pcon 2016: beyond programmatic - der wandel beginnt erst (dr. wolfgang faisst, sap xm)

BEYOND PROGRAMMATIC –DER WANDEL BEGINNT ERST

CONFIDENTIAL

Wien, 29. September 2016

Dr. Wolfgang Faisst, Head of SAP Exchange Media

© 2016 SAP SE or an SAP affiliate company. All rights reserved CUSTOMER 2

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Disclaimer


Let’s talk about the world of digital media today…


Global Marketing Spending

$522B(52%)

$984B billion

$400B

$50B $12B (1%)

Adver-tising

Marketing Services & Agencies

Data & Intelli-gence

Direct ITSpending

52% of CMO external spending is for advertising Advertising is shifting to digital media channels

Advertising is most important spending topic for a CMO


*eMarketer forecast

! Programmatic / algorithmic trading is the use of electronic platforms for entering trading orders with an algorithm which executes pre-programmed trading instructions whose variables may include timing, price, or quantity of the order, or in many cases initiating the order by a "robot", without human intervention.

! Widely used in financial services industry by investment banks, pension funds, mutual funds, and other buy-side (investor-driven) institutional traders, to divide large trades into several smaller trades to manage market impact and risk.

Population GDP Ad Spend Digital Spend Display Programmatic

0.7% 2.8% 4.6%

14.0%

21.4%

48.9%The programmatic market exploded in 2014. Growth forecast is $22 bn in programmatic in 2016.*

Digital Advertising - Point of Departure Programmatic advertising outpacing global trends


Source: Irene Aldridge (http://www.ablealpha.com), wikipedia.org

Digital Advertising - Point of Departure Adoption of electronic trading in finance as proxy for media

Adoption of electronic trading in finance 2001-2010


Challenges Description

Inefficient Value Chain

! Various middle men absorbing a significant portion of the media budget (50-70%)

! Advertiser‘s media departments under-staffed compared! Often loose control of the outsourcing service providers

Fraud & Viewability! Software bots creating significant traffic (25-40%)! Additionally, click shops hired to fake audiences! Viewability often not guaranteed, but reported & paid

Complex Processes! Large amount of manual and non-value creating activities! Long lead times to prepare advertising campaigns! Compliance issues in buying and payment

FragmentedTechnology Integration

! „Zoo“ of isolated tools per media channel & adformats ! Lack of integration between corporate systems

(in particular marketing system) and advertising systems! Batch reporting and no real-time optimization capabilities

1

2

3

4

Digital Advertising - Point of Departure Advertisers & agencies faced with four challenges


Source: WFA Guide Programmatic Media, 2014

AOR= Agency of Record ATD = Agency Trading DeskDSP = Demand Side PlatformValue Adds: i.e. Data Enrichment,Targeting, Reporting, Verification.

*

1Digital Advertising - Point of Departure Inefficient value chain with 60% absorption of ad budget


Source:Stats of Digital Ad Fraud Q1 2015, Dr. Augustine Fou

2Digital Advertising - Point of Departure Fraud & View ability creating an additional loss of 25-40%


Source: BCG Analysis

Need for a re-engineering of processes within the advertiser and with agencies

3Digital Advertising - Point of Departure Advertisers & agencies: Complex processes


“Ad Tech will become a natural part of an integrated enterprise landscape.”

Source: LUMA Partners

4Digital Advertising - Point of Departure Fragmented technology landscape


Digital Advertising - Point of ArrivalAdvantages for a direct model procurement and consolidated E2E solution stack


Today (2016) Beyond Programmatic (2016-2018)

Value Chain Fragmented & complex Streamlined value chain; more direct connections

Control Outsourcing & delay in reports 100% transparency & control

Process Cumbersome processes Re-engineered and streamlined processes

Systems 20+ sited tools, no connection to corporate systems

One system for Adtech , integrated with corporate systems (complete Adtech & Martech integration)

Metrics Inconsistent measurements Measurable business KPI´s (purchases)

Targeting High media waste (reach) Personalized & context-aware (relevance)

