programmatic business.

So, just how has the in-housing trend evolved to date? What forms can programmatic in-housing take? What are the benefits and challenges for brands? And what does the process really entail? In this guide, we’ll answer all these questions and more.

Exploring the Rise of Programmatic In-Housing

The first adopters of in-house programmatic media buying were mostly digital natives like Netflix and Target—brands boasting rich, voluminous first-party data that gave them a head start on the process. Over time, though, the types of companies in-housing have become more diversified. And, suffice to say, they have done so with varying degrees of success.

Those who tried and failed often did so because they underestimated the logistical hurdles involved and became too fixated on the stereotype that in-housing is an all-or-nothing play—just look at Vodafone or Prudential. But this idea of “agency versus in-house” programmatic is outdated, as it doesn’t suit the needs of modern brands. As marketers learn more about the intricacies behind this digital transformation, a whole range of in-house programmatic manifestations are emerging, with brands and agencies breaking new ground and creating new operational frameworks as their relationships evolve. Indeed, in-housing programmatic is far from a death knell for agencies—brands still lean heavily on their external partners, and agency investments still command almost a quarter of total marketing budgets. Understanding market logistics and maximizing technology-driven optimization opportunities requires as much critical insight as possible, and agencies remain perfectly positioned to provide that guidance.

When it comes to programmatic in-housing, one thing is clear: Where we were five years ago looks very different from today, and where we are today will look very different five years from now.

The Varying Levels of Programmatic In-Housing

While it is difficult to neatly classify the numerous variations of in-housing—especially considering all the factors involved—here are four of the most common arrangements:

All-In on In-Housing

This is the quintessential in-housing set-up, where an adtech stack sits within a brand organization in tandem with media strategy, ad operations, data management, and campaign stewardship. An in-house operation that looks like this is still relatively uncommon, given the major commitment of time, resources, and internal talent marketing organizations need to launch, maintain, and refine it.

However, despite the complexities involved, the popularity of programmatic in-housing is steady, and brands are building relationships with the technology platforms and the talent they need for in-housing to succeed. Case in point: 66% of brands say they have contracts with technology providers like DSPs or verification partners, and two-thirds also say they have “hands on keyboards” doing the actual work.

An Example of the All-In Set Up

For brands going down this route, the classic approach involves forming an internal agency-style trading desk and equipping them with a demand side platform (DSP). Going all-in can be a monumental task, but with the right preparation, the right planning, and the right implementation, the returns are significant. Pharmaceuticals giant Bayer, which first began developing their in-housing operations back in 2017, was reportedly able to reduce its programmatic buying costs by over $10 million in just the first six weeks. The company has also pointed to a number of additional in-housing related benefits, including ownership of their tech stacks, data, and dashboards.

The Importance of Greater Transparency into Media Buys

Bayer’s success is essentially a microcosm of the upsides that come from in-housing programmatic. With the removal of third-party cookies from Chrome lingering just over the horizon and data privacy at the front and center of public consciousness, it is paramount that brands know exactly what their advertising is doing.

Yet most marketers worry about not having a complete picture of how their media is traded and the results their investments deliver. Despite progress over the last few years, many agencies still fall short on providing real visibility into the digital ad buying process. This lack of transparency, plus added control and potential cost savings, is why most brand advertisers that pursue in-housing choose to do so. Indeed, gaining access to unfiltered campaign performance data empowers brands to do a host of valuable things, including:

Long-term Cost Efficiencies

The fact that Bayer was able to save $10+ million almost immediately after in-housing its programmatic is more the exception than the rule. Most brands experience their cost benefits over a longer period, with monthly gains stemming from not paying out agency fees (fixed hourly rates, platform fees, media fees, etc.). Internal programmatic teams have just one focus when pulling campaign levers: increasing profitability for the brand. Agency partners, meanwhile, must also balance this goal with their own need to make money and meet margins. In-housing simply eliminates that tax.

Then there is the matter of cost efficiencies through better campaign execution. The switch in-house ultimately enables brands to invest in—and nurture—talent within their marketing organization (assuming they can hold onto that much-coveted programmatic buying talent, of course!). While outsourced staffing solutions can provide some great results, they may not be able to optimize the consumer journey with the same granularity as an in-house staffer who knows the brand through and through.

Not All Plain Sailing

Now, there may be many upsides to in-housing, but brands should not underestimate the organizational, technological, and cultural challenges involved in this digital transformation.

For starters, programmatic in-housing takes time. Ideally, the transition should be a well-researched, deliberate journey with calculated investment in the right resources and tech over a period of many months, if not years. From the outset, those leading the change need to ensure they involve a wide range of internal stakeholders from all corners of their organization, including finance, legal, product, and IT. All these teams will have either a direct or indirect influence on the program’s success, so it is important to listen to their input on the process (and get their buy-in before proceeding). What are the security implications, for example, from an IT perspective? How much budget is available for the required tools? How are privacy regulations going to be respected? What are the data challenges from a CRM standpoint? A multitude of questions must be answered, so the more support earned from across the org, the better.

Essentially, programmatic in-housing is not something you can just do on a whim, and it is critical to set the expectation internally that transformational results are unlikely to arrive quickly. Brands accustomed to focusing on short-to-medium term initiatives and goals must learn to adapt to protracted, longer-term processes and a new way of working.

