Lloyds Bank sets agencies a programmatic ‘exam’ question

Can Lloyds force agencies to be more operationally and financially transparent, wonders Dominic Mills.

I’m told that agencies competing for the Lloyds Bank Group media business, pitching imminently, have been set an ‘exam’ question about programmatic.

The Group spends about £90m a year in the UK, more than any of its rivals, and about as much as RBS, Santander and HSBC together. It comprises Lloyds, Halifax and the Bank of Scotland.

It seems likely, therefore, that its competitors will be watching this one closely.

The three who will be sitting the exam are the incumbent MEC, Vizeum, and some as-yet unspecified combination from Publicis.

I don’t know the precise wording of the question, but I’m told it is something like this: ‘What is the strategic imperative for programmatic trading?’

My first reaction was that this wasn’t a very good question: after all, programmatic is merely an executional device; a means of buying media.

My second was that it was code: make it cheap. But everybody knows the price has to be low, so there’s no point in adding a coded message to the same effect.

On reflection though, it strikes me as a really good question, but not necessarily an easy one to answer. It has a functional dimension, but also a philosophical one, and sometimes the two cross over.

It is cunning in that it forces agencies to explain why programmatic is good a thing to do, rather than just the current fad – or something that offers the agency richer pickings.

But it also gets them to open up on how they think and organise around programmatic, which I suspect they do not really do in any considered, as opposed to tactical, way.

For example, thinking about the data element of the programmatic buy, the functional dimension is really about software, data management platforms and the messy business of integrating multiple data sets.

The philosophical dimension requires the pitching agencies to outline their approach to data. Organisationally, are they data-centric? Are they data literate? And what emphasis will they place on non-data skills (i.e. intuition or experience)?

Here’s another example: if programmatic is at the core of their media strategy, how does that play out in Lloyds’ use of other media like TV, press, radio and OOH?

Of course programmatic is about real-time buying, and as yet you cannot buy any of the other UK media in a programmatic fashion. But it is also about being reactive, responsive and iterative – in other words, adopting a real-time mindset.

It also means – in theory, at any rate – going where the audience is and understanding context.

So, bringing programmatically bought media closer together with that bought in a more traditional way may require both a change of philosophy on the part of the media agencies, but also a change of operational methodology.

Will, for example, the gap between the media agencies and the trading desks need to be closed?

I wonder if this Lloyds pitch is behind Publicis’s decision, last month, to move its Vivaki/Audience on Demand buyers into Zenith and Starcom.

Here’s the rationale offered up by Laura Desmond, boss of Starcom. “If you’re a marketer, do you want your programmatic decisions siloed and balkanised from everything else that you’re doing? No. You want it integrated.”

Quite so. Although she is spinning this for all it’s worth, Desmond fails to explain why Publicis was so happy to operate this “balkanised”, dis-integrated, model for so long.

My fellow columnist Brian Jacobs sums up the issue beautifully here, touching on the disconnect between the media agency’s planning work for its client, and the buying by the trading desk – buying over which they have no control but for which they are held responsible.

Now we have to wait and see what the other contenders do. They have the classic dilemma: do they follow suit and look like copycats? Or do they stick with their current models, bluster it out, but risk looking old-fashioned and regressive.

Not least, Lloyds’s exam question may also force the agencies to be more transparent, operationally and financially, about programmatic. If it is a core part of the media strategy, and operationally integrated, then it becomes harder to hide it behind the shrouds of mystery and obfuscation. Heaven knows, the dreaded media auditors may even get to stick their noses under the bonnet.

The exam question also throws up the issue of the Lloyds media budget, and the way it will be sliced up. Essentially, it pre-supposes that Lloyds is going to chuck a lot more money at digital display and video on demand.

They will have to, to make this change worthwhile.

I am stunned by some Nielsen figures I have seen, which shows that Lloyds spent about £3m last year on digital display – just over half what it spent in 2013. That’s just a touch more than 3% of its total media budget.

Doesn’t seem very much, does it? But Lloyds is not significantly different from its peers. The total spent on digital display by the five major banking groups (HSBC, Barclays, Santander and RBS, as well as Lloyds) was about £10m.

I imagine that one of the big issues holding the banks back is brand safety, the fear that their ads will appear in an inappropriate location – for example, on a forum discussing tax dodging or money-laundering – and incur reputational hassle.

That this happens must be down to the fact that the programmatic buyers, however much they claim otherwise, are effectively buying blind and, when they turn on the hose of programmatic and spray it around indiscriminately, have no idea where some of the money ends up.

But if Lloyds is going to shift more budget to programmatic, then this suggests that the winner will really have to lay out a convincing plan to tackle the issue, as well as that of its big cousin, fraud.

Not before time.