Consumer Huge ad-blocker interest Advertising perceived as value-add information

Return on media Non-Measurable Measurable & Manageable

Digital Advertising - Point of Arrival The Transformation: Beyond Programmatic


Media Procurement

Agency controls and operates entire media

lifecycle

Advertiser accesses agency platforms for

analysis

Advertiser controls media platforms, agency

executes

Advertiser operates everything except

trafficking & creatives

Advertiser controls and operates all media platforms

Low level Full potential

Empowerment of Marketing

Reporting documents days/weeks after

campaign end

Reporting documents and optimization during

campaign

Online reporting access for Marketing and

optimization

Online reporting access for Marketing; real-time

data, optimization

Real-time data and optimization, most usable

user interface

Data, intelligence & insight

No leverage of customer-internal

data (CRM, …)

Initial leverage of customer-internal data

(manual)

Manual processing of CRM data & leverage for

advertising

Automated leverage of customer data with

selected sources

Golden customer record (all sources) + automated

leverage

Process AutomationHighly manual, partially

non-digital processes between parties

First (automated) digital workflows – advertiser

internal

First (automated) digital workflows – advertiser /

agency

Automated digital workflows – advertiser /

agency

Seamless digital processes between all parties (automated,

integrated)

Technology Integration

Fragmented landscape (siloed Adtech, many ad

platforms)

First integration AdTech / MarTech (workflow)

+ Consolidated AdTech platform

+ Further integrations (e.g. SRM / Ariba)

1 AdTech platform, fully integrated with corporate

systems

E2E Measurement Only costs, clicks & impressions

+ Actions/ conversions (downloads, purchases)

+ (Store) visits (online, offline) and activities ?

+ Confirmed transactions (online, offline)

+ Incremental transactions (+ related

margins)

Digital Maturity

Digital Advertising - From Today to the Full PotentialAssess your Status


Digital Advertising - Point of Arrival Key value levers to transform digital advertising

! Advertising efficiency via premium private marketplace with most transparent brokerage

! Advertising effectiveness: E2E process excellence from planning to measurement to real-time optimization

! Empowerment for people via simplification of user interface! Assistance functions & automation powered real-time analytics & optimization capabilities

! Seamless integration: Connecting corporate systems & advertising technology (in particular MarTech & AdTech) and

! One platform for all media channels

! Leveraging 360° data (internal and external) to drive customer relevancy! Aggregation of first party, second party and third party data to „golden customer record“

! Attribution of incremental purchases (POS, eCommerce) to digital advertising campaigns! Measurement and optimization of „Return on Media“

Media Procurement

Empowerment of Marketing

Data, intelligence & insight

Process Automation

Technology Integration

E2E Measurement

1

2

3

4

5

6


Programmatic Media Buying Value Chain – “old world” SAP XM media buying value chain – “new world”

Lack of transparency and loss of budget due to ‘middle-man’ economy (intermediaries)

Increased ROI by connecting advertisers & publishers directly through e-2-e integrated online media network

Media procurementPremium private marketplace with brokerage model

1


Empowerment for marketing & agency

people: Simplification, Assistance & Automation

2


Empowerment for marketing peopleMedia mix optimization powered by algorithms & big data

Source: Harvard Business Review: “Advertising Analytics” (March 2013)

Define the optimal mix!

Siloedconsideration of channels

(“swim lane”)

Assistedconsideration of channels

2


Speedup = 500/30 = 17

10

~0

10

10

~0.......

~0 ~0.......

Duration parallel = 30

10

100

10

100

10

Duration sequential = 500

Duration

Process to be paral-lelized

Main memory 125.000 faster than disk Parallelization via multi-core processors

Main Memory

Disk

CPU

Core Core

L1 Cache

L1 Cache

L2 Cache

L2 Cache

L3 Cache

1 NS

3 NS

8 NS

80 NS

SSD: 100 K NSHD: 10 M NS

In-memory computingSpeed-up of >125K times possible with in-memory vs. disk2


Supports any Device

Any AppsAny App Server

SAP S/4 HANAand BW/4 HANA

JSONR Open ConnectivityMDXSQL

Other AppsLocationsReal-timeBig dataMachineUnstructuredTransaction

SAP HANA Platform

SQL, SQLScript, JavaScript, HTML5, SAP River

Replication, Streaming and ETL Integration Services

Search

Application Function Library

Data Virtualization Text Analysis &Mining

Spatial DatabaseServices

Stored Procedure & Data Models

Predictive & Planning Engine Business Rules

Application & UI Services

SAP HANA Platform Converges Database, Data Processing and Application Platform Capabilities & Provides Libraries for Predictive, Planning, Text, Spatial, and Business

Analytics to enable business to operate in real-time.

