WHITEPAPER

Three Steps to
Programmatic Marketing
THOMAS H. DAVENPORT
Founder International Institute for Analytics (IIA), Visiting Professor, Harvard
Business School, Babson Distinguished Professor for Information and Management.

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2013 DataXu, Inc. All rights reserved.
DataXu | 281 Summer Street, 4th Floor | Boston, MA 02210
www.dataxu.com
Three Steps to
Programmatic
Marketing
Contents
Executive Summary 3
Three Steps to Effective Programmatic Marketing 4
About The Author 9
About DataXu 9

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THREE STEPS TO PROGRAMMATIC MARKETING
2013 DataXu, Inc. All rights reserved.
DataXu | 281 Summer Street, 4th Floor | Boston, MA 02210
www.dataxu.com
Executive Summary
Technologies for managing marketing data, generating marketing
analytics, and driving marketing decisions have proliferated rapidly
over the past several years. At the same time, digital marketing
has become increasingly important, and has dramatically
accelerated the pace of marketing decisions. Many marketing
organizations and executives have had diffculty keeping up
with the changing landscape. There are many opportunities to
make better, faster, and more cost-effcient marketing decisions
through the use of programmatic marketinga combination of
technology, people, and processes that leverage data science to
better understand and engage consumers and maximize return
on investments. However, many frms and executives still make
only intuitive, experience-based decisions. Nevertheless, its
important to move toward programmatic marketing, and this
paper outlines three steps that executives can take to position
their organizations to win in a digital world.
There should be little doubt that marketing is moving from a
purely intuitive, creative function to one that is also data-driven
and computational. There is still the need for creativity and
intuition, but as media increasingly become digitized, and as
customers increasingly become addressable across all channels,
marketing decisions can increasingly be based on big data and
algorithms. When thousands of decisions on digital and social
media need to be made every second, there would seem to be
little choice but to embrace tools that make rapid decisions about
which brands and campaigns relate to which customers. Yet many
marketing executives are still attempting to base their decisions
solely upon intuition and gut feel. They may acknowledge the
value of data science and analytics in principle, but they struggle
to identify and implement an appropriate solution.
The balance between art and science in
marketing is undeniably shifting toward
sciencedecisions based on data.
A recent survey illustrates how poorly prepared many
marketers are for dealing with the data-driven transformation
of the function. The Corporate Executive Board surveyed 800
marketers at Fortune 1000 companies. The survey revealed,
for example, that marketing executives depend on data for
just 11% of all customer-related decisions. When asked what
type of information supported a specifc recent decision about
customers, data was actually last on the list, after such anecdotal
sources as conversations with colleagues, advice from experts,
and interactions with single customers. Only 6% of the marketers
could correctly answer fve basic questions about statistics, and
only 5% of the sample owns a statistics textbook.
Of course, there are still some intuitive and ad hoc decisions to
be made in marketing. If there isnt much data available, or if
the decision involves close human relationships, human intuition
may be the only resource. Decisions on whether to run a Super
Bowl ad, which agency to partner with, or how to create the big
idea still rely on human deliberation by Chief Marketing Offcers
(CMOs) and their teams. The people that CMOs hire and the
relationships that he or she chooses to build inside and outside
the corporation are also undeniably human decisions based on
experience. Although these decisions may be unstructured, even
they can beneft from data and analysis when they are available
and feasible.
No matter what the type of decision, the balance between art
and science in marketing is undeniably shifting toward science
decisions based on data, algorithms, and formalized business
rules. Many observers are beginning to refer to this approach
to marketing as programmaticone that is rapid, repeatable,
and based on continuous testing, learning and optimization. This
approach allows marketers to make the most repetitive decisions
through automation, which frees their attention for the strategic
and experience-based ones.
The limited adoption of programmatic marketing is not simply
because some marketers have their heads in the sand; there are
good reasons for having diffculty with data-driven marketing.
For example, the data and systems for marketing decisions are
piecemeal and fragmented. In digital media management alone,
there are diverse sets of tools and capabilities for optimization,
analytics, testing, demand-side platforms, networks and exchanges,
social, video, mobile, and creative. For marketing and customer