The Hybrid In-Housing Option

Of course, every marketer right now is thinking hard about how to wrangle more out of their advertising dollar, and many are concluding that they need outside help and guidance to do so successfully. At the same time, many media agencies are adopting new structures—reorganizing in a way that makes it easier to offer on-demand services and step into a more advisory role for clients that seek to in-house some of their programmatic budgets. It is a development that makes sense for both parties: Agencies have extensive experience in what works and what doesn’t in the programmatic sphere—not to mention the tools necessary for executing on programmatic media buys—and clients need to tap into those resources as they bring some of that operational activity inside their own walls.

This, in essence, is what the hybrid in-housing model is all about: An in-house marketing team tees up the overarching strategy before consulting with an agency on how to deliver it in the market. Sometimes, this will lead to the agency assuming the day-to-day responsibilities of implementing the plan and pulling the levers, and other times it will lead to the advertiser doing the work with their own platform under the agency’s direction.

The latter scenario is the one that more brands are pursuing as it ultimately merges many of the best aspects of both in-housing and outsourcing. With hybrid in-housing:

A 2023 Association of National Advertisers study frames the hybrid in-housing trend in numerical terms, finding that only 32% of marketers have in-house programmatic capabilities, and just 17% of the remaining respondents have considered adding those capabilities in the next year. This highlights just how important agencies remain to brands. Programmatic advertising can be a labyrinthine, complex venture, and there are still many marketing organizations that struggle to identify the right systems to help them better engage their audiences. The hybrid option alleviates that pressure and empowers brands to take whatever baby steps they want.

Fully Outsourcing Programmatic Functionalities

Option number three: fully outsourcing, a route that many brands still prefer despite the myriad benefits that in-housing offers. It represents a great option for those who don’t have the resources to build an internal programmatic team and all the costs that come with it—think upfront licensing fees, salaries, training, etc.

From a brand perspective, the main drawbacks to contracting out all aspects of programmatic advertising are the lack of control they will enjoy over their consumer data and the limited transparency they will get into media performance. To address and nullify this, however, some agencies are recalibrating with a dynamic that is helping them win more programmatic business: the agency plus sister company, or two-for-one, solution. Indeed, a growing number of agency pitches today feature purpose-built services supported by their holding company’s dedicated data and analytics divisions. It is a move designed to negate the potential for brand-agency conflicts, with these specialty customer intelligence orgs brought into the equation to fuel better communications planning and extract deeper insights into the brand’s marketing efficacy. It is a symbol of how agencies are responding to the moment and the mood of the industry, becoming nimbler and reengineering their capabilities to stay attractive to brands.

There’s a Programmatic Talent Shortage

One key area where agencies retain an upper hand in the in-housing/outsourcing calculation is talent. Managing and optimizing programmatic media is a complex art, and advertisers considering independence from agencies will need a glut of staff additions in order to ensure they are doing things right—a programmatic manager, a data analyst, and a DSP operator, to name but a few.

The problem facing brand-side HR departments today is actually filling these positions—the labor market in this field is desperately tight, job titles are evolving, and, to make matters tougher, the available talent often take opportunities at agencies over brands because they can offer better career progression, opportunities to diversify, and ongoing learning. Within the four walls of a brand, those things can be difficult to come by, considering there is only one program to service and (most likely) fewer opportunities to influence overall strategy.

No player in the programmatic space can expect to be successful without the right people doing the bidding, so this talent shortage is a pressing concern for brands, regularly leaving them with no choice but to look to external partners.

The Path to Self-Service

Likely a concept that many marketers may not even be familiar with, the path to self-service model is aimed at brands that desire greater control over specialized programmatic functions but may be kept in check by internal resource limitations.

The premise is simple: marketing organizations tap dedicated in-housing consultants to onboard new technology at a pace that makes sense for their evolving business. Then, as the client gets more comfortable with each aspect of the programmatic ecosystem, the consultants introduce more capabilities and training modules to nurture in-house teams to the point that they can manage everything independently. This is an option that may suit small- to medium-sized teams that have resisted in-housing programmatic media buying because they felt it too complex and/or tedious for them to manage alone. But with the proper training and strategists on standby, teams can maintain internal operations with far greater ease.

Here is what a typical path to self-service might look like over six months:

The path to self-service blueprint can ultimately help brands ensure their systems, campaigns, and data consolidation practices are set up effectively from the outset, allowing marketers to mitigate many of the issues that can bring in-housing plans grinding to a halt.

Key Considerations for Programmatic In-Housing

From platforms to people to processes and everything in between, with so many factors to weigh when considering in-housing programmatic ad buying, where does one start? Here are a few considerations for those looking into in-housing, whether they’re at the RFP stage or just the “I was thinking about…” first step:

1. Ask “why” this is important to your organization. Is your organization looking to cut costs? Hit a business objective? Gain more operational control? Identifying your in-housing “why” will allow you to understand your needs, wants, limitations, and what you’re trying to change. It will also open up room to do a feasibility check as well as an objective brainstorm that moves you from problem to solution.