SAP HANA: In-memory platform leveraging libraries for predictive, planning, text analysis, spatial & analytics2


Billing Systems & other

Infrastructuree.g., invoices, call-by-call, payment history)

Billing Systems & other

Infrastructuree.g., invoices, call-by-call, payment history)

(e. g., customer service, shop requests,

complaints, inquiries, emails, talk recordings)

(e. g., customer service, shop requests,

complaints, inquiries, emails, talk recordings)

ERP (e. g., customer data,

transactions)

ERP (e. g., customer data,

transactions)

360!!Customer View

Market Research e. g., Nielsen, GFK

Social Media e. g., Facebook, Twitter, Youtube, Blogs forums,

LinkedIn

ERPe.g., refine & improve

brand experience, reduce mark-downs & stock-outs, payment history

CRM+e. g., customer service, complaints, inquiries, emails, talk recordings

Internal sourcesExternal sources

Mobile Appse. g. consumer tracking

Website(e. g., clickstream, requests)

External Websites e. g., retail channel

In focus with Big Data

Text and voice information

Data, intelligence & insight360° customer view (internal and external)

Wholesale & Retail (POS)

e. g., purchases, coupon redemption

POS tracking information via beacons & sensors

3


Marketing Planning

Create digital ad campaign (incl. brief document)

Create campaign (automatically) + receive task for completion

Monitor marketing campaign progress

Marketing Expert Media Expert

Bus

ines

s Pro

cess

Setup ad campaign and settings (tactics, inventory, targeting). Send for approval.

Activation of ad campaign

Execution and (auto-) optimize ad campaign

Marketing Suite

Procurement Expert

Create shopping cart w/ insertion order

Review and approveConsolidated Mgmt. Reporting

Process AutomationMarketing, media and procurement in one workflow

Supplier Relationship Management

4


MarTech AdTech MarTech

! Comprehensive planning within advertiser‘s system

! Campaign definition! Data management

1. Plan 2. Execute 3. Measure

! E2E reporting! Steering in real-time

! E2E advertising ! Execution across all digital cha

nnels! Procurement optimization via

bidding engine

Media Mix Optimization.

AttributionD

igita

l / O

nlin

eO

wn

Ch.

Search (e.g. Google)

Video

Smart TV / Digital Radio

Social (e.g. Facebook)

DooH / IoT

Mobile

Web

Print

TV

RadioOff

line

Email / SMS

Social

Apps

Web

Marketing Suite

Marketing Mix Optimization

Consumer

Technology integrationOne simple platform for all customer channels5


Technology integration Connecting all media channels to enable advertising along the customer journey

In 500 m you reachStarbucks

Early Bird Coffee! 5

Coke to goat just ! 0.50!

Stop at the next gas station

in 5 km

5


Balance Check Smart TV App

Thanks for visiting!Hope you enjoyed

our services

Earned Savings Points

Mobile payment Office

Shopping

Driving home

End Office

Technology integration Connecting all media channels to enable advertising along the customer journey

5


6E2E measurementClosed loop from planning to buying and optimization

SAP XM

Partner Solution

Other SAP Solutions

1st Party Data

3rd Party DMP

Media Planning & Mgmt Execution Publisher Corporate Systems

Med

ia M

ix P

lann

ing

&

Opt

imiz

atio

n

Desktop

Mobile

Video

Social

DooH

Search

Procurement

Desktop

Mobile

Video

Social

DooH

Search

SAP XM

ERP

CRM

eCommerce

Website, apps

E2E measurement and feedback loop

Marketing mgmt

Direct marketing

Handover to compliant approval


Digital Advertising - Point of ArrivalMaking “Return on Media” measurable & manageable

Return on Media

RETURN

Current Return (Campaign)

Incremental revenue

Price Gross PriceDiscounts

Volume

Reach

Conversion

Impressions

Clicks

Action

…

Future Return (Brand Value)

…

…

Investment

MEDIABUDGET

Earned

Owned

Paid

TRADITIONAL

TVPrintRadio

…

DIGITAL

DesktopMobileSocialDooH

…INTERNAL COSTS

PROCESS/PEOPLETime

Costs

IT SYSTEMSTime

Costs

price x volume

+ fees & commissions

price x volume

+ fees & commissions

DIVISION

MULTIPLICATION

MULTIPLICATIONADDITION

ADDITION

THANK YOU!

Dr. Wolfgang Faisst

STRICTLY CONFIDENTIAL

[email protected]

+49 160 90432577

www.sapexchange.media