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THREE STEPS TO PROGRAMMATIC MARKETING
2013 DataXu, Inc. All rights reserved.
DataXu | 281 Summer Street, 4th Floor | Boston, MA 02210
www.dataxu.com
relationships overall, there are CRM systems, campaign
management systems, online marketing, data and attribution
management and web analytics platforms, and a variety of
other tools. The panoply of agencies, consulting frms, and
other marketing services organizations is just as fragmented.
At the moment, at least, one-stop shopping for programmatic
marketing is a painful illusion. Even for those organizations that
can handle this complexity, the resources necessary to acquire
and integrate all these tools may be diffcult to muster.
All of these new software capabilities have become available at
a time when there are also unprecedented opportunities for le-
veraging new hardware and processing alternatives. Analytics in
the cloud has become a viable option for many organizations,
and allows for low levels of initial investment with easy-to-add
capacity. For organizations wanting to compute their marketing
analytics on premise, there are much faster (and in some cases,
cheaper) tools for doing so, including big data server clusters
running Hadoop, grid computing, in-memory analytics, and in-da-
tabase processing. All these new tools simply mean more choices
and decisions for CMOs.
These questions are not going to be resolved overnight. Bill
Pearce, the former CMO of Del Monte who now teaches marketing
at the University of California, Berkeley business school,
commented, I think we are a decade out from having this
solved. Yet some frms, such as Procter & Gamble, are moving
aggressively on data-driven marketing and analytics. P&G has
already undertaken initiatives in the following areas:
Accelerated marketing mix analysis to a more continuous,
scenario-based analysis (versus the common annual approach);
Introduced new approaches to e-commerce on social sites, e.g.
Facebook;
In-house development of a digital media buying optimization
solution (Hawkeye);
Consolidated relationships with digital marketing services
providers, including Nielsen and Accenture;
Holding an annual internal conference (Signal P&G) on digital
and social media;
Development of an online social analytics tool on more than 50,000
employees desktops (Consumer Pulse);
Textual analysis of social media comments and buzz;
An overall initiative driven by CEO Bob McDonald to make P&G one
of the most digitally-oriented companies in the world.
Of course, marketers cant leave the aggressive innovation to
P&G. CMOs across companies and industries need to act nowto
acquire new technologies, manage marketing data, and make
better strategic and tactical decisions. Given this shift and these
obstacles, how can CMOs and marketing organizations plot an ef-
fective course, and follow the lead of pioneers in programmatic
and data-driven marketing?
To determine these issues, I interviewed a dozen senior marketing
executives across a variety of industries. The primary topic
was the shift toward programmatic marketinghow they are
handling the changes, what specifc steps they are taking, which
technologies they are counting on, and how they are fnding
people to drive the changes.
Three Steps to Effective Programmatic
Marketing
In the rest of this report, I describe three steps to effective
programmatic marketing. These are not necessarily sequential,
although completion of the later steps cant happen without
substantial progress being made in the earlier ones.
Step 1: Understand your customers
At the core of any effective programmatic marketing strategy
is a clear 360 degree understanding of customer attributes and
behaviors across all channels on and offine. Given the rapid
proliferation of channels and customer information sources, this