2. Understand the landscape. Nearly a decade ago, in-housing came into vogue thanks to tactics like real-time bidding. During COVID-19, long-term contracts and full-time employees became more of a burden as businesses just tried to survive. If you do consider in-housing, it’s important to consider it in context of the larger marketing and economic landscapes to ensure that now is the right time to take the first steps.

3. Review your readiness. When it comes to technology, are you comfortable vetting new options? How hard would it be to change tech partners? In terms of people, are you well-positioned to add, retain, or replace talent? As far as strategy, how does your first-party data look? How confident are you in making real-time optimizations to live campaigns? Answering these critical questions can uncover your gaps as well as highlight opportunities for process and personnel improvements.

4. Bring in the right stakeholders. As noted earlier, organizations that wish to bring their programmatic adtech stacks in-house—even if an agency might still operate and manage it—should invite HR, IT, CRM specialists, finance, legal, and product to early conversations, as any of these people may have direct or indirect influence on, or use of, the tools at hand.

5. Bite off only what you can chew. Even though it may save money in the long run, in-housing programmatic can be an expensive venture: It takes time, it takes energy, it can be costly, and it can be disruptive to the status quo at most organizations. Taking it on in small chunks can help match a company’s tolerance level for each of those issues, and that can be in the form of a hybrid model or a path to self-service.

(Looking for a deeper dive into in-housing considerations? Check out our AdTech Unfiltered podcast episode with Raashee Gupta Erry, Principal and Founder of UpLevel Digital Media Consulting.)

Programmatic In-Housing—Wrapping Up

Bringing programmatic media buying in-house is a colossal undertaking. The whole operation must be built on a foundation of organized data, deliberate processes, capable tools, and skillful talent. As programmatic’s prominence rises and third-party cookie deprecation becomes a reality, more marketers may want to in-house their programmatic advertising… but all too often, they don’t know where to begin.

The good news is a host of options exist—be it going all-in, a hybrid approach where brands and agencies share responsibilities, full outsourcing, or going down a path to self-service. Overall, there are many benefits of in-housing, with the biggest being the ability to obtain greater transparency into media buys and secure more holistic control over data, not to mention the possibility of significant long-term cost savings. And either way, agencies still have an important role to play in the media buying ecosystem—whether as valued partners or as critical consultants.

If you’re starting to think about making changes to your organization’s programmatic advertising strategy and are looking for some guidance, our Programmatic Readiness Quiz can help! In just three minutes, you’ll discover whether outsourcing, hybrid, or in-house programmatic ad buying is the best path for achieving your team's goals.

CO2 emissions and climate change: Subjects typically reserved for discussions among the world’s politicians, environmentalist groups, the scientific community, non-governmental organizations, and multinational conglomerates. But are they relevant to the digital advertising industry? You bet—and more than that, they present an opportunity for marketers.

Many of the world’s largest brands are working to tout their green credentials and communicate their milestones—successes like innovating packaging to reduce waste or optimizing their supply chain to become net zero. But what about the environmental impact of serving ads highlighting those efforts throughout the online ecosystem? The carbon cost involved in that process is meaningful, and it has often been overlooked...until now.

Indeed, two drivers have nudged this issue into the marketing spotlight:

  1. Stakeholders including consumers, investors, and employees increasingly want to see brands do more around sustainability and safeguarding the future of our planet.
  2. Taking a climate-friendly approach that decreases the carbon footprint of digital campaigns can prove to be a smart business decision that leads to cost savings and improved performance outcomes.

In other words, brands willing to tackle the issue head-on stand to gain a more positive brand perception and higher ROI on ad spend. Like nearly every facet of society, digital advertisers have a role to play in decarbonizing the economy to meet the goals outlined in the Paris Agreement, and there are great rewards available to marketing organizations that tap into growing green value pools and actively participate in the sustainability movement.

Explaining digital advertising’s carbon footprint

A seminal environmental impact assessment review of online advertising estimated that in 2016, one-tenth of all emissions emanating from the internet—between 20.38 to 282.75 terawatt-hours (TWh) of energy—were attributable to online advertising. That was seven years ago! In the time since then, digital advertising has exploded and evolved, then exploded and evolved some more—and all the while siphoning dollars away from traditional offline media (radio, print, and TV).

Of course, it’s difficult to grasp whether that percentage share has increased on an annual basis up to now—especially considering the emergence of other data-hungry internet-related systems like cryptocurrencynon-fungible tokens (NFTs), and generative AI—but it would be difficult to argue that the total energy usage of digital advertising hasn’t grown considerably. Of the $370+ billion US marketers are forecast to spend on advertising this year, a shade under three-quarters of that (74.6%) will go to digital channels, up from just 37.6% back in 2016. And there are no signs of this trend slowing down anytime soon, with that share projected to continue climbing every year through at least 2027, indicating the industry’s carbon footprint is only likely to keep increasing.

According to Good-Loop’s online carbon calculator, a sample ad campaign comprised of a 100-megabyte video file that delivers 100,000 impressions in the UK equates to around 5.4 tons of carbon. For a little perspective, that’s the same as driving over 13,000 miles in an average gasoline-powered passenger vehicle. Sum all the millions of digital activations that brands are collectively running at any given time and the energy and emissions implications become clear.

