The world of instantaneous display advertising

Programmatic media buying is increasingly dominating the online advertising space. Indeed, marketing industry researcher Magna Global forecast that by 2019 over 50% of international brands’ display and video advertising will be bought programmatically.

The rise of programmatic allows iGaming operators to optimise their acquisition and retention via the media buying channel. However, automated ad buys do not relegate traditional media buying to advertising history. The personalised approach offered by direct media buys and affiliate marketing will continue to play important roles in operators’ marketing mix.

On target with automated advertising

Since the iGaming industry’s earliest days, operators’ direct media buys and use of ad networks to place their banners on high traffic websites have proved invaluable in raising brand awareness and prospecting new players. While the importance of brand building cannot be understated, the cost effectiveness of traditional display media buys as an acquisition tool is often erratic.

The core pricing model of cost per mille (CPM) means that operators pay for impressions rather than converting players. The alternative model of cost per click (CPC), whereby advertisers pay for actual click-throughs rather than per 1,000 page impressions as with CPM, is more cost effective as an acquisition tool but still does not guarantee conversions.

According to Google, click-through rates (CTRs) for gambling display ads targeting the UK average just 0.09%. As a result, iGaming acquisition managers focusing on this market and other European countries need to ensure that the CTRs for their campaign’s banners significantly exceed this benchmark.

One strategy to maximise CTRs and, by extension, conversions is to develop creatives that are engaging visually and in terms of their call-to-action and associated sign-up offer. Another approach is to move beyond conventional display ads and focus on rich media, and especially video. CTRs for video ads average 1.84%, according to DoubleClick. Beyond the ads themselves, the most effective way for operators to maximise their creatives’ CTRs is to ensure that their campaigns are targeted at a consumer level.

Sophisticated ad targeting is at the heart of programmatic media buying. “This is about selling dog food to dog owners,” says one media buyer when defining programmatic to Adweek. Bringing a highly automated approach to online advertising, programmatic is an umbrella term for using software and data on consumers to streamline the media buying processes – from where ads are placed to who is viewing them.

Through demand-side platforms (DSPs) such as DoubleClick Bid Manager and AppNexus, programmatic media buyers are connected to data exchanges and ad exchanges. Through these interfaces, operators can purchase an array of highly targeted ad space – using third-party data as well as their own segmented player databases – at the touch of a button, including in real-time. Perhaps the most cited example of programmatic, realtime bidding (RTB) involves advertisers bidding on ad space on an impression-by impression basis, with the auction finalised in a fraction of a second.

Whether a campaign involves an RTB auction or is automated guaranteed, in which ad space is bought automatically without an auction, programmatic allows operators to focus more on targeting players directly. Using third-party data ahead of the Euro 2016 semi-finals in early July, a sportsbook can use their DSP to target 18 to 30-year-old male football fans by buying ad space with a range of sites that specifically cater to this demographic and interest group (publishers of sports news and men’s lifestyle content).

A proportion of targeted users will clickthrough via an operator’s display ad without converting. Ahead of the final of the Euros in Paris on 10th July, media buyers can retarget these almost-players by developing creatives specifically tailored to them and the match, and then literally following them around the web with ads placed on the sites these users frequent. Income Access’ data reveals that consumers who have engaged with an iGaming brand’s site are 5% to 10% more likely to convert than a user unfamiliar with the offering, which demonstrates the power of retargeted media buys in acquisition efforts.

Even converted players may become inactive or less engaged over time. Using their own first-party data on these customers, operators can develop retention
ad campaigns involving display banners with promotions for the relevant player segment. Considering that Kissmetrics estimates that it is seven times more expensive to acquire a customer than re-engage an existing one, it’s vital that operators don’t neglect the retention benefits of programmatic.

Although display ads remain a core marketing focus for iGaming brands, they can also explore the opportunities of targeted ads on Facebook and Twitter. The reams of data both social media platforms possess on user demographics, interests (‘likes’) and overall engagement means that Facebook ads and suggested posts as well as promoted Tweets allow operators to reach beyond their followership to drive new players to their brand. With DoubleClick Bid Manager (DBM) now offering social media ad buying – Twitter integrated in H2 2015 after Facebook partnered with DBM in 2013 – operators can increasingly manage their programmatic media buying from a single interface.

Traditional media buying and affiliate marketing

With programmatic increasing the efficiency and overall ROI of media buying, are direct media buys still relevant? At the dawn of the programmatic era, ad exchanges’ programmatic inventory was comprised of publishers’ ‘remnant’, or unsold, ad space. A common criticism of programmatic was that it focused on low-quality inventory. Although advertisers continue to face the risk of buying fraudulent traffic, the recent rise of ‘premium’ programmatic and automated media buying’s growing popularity has significantly improved this situation.

Nonetheless, iGaming remains a niche industry whose growth has been driven by personal relationships between advertisers and publishers. Yesterday’s webpages specialising in providing gambling news and content have evolved into today’s sophisticated online media brands like PokerNews, Oddschecker and XL Media’s portfolio of publications. The high traffic of sites like these means that they can charge significant CPMs for their advertising space. Often, they still reserve their prime digital real estate for the direct media buys of operators with whom they have had longstanding relationships.

Will high-traffic gambling publishers embrace the programmatic model going forward? Given such sites’ reluctance to promote brands with PR difficulties, the prospect of open RTB auctions appears remote. However, publishers have the alternative of private auctions, whereby they invite a select group of operators to bid programmatically on their ad space. Given the efficiencies of this approach over the traditional methods of direct buys and ad networks like Adcash and Gunggo, private auctions are likely to gain increasing traction.

Until programmatic auctions become the dominant approach for high-traffic gambling publishers, operators will continue to allocate a significant proportion of their budget to traditional media buying alongside their programmatic spend. Similarly, the tried and tested advertising model of affiliate marketing will remain a
key element in operators’ marketing mix. 

However targeted a media buy, though, advertisers still pay for impressions or click-throughs rather than conversions. In contrast, affiliate marketing’s cost per acquisition (CPA) or revenue share model means that operators only compensate affiliates for acquired players. As such, the affiliate channel is broadly more cost effective than media buying. Nonetheless, affiliate sites have less reach as a brand awareness channel than higher traffic publications offering the CPM model and take time to achieve results.

Affiliate marketing and both traditional and programmatic media buying have different strengths and weaknesses. For a new brand’s first year, operators can allocate approximately 60% of online advertising spend to media buying due to the channel’s effectiveness in raising brand awareness. Perhaps a third of that spend can be dedicated to programmatic buying, while the remainder can be allocated to direct buys with key gambling publications. Around 40 percent of a new brand’s online advertising budget can be reserved for affiliate marketing, considering its incremental impact.

Brands will recalibrate their online marketing mix with time and depending on results. Another influencer will also factor into their thinking: technology. Given programmatic’s growth over the last five years, it is challenging to forecast its future impact on acquisition and retention. As Magna Global predict, will programmatic be the dominant media buying approach for iGaming operators by 2019, and could it one day be the only approach?