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2013 DataXu, Inc. All rights reserved.
DataXu | 281 Summer Street, 4th Floor | Boston, MA 02210
www.dataxu.com
is a challenging and ongoing step. The perfect, fully integrated,
omni-channel customer database may never exist, but companies
need to make considerable progress toward this goal.
When a new customer channel or touch point emerges, the natural
tendency is to separate it from previously existing programs and
data. The new channels are unproven, and typically involve types
of data with which your organization will not be familiar. Its
challenging to embed the new data types with the tried-and-true.
However, it should be clear by now that we live in an omni-channel
world and that online and offine messages must coexist. Similarly,
social and mobile channels are here to stay. Of course there are
privacy-related issues to consider, and most organizations avoid
joining personally identifable information (PII) about customers
with their specifc browsing behavior. Companies that are fully
committed to omni-channel relationships, such as Vistaprint and
1-800-Flowers.com (perhaps the only frm with an omni-channel
name!) are developing or have already developed integrated
customer data environments.
Therefore, organizations should combine customer information
from online and offine contexts whenever possible. In most cases
this will take the form of an integrated customer data warehouse
of some sort, incorporating online and offine behaviors,
offers and promotions, responses, and the more traditional
demographic and segmentation data. Using multiple sources of
data about customers not only provides a more complete picture,
but also allows marketers to separate the signal from the noise
to identify truly meaningful trends.
There are lots of subsets of this big data
areaproduct performance, consumer
behavior, other inputs. Were knitting
together the data, multiplatform stuff,
CRMthere are so many different threads to
pull together.
Julie Cary, CMO, La Quinta
The integration of data should encompass not only online and offine
sources, but also data from a variety of customer intelligence
sources: CRM, ERP, web transaction logs and clickstreams, social
analytics, and even call center activity. It should also incorporate
data types across geography, business units and product groups,
and purchasers, prospects, and infuencers. There are generally
no good reasons for sprinkling customer data in small databases
or marts around an organization, making them inaccessible to
broad campaigns.
The head of marketing for an entertainment company commented
on progress in this regard:
We are stitching things together all the time. Its not
extraordinarily diffcult, but its a lot of work. There are lots of
subsets of this big data areaproduct performance, consumer
behavior, other inputs. Were knitting together the data,
multiplatform stuff, CRMthere are so many different threads to
pull together.
Many problems in customer analytics come about because of
fragmented organizational responsibilities. For example, the
Service organization controls the CRM system and data, and they
are reluctant to share it with us in Marketing.
Julie Cary, CMO of hotel chain La Quinta, pointed out in an
interview that data integration sometimes requires organizational
integration. She commented:
We have two different databases that arent fully integrated
and have disparate data sources that inform all aspects of
our marketing. Integrating this data is time consuming but
has provided valuable insights. I also see more overlap in the
functional roles on my team loyalty, online media, e-commerce,
etc. As a result, we restructured our department. It is important
for each functional part of our marketing team to see the
customer all the way through the life cycle. We are also trying
to integrate and collaborate with more travel partners to jointly
advertise and target certain groups online, and contain the
information for later remarketing.
A customer intelligence initiative should address the importance
to your business of relatively new forms of marketing data,
such as social, mobile, and locational data from and about

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THREE STEPS TO PROGRAMMATIC MARKETING
2013 DataXu, Inc. All rights reserved.
DataXu | 281 Summer Street, 4th Floor | Boston, MA 02210
www.dataxu.com
your customers. Its sometimes diffcult to identify customers
consistently across all channels, but companies need to begin
incorporating data from these new touch points. Some retailers
are even beginning to identify customers though their mobile
devices when they enter storeswith their customers permission,
of course.
Step 2: Invest to Maximize Return
With some degree of integrated customer intelligence in place,
companies should invest in programmatic marketing capability
with a constant focus on maximizing return on investment (ROI).
In order to maximize returns, its important to create a broad
platform for programmatic decisions, and to understand how
to attribute sales and results. Its also important to invest in
programmatic marketing skills to augment creative skills.
In todays marketing environment, the insights arrive at a furious
pace, but most organizations do not have the structures and tools
in place to effectively manage them. Unfortunately, analysis
paralysis is a crippling disease. There are simply too many
variables and too many decisions to be made in contemporary
marketing for humans to deal with them allor even for humans
to employ traditional hypothesis-based analytics. Therefore it is
necessary to invest in programmatic approaches that can operate
at the speed of todays digital marketing.
Integrating this data is time consuming but
has provided valuable insights.
Julie Cary, CMO, La Quinta
Digital and social marketing alone can involve literally thousands
of decisions a day about what content to run on what sites.
Prices for display ads change by the second, and vary widely
across publishers. The only way to handle this frequency and
complexity of decision-making is through the use of decision
automation and algorithms.
To maximize ROI, marketers must invest resources in customers
likely to deliver a high lifetime value (or invest appropriately,
given a consumers potential lifetime value). A solid foundation
of omni-channel customer intelligence makes it possible to build
respective audience segments. Many marketers identify a set of
customer segments, but they dont have the ability to consistently
treat each segment differently. In order to realize the potential
of customer intelligence, marketers must understand how, when
and where to engage each of their subsets of customers.
There are a variety of approaches to implementing the
necessary algorithms and programmatic processes. A key
objective is to automate frequent tasks such as digital media
buying, while maintaining tight integration with customer
data management. Some organizations may choose to develop
their own systems, although this would require a very high
level of analytical, marketing, and technical expertise. Some
may employ consultants or agencies for this purpose. Since
the vendor environment for marketing software tools is highly
fragmented, sourcing different algorithms in different tools
may lead to a very complex and siloed set of models and vendor
relationshipsdefeating information technologys fundamental
purpose of making things more effcient. Whenever possible,
seek technologies that are fexible in terms of their optimization
capabilities and can work with a variety of marketing entities,
data types and marketing objectives.
We have people with great creative
skills, other people with analytics
expertisebut very few with both. At a
minimum we need to get those two sets
of people talking with each other.
In order to understand the returns on your marketing investments,
companies need an effective model for omni-channel attribution.
The attribution of results to particular customer contacts and
relationships is an important issue for any marketing organization.
If you dont know what combination of creatives, messages,
or customer contacts leads to a sale, then you have no means
of knowing whats working in a campaign. Attribution models
became popular with digital marketing, but the need to attribute
results to a marketing initiative is as old as direct mailthe frst
addressable technology in marketing.