At question here is the mechanism by which ads are delivered to audiences, particularly as it pertains to programmatic buying. In the nanoseconds it takes for an ad to load on a webpage, a plethora of technology companies (such as ad agencies, data-management platforms, data clean rooms, ad exchanges, ad servers, ad verification firms, demand-side platforms (DSPs), supply-side platforms (SSPs), and brand-safety vendors) take part in a bidding process to win the auction that puts the ad in front of the consumer. In the process, thousands of servers are springing into action, requiring electricity to realize each ad call.

In essence, there is a significant amount of computing firepower at the heart of digital advertising, and as the landscape expands and grows more complex and fragmented, leaders must take urgent steps to first curb, then reduce, the carbon cost of its operational infrastructure.

Consumers are paying close attention

Consumers today care about more than just the products and services a business creates and provides—they increasingly want to see actions that demonstrate strong societal and cultural values. Brand purpose is emerging as a key decision criterion, and consumers across the generational spectrum are putting environmental impact at its center:

Of course, what’s top of mind for consumers must be top of mind for brands. After facing a digital transformation imperative in the wake of the pandemic, marketing organizations are now dealing with a sustainability transformation imperative. To ignore it is to risk reputational fallout…and to miss a seriously golden green opportunity.

A climate friendly approach is good for business 

Now here’s the interesting thing: Becoming a more climate friendly brand doesn’t have to mean spending more money—in fact, the opposite is true. By making small tweaks to campaign KPIs and optimizing the digital supply path, marketers can start to minimize their carbon emissions in a way that is also beneficial for overall campaign performance. What’s the saying? Two birds, one stone? Let’s explore:

Focus on attention metrics

Attention metrics are on the rise: A trend fueled by the idea that the old proxies for performance—the likes of viewability, reach, and frequency—are no longer optimal since they fail to provide an accurate measure as to whether target consumers actually see ads. Attention data technology works by filling that knowledge gap, providing more definitive insights into how audiences engage with a brand’s content on specific domains.

How does this relate to cutting carbon costs, you may ask?

One study found that by removing impressions that receive less than 0.5 seconds attention time, brands can reduce total emissions by 53% while increasing the average attention time per impression by nearly 40%. Or, to put it another way: advertisers that pull spend from publishers they know are offering little-to-no bang for their buck can weed out wasted spend and lower their carbon footprint in the process. Win-win.

Streamline your supply path

Remember all those technology companies involved in the programmatic bidding process? Momentum is building toward a more streamlined—and, therefore, more efficient—network. Eliminating redundant auctions for the same inventory and optimizing the flow of data not only makes sense from a business perspective, but also reduces the amount of computing power needed to run the overall ad ecosystem. It also cuts costs by opting out of relationships that don’t provide value as part of this change and opting in to relationships that simplify the digital campaign workflow (be that centralizing planning processesconsolidating reporting, or reconciling financial data). And side note: With new data privacy laws coming into play requiring a more detailed understanding of who has access to consumer data throughout the bid stream, there has never been a better time to conduct a partner review. Win-win-win.

The need for environmental education 

So, the carbon footprint of digital advertising is growing, consumers are invested in it, and incorporating climate friendly initiatives into larger business goals turns out to be not just a moral imperative but also a financial one.

What’s the hold-up, then, when it comes to greater action across the industry?

It boils down to these reasons: A lack of standardization, a lack of regulation, a lack of urgency, and a lack of education. Marketers are many things—creative thinkers, performance forecasters, data analysts, investigative journalists, and idea generators, to name a handful—but they are not climate experts. Only 24% of marketers say their company has set targets to address the carbon cost of online ad campaigns, and a negligible number say they have already reached net zero. Clearly, there is ample room for progress. But until the industry collectively garners a greater understanding of the issues at hand and agrees on common measurement methodologies, change will likely continue at a glacial pace.

Fortunately, though, help is on the way in the form of new tools and initiatives:

Then there are the stories of big brands already making proactive moves:

Without many global benchmarks and standards for marketers to follow, it is these stories and these actions that are sparking the conversation. More are bound to follow as the benefits of adopting sustainable digital practices come increasingly into view. Could 2023 be the tipping point? Only time will tell.

Digital Advertising’s Carbon Footprint—Wrapping Up

Advertisers and consumers alike are waking up to the carbon cost of digital advertising. Brands are facing myriad challenges in 2023 (most notably planning for the cookieless future and keeping up with all the latest regulations), but sustainability shouldn’t be deprioritized in planning discussions. As marketers start or continue their journey to become more sustainable, it’s important to focus on efficiency as a route to achieving success, and embracing greener digital ad buying efforts and shoring up the supply path are great places to begin. Those that do so now can gain the early mover advantage and set themselves up to foster greater brand loyalty and cost savings down the road.

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Looking for more tips to kickstart your sustainability transformation? Check out our blog post that dives into all the do’s and don’ts for digital marketers when it comes to climate change and sustainability advertising.

The TikTok era of social advertising marches on.

Moving way beyond its roots as a forum for lip-syncing and dancing teens, this short-form video app has blown up the model of what a social network can be, and it is increasingly a must-buy for a growing number of advertisers. TikTok isn’t the same as Facebook, Instagram, Twitter, or YouTube, where advertising typically equates to buttoned-up and polished productions. To excel on this channel, brands must embrace creator-led, user-generated, unfiltered content to tell their story. And above all, they must be authentic. Indeed, nailing the creative in a way that is real and raw should be priority number one for advertisers on TikTok.

