Mad men, meet the algorithm: the art and science of modern marketing

Art has squarely met science in the modern practice of digital marketing, ushering in new forms of collaboration among marketers, agencies and technologists. Successful campaign execution now requires as much deftness with data and analytics as it does with creative and media planning disciplines.

This approach isn’t entirely new, however.

For decades, marketers have used consumer insights to inform creative and communications strategies, and relied on data signals to understand, target and measure audience reach. This is still true today, but with a twist: the shift towards auction-based buying of media formats such as search and video and automated trading of display media, has moved the industry to data-driven, technology-centric planning and buying modes.

Mad men, meet the algorithm.

Algorithms are sets of rules that perform operations, from simple data processing and calculations to more automated reasoning and artificial intelligence. Decision systems applied to vast pools of media inventory or search queries allow humans to triumph over complexity and solve multivariate marketing inputs, in real time.

In its simplest form, marketing has a singular goal: to connect with the right people, at the right moment, with the right messages. Algorithms that power media trading platforms make this possible at a scale and speed unimaginable a decade ago.

Given the size and intensity of the UK’s advertising industry, it is little wonder programmatic buying platforms have proliferated. Programmatic trading enables advertisers and agencies to make sense of data inputs in real time – consumer signals, inventory types, context, pricing and creative offers – and make instant, efficient buying decisions against target audiences.

In turn, automated trading via sell-side platforms gives publishers access to a highly efficient sales channel, whether on open exchanges or private marketplaces. Media sellers increasingly transact both premium and remnant inventory to improve yields, driving efficiency in their sales channels.

Ad technology has enabled marketing’s first and fully automated marketplace for buying and selling media. It resembles a financial exchange, with media being traded in lieu of commodities or other financial instruments. Trendspotters predict the vast majority of UK display advertising – north of 80% – will be transacted via trading desks by 2017. A recent Boston Consulting Group study (pdf), commissioned by Google, found that programmatic buying – yes, algorithms – helped advertisers increase return on investment by 30%–50%.

All this is not to say that human skills – such as judgement, creativity, storytelling – are any less vital to a great advertising campaign. Quite the opposite. Understanding people’s motivations, discerning consumer insights, creating compelling messages and delivering them across multiple channels and devices at appropriate intervals remain fundamental inputs to successful marketing communications.

That’s the art.

Human skills are likewise essential when implementing and optimising campaigns, because in practice, all data-driven marketing is a function of human instructions. It requires judgment to determine decision rules, structure data, define targeting parameters and set budgets. It requires analytical skills to interpret results and reset data parameters. It requires deft understanding of consumers to turn insights into action.

That’s the science.

Eileen Naughton is the vice president and managing director of Google UK & Ireland. Google is speaking at this year’s Changing Media Summit

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