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THREE STEPS TO PROGRAMMATIC MARKETING
2013 DataXu, Inc. All rights reserved.
DataXu | 281 Summer Street, 4th Floor | Boston, MA 02210
www.dataxu.com
In a complex omni-channel environment with a variety of
digital infuences on a sale, attribution becomes substantially
more diffcult. Many organizations are still using a last click
attribution model, even though there may be many other
customer touches that infuence a sale. Models based on the last
click dont allow an understanding of the multi-channel infuences
on a sale or conversion, and are likely to be found wanting in an
assessment. Increasingly, sophisticated marketing organizations
understand what channels and touch points are used for each
unique customer journey in their campaigns. Otherwise it is
diffcult to optimize variables that havent been defned by the
organization. Some organizations optimize only on cost, but wise
organizations will optimize both cost and benefts.
Assuming that the organizations current attribution model
isnt able to assess all of its programs and channels, at this step
the organization should begin generating a variety of different
models and comparing the results and their implications for
marketing decisions. While the perfect attribution model is an
elusive concept given the diffculty of tracking every customer
contact and understanding all customer behaviors, almost
every organizations model could be improved. A key tool
to allow multi-channel attribution is the demand-side data
management platform (DMP), which should be licensed and
controlled by the CMO.
Using loyalty data from retailers has helped.
We are doing a lot of digital experimentation,
and that is helping us refne our model.
Some organizations have noted that the problem with attribution
is less a matter of analytics, and more an issue of getting access
to the necessary data. At a global consumer products frm, for
example, a senior marketing executive noted, For us the
problem of attribution is less about analytics, and more about
getting a line of sight to the information. That is particularly
diffcult in industriesas in consumer productswhere there are
intermediaries between the company and its consumers. The
same executive noted, Using loyalty data from retailers has
helped. We are doing a lot of digital experimentation, and that is
helping us refne our model. Its not impossible, but it has to be a
very focused task. A fnal point here is that frms should beware
of agencies, service providers, and partners who do not have, or
are unwilling to provide a vehicle to fow the needed information
back to the enterprise. As clients, they have leverage with those
providers and should use it.
In order to effectively make and monitor these investments in
programmatic marketing, many organizations will also need to
invest in analytical marketing skills. One of the greatest barriers
to the use of marketing analytics is a lack of skills. As one CMO in a
media company put it, We have people with great creative skills,
other people with analytics expertisebut very few with both.
At a minimum we need to get those two sets of people talking
with each other. Some organizations have developed major
initiatives to address this issue, including a week-long Marketing
Boot Camp at Nationwide Insurance; the same company has
sponsored a similar program at Ohio State University, a school
from which it recruits heavily.
Step 3:
Engage customers more effectively
The overall payoff of these investments in customer data and
programmatic marketing is better customer engagement. Given
the very fast pace of change in the marketing domain today,
most organizations will beneft from simply getting started
with programmatic software and processes, customizing the
implementation, and learning from the experience. This is no
era for long-term planning, but any steps taken should build a
broader capability, moving the organization toward a more
platform-oriented approach to programmatic marketing, with
less fragmentation and more broadly-capable tools.
Consistent with the idea of making rapid progress, many
companies are adopting more agile methods for implementing
new technologies, making changes rapidly, and generating
insights. A director of marketing analytics at a consumer goods
company commented, Its easier to build models than to get
everybody aligned on them in advance. So we use scrum methods
to build new model prototypes quickly, and then people can see
what they will get with them. The head of marketing analytics
at an insurance company commented, If we wait for the perfect
model well all be dead. So we try to generate an insight per
week for our internal customers. Of course, with programmatic
tools and processes in place, the rate of model generation could
approach many insights per second.
Its easier to build models than to get
everybody aligned on them in advance.