Powered by a dynamic algorithm that quickly gauges individual user preferences and then curates a highly personalized “For You” page (FYP), TikTok doesn’t have its users tell the platform what they want to see—rather, it tells them. And the internet, and advertisers, seemingly can’t get enough. The app is continually developing and implementing ad capabilities and features, yet there is already much for media buyers to get excited about, particularly with TikTok’s next phase of ad growth enabling advertising both down the funnel and deeper into social commerce.

Of course, it’s not a channel without its share of troubles and controversies. Nearly three years after the Trump administration threatened to ban the app if its Chinese owner ByteDance didn’t divest, TikTok is once again facing an existential threat. US lawmakers on both sides of the aisle are renewing calls to remove it from US app stores, citing perceived risks to national security and user safety. As a result, TikTok has become a symbol of rising geopolitical tensions between the world’s two largest superpowers, and there is unlikely to be any resolution to this saga any time soon.

Nevertheless, even in the face of all the controversy, TikTok has become a go-to app for millions of users and a must-use for countless advertisers. Here, we explore the evolution of TikTok through a collection of stats and facts. We’ll cover all the good stuff and all the ban-related stuff as we look to paint a picture of why TikTok continues to be the talk of the digital advertising town. Let’s go.

TikTok’s Meteoric Rise in Popularity

It is, quite literally, a multi-billion-dollar question: just how did TikTok go from being a niche player just four years ago to one of the most popular apps on the planet? The reality is there is no single answer, but instead a combination of factors: simple and easy-to-use video creation tools that blur the metaphorical line between creator and consumer; shrinking attention spans that pave the way for short-form video to thrive; a vast library of licensed music that allows users to easily enrich their clips with audio without fear of copyright infringement; and a community and collaborative feel within the platform (think hashtag challenges and Stitch). Its model is so successful, in fact, that it has frightened Meta and YouTube (and others) into disrupting their own business—Instagram Reels and YouTube Shorts, anyone?

The TikTok Effect on Marketing and Advertising  

“Don’t make ads, make TikToks.”

That was the invitation TikTok laid out for advertisers when it opened its brand-facing wing back in 2020. And with the company’s revenues skyrocketing, it appears that challenge has been gleefully accepted. TikTok’s ad business made its first foray into performance marketing with lead-generation ads that empower brands to collect information from prospective consumers through forms and contests. Since then, TikTok has been busy significantly expanding upon those offerings, rolling out formats like interactive add-ons, search ads, and collection ads that together look set to play a fundamental part in the app’s monetization strategy.

TikTok and the Highly Coveted Gen Z Audience

TikTok has disrupted how an entire generation connects, shops, entertains and educates itself, and ultimately perceives the world. To understand why TikTok is so popular with Gen Z is to understand their inherent characteristics. Research shows that one of the defining features of today’s youth is an expression of “individual truth”. They are also the first generation of online natives—well-acquainted with digital advertising tactics and therefore naturally drawn to fresh ideas and creative storytelling (for example, unfiltered videos!). The fact that TikTok facilitates self-expression and celebrates authenticity plays right into their hands. In other words, TikTok and Gen Z were made for one another.

TikTok’s Appeal Goes Beyond Short-form Video

For a long time now, TikTok has been the elephant in its competitors’ boardrooms—and on their increasingly regular disappointing earnings calls. The app’s recent advances in ad technology, measurement capabilities, and expansion into the digital marketing ecosystem (for instance, through music streaming and mobile gaming) indicate that TikTok is not content to simply sit in the realm of short-form video. The platform is already siphoning ad dollars away from Meta, but the diversification of its portfolio could soon pit TikTok against the likes of Spotify, Apple, Amazon, and Google as it transforms into a public square for news and conversation.

An Uncertain Road Ahead

As of early 2023, rumblings about a possible TikTok ban in the US have grown from a whisper to a roar. After the US federal government and numerous states outlawed use of the app on government-issued devices (something many other countries have done as well), a House panel went a step further and voted to approve a measure that, if passed by Congress, would give President Joe Biden the power to remove TikTok in the US outright.

Feeling the metaphorical heat, TikTok has been offering a series of olive branches to regulators in an effort to cool the pressure—for example, providing more transparency into its famed algorithms and restructuring its US-based business operations. They don’t appear to have been particularly well-received, though, judging by the pummeling TikTok CEO Shou Zi Chew got from a congressional committee back in March. All said, TikTok is stuck between a rock and a hard place right now, and all the scrutiny it’s under may well stand in the way of its US growth and brand marketing ambitions. Only time will tell.

TikTok by the Numbers—Wrapping Up

TikTok has become a digital advertising powerhouse seemingly overnight. Its consumer appeal and high engagement rates across numerous verticals make it a worthy option for ad spending at a time of economic uncertainty. But as a new(ish) channel, figuring out just where it fits into the digital media mix and how much budget should be dedicated to the platform remains a significant challenge for brands. There’s also the threat of a ban to at least consider, and while nothing is likely to happen in the immediate future, marketers would be wise to start scenario planning and stay flexible with social ad buys so they can pivot to an alternative video platform quickly if needed.

