Lauren Wentzel, Admedo, marketing director, argues the correct application of programmatic advertising could be key to the SME sector being at the vanguard of the UK recovery, however it is thus far the domain of the corporate behemoths, this must change.

Everyone has felt the pinch of the economic downturn in some way. We may not have suffered depression-like food or fuel shortages, but in the ad industry there has been a notable lull in canapés and ad budgets.

The greater economy might not have got off as lightly and the UK Government has called on SMEs to lead the country out of recession. If we consider that the return on investment (ROI) from advertising is far greater for SMEs than any larger firms, then programmatic advertising is arguably the best way for SMEs to scale their business.

It was Nick Clegg who recently declared: “Today’s small business is tomorrow’s big business,” and while this is a sentimental political platform, there is also truth in the vital role that SMEs play in restoring our economy.

They are more agile innovators, quick to react to the needs of the market and grow into new territories. As a collective, SMEs contribute a grand total of 40% to the total UK GDP, but only contribute an insipid 18% of total UK ad spend and there has to be a reason why such a lag exists.

The plight of the SME

Advertising is still a game of elite minorities, especially performance display, which has been a challenge for SMEs. Demand side platforms (DSPs) have been the privileged domain of big brands, media agencies, and are a luxury that often requires a contract or a long-term trade agreement.

The inability to access advertising technology also inhibits SMEs from advertising seasonally or for specific initiatives. Search has become the bread and butter channel for most SMEs that are attempting to advertise online. This space however, has become crowded and lacking the added benefit of brand awareness. What was once an accessible advertising medium is now causing a rising tide of frustration and inflated PPC costs.

Bridging the digital divide

We (the ad tech industry) shouldn’t sit back on our laurels and declare ‘let them eat cake’, or ‘…long tail ad solutions’, we should do something greater for this sector of the economy. Advertising returns are estimated to be eight times more beneficial for an SME than a larger firm according to a recent report from the Advertising Association and Deloitte. Also, for every £1 spent on advertising returns an average of £6 in GDP. The numbers make a strong case for bridging the digital divide between the elite Brands and SMEs.

The programmatic manifesto

Programmatic is a broad term that covers many automated ad exchanges, but most importantly, it is an enabler. Martin Cogan, CEO of Headway Digital, sums up the benefits of programmatic as: “laser targeting, real time, optimisation and access to multiple publishers from a single platform.”

Programmatic harnesses the power of multiple data sources and allows impressions to be bought in real time auctions (RTB). This all sounds great but what is programmatic actually going to give back to the people?

1. Programmatic will give SMEs performance display advertising

This will complement, or compete, with search, either way, it will enhance the efficiency of their online ad spend. It is programmatically traded, measurable, can be optimised to conversions, and has the added benefit of brand awareness too. The same awareness that increases branded searches and drives down eCPCs. Performance display doesn’t need to replace search but can improve its performance.

2. Programmatic will help SMEs scale

By giving SMEs RTB they can access billions of impressions and only show ads to the most relevant people. This can be done through extensive audience targeting. It also gives them financial flexibility to control their budget in real time, unlike more traditional methods like local press, which is less measurable and less cost effective. By introducing thousands more SME advertisers to the mix this will also improve the scope of data used by DSPs, as well as demnd for publishers’ inventory.

3. Programmatic will give SMEs local audience management

As SME audiences are typically more niche and localised, it is a challenge to collect records to build out specific audiences for prospecting. Retargeting is very important for audience management too. Programmatic allows SMEs to retarget customers and alongside this strategy they can leverage data (such as geo-targeting) to localise their advertising for maximum ROI.

The industry of change

The horizon does look promising for SMEs. In the race for market share Google, Yahoo, and AOL are trying to secure big brand budgets but they are also seeing the benefits from long tail performance buys made possible by programmatic, as confirmed by Noel Penzer, AOL UK MD. More compelling is how tech companies are starting to enable SMEs to take control of their own self-serve programmatic advertising efforts.

As an industry we can loosen the shackles of contracts, minimum spend and monthly fees, we can remain open about commission, we can provide SMEs with control, we can develop intuitive advertising tools and offer automated optimisation.

Advertising already contributes £100bn annually to the UK economy and with the right platforms in place, today’s small business will be tomorrow’s big programmatic business.