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THREE STEPS TO PROGRAMMATIC MARKETING
2013 DataXu, Inc. All rights reserved.
DataXu | 281 Summer Street, 4th Floor | Boston, MA 02210
www.dataxu.com
Figure 1 displays typical cycle times for traditional market
testing (one month at best), operational campaign analysis
(one week at best), and programmatic marketing, in which
decisions can easily take place in micro- or milliseconds.
Figure 1
Typical Cycle Times for Marketing Decisions
The key to success is the speed at which an organization can not
only generate new insights, but absorb and act on them going
forward. Marketing campaigns that are driven by analytics and
automated decision-making can generate a lot of insights quickly
that can be used to inform future campaigns. For example, in
one campaign by a fnancial services company using the DataXu
platform, the company learned a great deal about marketing to
students, such as:
Consumers who were targeted for the Student Checking Account
converted at a higher rate than those who were targeted for
similar banking services in other fnancial services campaigns.
The volume of applications signifcantly dropped in the second
week of the school year, indicating that students made fnancial
decisions within the frst week of arriving on campus.
Creatives geared towards parents elicited a positive response,
indicating their involvement in their childrens fnancial decisions
into early adulthood, as well as the students reliance on their
parents for fnancial advice.
Female consumers aged 18-22 had a higher response than their
male counterparts.
Each of these insights could greatly inform future campaigns to
the same audiences.
Not only marketers, but also marketing analytics and technology
people can learn from these early experiences at a time when
everything is moving quickly. As Bill Pearce, the former CMO of
Del Monte put it:
It will take some leading frms to align all of us on how to do
data-driven marketing, and to generate a common lexicon for
everybody. The schools arent teaching it yet, and right now
the top 100 leading national advertisers have 100 different
approaches. It will take a while to be sorted out.
The only real mistake is to do nothing. An analytical
manager at a large oil company, for example, bemoaned
their companys situation:
Were doing nothing except running broadcast ads, and we
dont even know that they work. Were not experimenting
with social or digital. Our marketers dont know anything
about these new approaches; they were trained in a different
era and they are scared of anything new. Frankly, nothing short
of an entire generational change in our Marketing organization
will make a difference.
It will take some leading frms to align all
of us on how to do data-driven marketing.
Bill Pearce, former CMO of Del Monte
Execution
Insight
Operational Stage
(1 week cycle)
Testing Stage
(1 month cycle)
Programmatic stage
(0.1 second cycle)

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THREE STEPS TO PROGRAMMATIC MARKETING
2013 DataXu, Inc. All rights reserved.
DataXu | 281 Summer Street, 4th Floor | Boston, MA 02210
www.dataxu.com
Summary and Conclusions
The three steps outlined in this report may seem straightforward, but they can be complex to accomplish. Each of them will be
undertaken not once and for all, but in an ongoing fashion. Investment in IT and human capabilities will be required throughout the
journey to programmatic marketing. However, it is also clear that a move to more integrated and platform-based data and software
environments can yield cost effciencies in terms of personnel reductions, elimination of unnecessary intermediaries, increased lift
from marketing and media investments, and data rationalization and redundancy avoidance.
The keys to success are to get started, to involve the entire organization, to view the customer as a single entity with a variety of
attributes and touch points, and to learn and adapt from initial experiences. It may be a confusing time to be a marketer, but it is also
one of the most exciting and change-flled periods in the history of the function.
About the Author and Sponsor
Thomas H. Davenport is a Visiting Professor at Harvard Business School, a distinguished professor of IT and Management at
Babson College, co-founder and research director of the International Institute for Analytics (IIA), and a Senior Advisor to
Deloitte Analytics.
This independent research study was conducted by Thomas Davenport, and was sponsored by DataXu, a leading provider of digital
marketing management platforms. To learn more about DataXu, visit the companys website at www.dataxu.com.
For more information on this topic or the research, please contact Tom Davenport at tdavenport@hbs.edu.
About DataXu
At DataXu, we are transforming the way global brands market to consumers in the digital world. An enterprise data and analytics
company, DataXu offers DX3, the frst omni-channel marketing management platform. DX3 helps you easily manage the deluge of
big data, turning insights about consumer behavior into immediate decisions that impact Return on Marketing Investment (ROMI).
We help brands to more effectively and effciently reach and engage consumers, resulting in improved brand engagement, customer
acquisition, and sales.
The private company is backed by Atlas Venture, Flybridge Capital Partners and Menlo Ventures. For more information, visit www.
dataxu.com or follow us at Twitter.com/dataxu.
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