One thing is for sure, though: TikTok remains social media’s golden child, and there are great rewards available to those that get it right.

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Want to learn more about how to approach TikTok advertising? Check out our blog post, The Do’s and Don’ts of TikTok Marketing to get all the tips and tricks you need to succeed. Or, if you’re looking for more general advice about your media campaigns yet don’t know where to begin, our Media Strategy & Activation team can point you in the right direction.

Unless you’ve been doing nothing nowhere all at once for the past, say, 10 months or so, you know that artificial intelligence (AI) and automation have seized the marketing limelight.

Most of the current buzz centers around the potential business impact of new tools within the field of generative AI. But even before this boom, agencies and brands have been increasingly leaning into automation and AI technologies to unlock efficiencies and improve collaboration. One study found that 90% of marketers are using them to strengthen customer interactions, 89% are using them to enhance data integration, and 88% are using them to personalize the customer journey across channels. Other use cases include resolving customer identity, driving best offers in real-time, and bridging online and offline experiences. Indeed, marketing organizations today have so much disparate data at their fingertips and so many disparate systems to manage throughout any given campaign lifecycle that leveraging automated technologies to save time and cut costs is critical to unlocking success.

Automation and AI are spurring brands’ digital transformations, igniting conversations, and capturing headlines…but what exactly do we mean when we talk about “automation” and “AI”? The terms are often used interchangeably, but in order to make smart decisions about how to invest in them and grasp their possible impact, it’s important to know how they differ and where they fit into the marketing and advertising ecosystem. Here, we unpack all that, and more.

What’s the Difference Between Automation and AI in Digital Advertising?

The sometimes-synonymous use of these terms stems from the fact that automation is a broad category encompassing an entire class of technologies that includes AI itself. In advertising parlance, however, there are some key distinctions to be made.

The automation umbrella refers to a type of software that follows pre-programmed rules—it substitutes human labor across the campaign workflow, tapping into patterns to perform tasks that are repetitive and predictable. In the process, it enables scale that is virtually impossible to achieve without it.

AI, on the other hand, describes software designed to simulate human thinking—it is, as the name suggests, intelligent. Predicting outcomes under conditions of uncertainty is one of the most challenging aspects of digital advertising, and AI platforms can be a powerful ally in that fight by dynamically identifying and analyzing situations and crafting conclusions.

Simply put: automation works with data, while AI understands data.

How is Automation used in Digital Advertising?  

Digital advertisers use basic automation in an assortment of ways—for example, in leveraging programmatic media buying or eliminating incomplete or redundant lead information. But it can also help brands and agencies manage the myriad new channels and platforms that have caused media complexity to soar while sapping marketers’ time. Media buyers can use automation to simplify workflows and increase agility as they build out adaptable cross-channel experiences.

From streamlining planning processes, to optimizing ad spend in real-time, to centralizing all reporting, to reconciling financial data, automation can help marketing organizations tame the fragmented markets and accomplish things they never could with manual processes alone. And side note: this powerful technology can also enrich the employee experience by significantly reducing redundant and tedious tasks in favor of more meaningful, higher-level strategic work.

How is AI used in Digital Advertising?

Let’s move on to the topic of the moment.

It seems like barely a day passes without some marketing-related story about AI hitting front pages and homepages. The constant flurry—or, rather, blizzard—of new tools to hit the mainstream is whipping up an industry-wide frenzy.

OpenAI’s DALL-E 2 got the ball rolling when it burst onto the scene in late 2022. ChatGPT came next, gaining a million users in its first five days and reaching 100 million within just two months (making it the fastest-growing web platform ever). And GPT-4 has kept the hype going (and growing)—a tool proving adept at solving logic puzzles, building websites from a notebook sketch, creating business plans, telling jokes, and even passing bar exams. It’s also the technology powering Microsoft’s Bing Chat (you know, the one that went a bit crazy).

Of course, Mountain View was never going to sit back and let Redmond enjoy all the attention, so Google too has launched an API for its own language learning model (LLM), PaLM, alongside a number of other enterprise AI tools that it says will enable businesses to generate text, images, code, videos, and audio from simple natural language prompts. This includes Bard, Google’s chatbot, which runs on the company’s Language Model for Dialogue Applications (also known as LaMDA).

Big picture-wise, this is all game-changing stuff in the world of marketing. These new LLMs have accelerated the adoption of AI, and it’s easy to see where the advertising applications of these tools fit in. Brands and agencies are already reportedly using it to draft creative assets and brainstorm strategically, help refine consumer messaging based on online shopping habits, map out new marketing touchpoints, and scale their existing operations to do more with less.

It’s important to remember, though, that AI consists of so much more than just generative AI. Many aspects of digital advertising already leverage the technology to facilitate things marketers use regularly—think machine learning, behavioral marketing, contextual targeting, dynamic pricing, bid shading, and digital assistants.

Of all those areas, contextual targeting is probably the most widely adopted. Just over half (53%) of brand and agency marketers are currently using it, with another 33% planning to do so in the near future. This is no surprise considering the end of third-party cookies looms on the horizon. Since it doesn’t rely upon the use of personal data, contextual targeting neatly sidesteps identity issues, making it a sound (and cheaper) option for advertisers in this new privacy-forward future. It also adds an additional layer of filtering for page quality, helping to boost brand safety by avoiding lower-quality content and pages that don’t align with desired standards.

All said, the various applications of AI offer many of the same benefits as automation: They enable marketing organizations to build more robust actions that are regulation-compliant, all at a magnitude that would be implausible without them.

5 Best Practices for Using Automation and AI

Understand the Opportunity

If you’re not already leveraging automation and AI, start your journey by assessing the opportunity for your organization and establishing high-impact use cases. Laying out the capability and governance groundwork ahead of time is critical to implementing and utilizing the technology successfully.

Stay Balanced

Identify where you can find quick wins with the highest automation potential and then branch out. In parallel, develop a long-term vision for more comprehensive transformation that features automation and AI in your workflow and operating model.

Be Cautious with Generative AI

We’re still in the early days of generative AI and marketers can already use it to help with creative processes. But—and this is a big but—you must tread carefully. While the cost-savings this technology offers may be tempting, especially in today’s economic climate, advertisers that use it could find themselves embroiled in legal battles. Create guidelines around when, where, and how your organization adopts AI and ensure AI-generated content is always vetted by a human with relevant subject matter expertise.

Be Transparent with Your Employees 

The use of automation and AI can feel threatening to many marketers. But at least right now, the technology is at a stage where it’s there to help them do their jobs better and quicker. And who doesn’t want that? Marketing leaders should make sure they’re engaging their employees about how they’re using it and address any associated concerns they may have.

Start Experimenting

Developments in AI are poised to disrupt our industry. Changes will likely come slowly at first, but it’s essential to keep a close eye on them. Early adopters are more likely to reap the benefits down the line and late movers may struggle to keep up. Start testing and gain the advantage of early learning.

Automation vs AI in Digital Advertising—Wrapping Up

Automation and AI each have sweeping definitions that encompass a variety of complex technologies. Both are already indispensable tools for driving the kinds of large-scale, personalized, omnichannel advertising experiences that today’s consumers demand. It’s by no means essential for every marketer to be an expert in both, but looking into the future of digital media, it’s clear that automation and AI will have an enormous impact on our industry.

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If you’re interested in learning more about how to incorporate automation and AI into your marketing but unsure of where to start, reach out to our Media Strategy & Activation Team. You can also check out AdTech Academy, which offers courses that cover an array of automation and AI-based topics, including algorithmic optimization, behavioral targeting, contextual targeting, machine learning optimization, programmatic advertising, and many others.

At the start of every year, digital marketing teams around the world draw up checklists of short- to medium-term challenges they must address in order to meet the moment successfully. The 2023 edition probably includes big-ticket action items like:

Of course, there are many moving targets on this list—the landscape changes, and new priorities emerge. However, there are certain challenges that remain ever-present, and those always-on initiatives are essential to driving brand awareness and customer acquisition.

Maximizing return on investment (ROI) from programmatic ad spend is one such example. It’s an enterprise that’s simultaneously crucial (given the ubiquity of the programmatic market) and complex (given the pace of evolution across the digital ecosystem).

Programmatic ad spending remains strong in the US, despite—or perhaps because of—macroeconomic headwinds. Indeed, the flexibility afforded by programmatic makes it a safer bet in times of uncertainty, as advertisers can quickly shift budgets and optimize spend toward channels, platforms, or formats that are delivering high returns without the headache of navigating cancellation terms. The medium is so pervasive today that it encompasses over 90% of US digital display ad spending and its share is expected to increase incrementally through 2023 and 2024. Programmatic also continues to gain traction in maturing channels including connected TV (CTV), digital out-of-home (DOOH), and podcasting, as well as more traditional channels like linear TV (more on all that later). Then there’s the added dynamics of retail media networks, around which programmatic advertisers are swirling with interest thanks to their treasure trove of first-party consumer data and closed-loop attribution.

Put it all together and it becomes clear that maximizing ROI on programmatic ad spend is a huge undertaking. It requires connecting the dots between different tech players in the supply chain, different point solutions, different pricing methodologies, and unstandardized metrics—that’s a lot of moving parts! Here, we’ll break down some of the complexities involved in driving programmatic performance, including definitions and formulas, important trends across the current programmatic landscape, and tactics marketers can implement to capitalize on programmatic’s potential.

Ready? Let’s dive in.

What is Programmatic Advertising ROI?

Programmatic advertising ROI is exactly what it sounds like: it refers to the return on investment a company makes from its programmatic media buying initiatives. It can be calculated to show the payoff on programmatic spending holistically or it can be broken down in more granular terms—be it by channel (CTV, audio, native, etc.), device (smartphone, desktop, TV), ad type (video, non-video), campaign, creative, or even demographic and geographic data.

It’s pretty simple, really. And, also, really important to measure.

At a time when marketers are facing mounting pressure internally and externally—from boardrooms to justify spending and from consumers to deliver seamless personalized advertising experiences—it’s more critical than ever for marketing organizations to accurately track performance and identify where they are most effective. Embracing the use of ROI as a discipline can help build more robust and agile brands that are set up to cultivate meaningful long-term relationships with their audience. It’s marketing 101 in 2023.

How to Calculate ROI on Programmatic Ad Spend 

Calculating ROI is done through a straightforward formula: subtracting the initial investment from its final value, dividing the resulting number by the cost of the investment, and finally, multiplying it by 100.

For example, let’s say a company spent $250k on a social campaign that generated $1 million in revenue. The number crunching would look like this:

Net income ($1 million – $250k = $750k) / Cost of investment ($250k) = 3. x 100 = 300%.

Obviously, the goal with any ROI-based project is to end up with as high a positive number as possible, but success is truly in the eye of the beholder. What constitutes a triumph depends on all manner of factors. Some companies also establish a threshold for ROI that considers risk tolerance and the cost of human resources, below which they may be hesitant to make investments.

It’s also worth noting that ROI doesn’t necessarily have to be financial in nature. Once marketing organizations have set up ways to track the dollar value of programmatic activities, there are also benefits to factoring softer metrics into the equation—think engagement on social media, ad impressions, new subscribers, video views, or website sessions. They all contribute to building brand awareness and establishing an active presence in the minds of consumers. When managed properly, these KPIs can help reduce the need for paid media in the first place, thus essentially driving higher ROI in the process.

The Programmatic Advertising Landscape Today

Blink and you’ll miss something significant in the world of programmatic, such is the speed of its evolution and growth. Right now, programmatic accounts for 91.1% of total US digital ad spending, with marketers stateside forecast to spend $21.49 billion more on programmatic display ads than they did last year (a 16.9% jump). For context, that’s more than double the increase predicted in Canada, China, France, Germany, and the UK combined.

But where’s all that money going? How does it break down? And how is it being served? Let’s explore:

5 Ways to Maximize ROI on Programmatic Ad Spend

Unify your analytics

This is easier said than done, especially when a given campaign can span several channels and platforms that report against independent metrics. Brands today are using an average of 18 disparate data sources in their campaigns (up from 15 in 2022). And incredibly, only 14% of marketing organizations claim to have a complete 360-degree view of their customer base. Fourteen percent! Operating through disconnected silos leaves you susceptible to all kinds of issues from an operational and legal standpoint. It's also a drain on resources with media planners forced to spend a disproportionate amount of time trying to wrangle their data into a cohesive story. Gaining unfiltered visibility into your data at scale is truly transformative in the modern advertising climate—and maximally effective, consumer-centric advertising (and consequently better ROI) is next to impossible without it.

Lean on your data

Once you have your data ducks in a row (or if they are already lined up nicely), be sure to actually use your analytics to understand your baseline potential and develop strategic hypotheses that can inform campaign execution. Learn as much as you can. Play with different scenarios. If your data reveals distinct clusters of consumers who derive different value and benefits from associating with your brand, apply that knowledge to the stories you’re telling across your programmatic media—that’s data-driven marketing. Then it’s all about testing. Programmatic makes it easy to swap out concepts. Experiment with copy, visuals, links, whatever, and narrow down what your audience is responding to. If there’s any doubt whether something is working, simply turn it off and observe the effects.

Keep your creative fresh

Regardless of how good your data is, how streamlined your measurement is, or how robust your targeting is, nothing can mitigate the shortcomings of ads displaying lackluster creative. Given how much digital media people consume on a daily basis (8 hours and 23 minutes’ worth, to be precise), simply “turning up” and exposing your brand or product is not enough. Your marketing must forge emotional connections with consumers and set you apart from all the noise. That means tailoring your messaging and design and creating specific stories for specific personas. It also calls for more collaborative ways of working between your media folks and creative teams—get together to discuss the finer details of audience segmentation and dive into the successes and failures of past performance. Your ads will become all the richer as a result.

Embrace Automation

Sure, programmatic is automation in action. So, by definition, if you’re executing media buys programmatically, you’re already actively embracing automation. But fully leveraging the potential of advertising automation extends to what happens behind the scenes, aka the platform(s) you use to activate and measure your campaigns. Programmatic is a complex beast, so it’s vital to utilize technology that simplifies some of the work for you and helps you stay nimble—be that by consolidating your workflow, using machine learning to optimize bid adjustments, or centralizing performance data. Those who do so can save time, cut costs, and focus on what matters: strategy and outcomes.

Optimize Your Supply Path

Time commitments aside, there are no drawbacks to regularly auditing your programmatic supply path. As the market collectively adjusts for a focus on privacy and the end of third-party cookies, advertisers and publishers are cutting out unnecessary intermediaries and opting out of relationships that don’t offer clear value as part of this sea change. New laws have also come into play requiring a more thorough understanding of who has access to consumer data throughout the bid stream, meaning there is no better time to conduct a review of your partners. A violation around data today can have serious repercussions—just ask Sephora and Kochava.

Maximizing ROI on Programmatic Ad Spend—Wrapping Up

It’s a new day for marketers, and industry-wide transformations are reshaping how brands connect with consumers. Programmatic is just one cog in that machine, but it’s a powerful and dynamic one. Orchestrating performance across programmatic channels relies on a host of capabilities and processes, but for those willing to invest in them, better campaign ROI awaits.

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Looking for more programmatic content? You’re in the right place. We’ve got the top seven programmatic advertising trends to know for 2023. We’ve got everything you need to know about programmatic guaranteed. And we’ve also got a handy quiz that helps you identify which programmatic buying method is right for your organization (including all-in on in-housing, a hybrid approach, or outsourcing).