Just 5 years ago, the marketing industry was in a state of frenzy fawning over a fresh-off-the-press media buying technology. The buzzword on the tip of every marketer’s tongue?
Programmatic advertising – a robust technology which in part uses automated systems and software to bid on and buy digital space in ad exchanges, within a matter of milliseconds. Brand advertisers were quick to embrace programmatic because it allowed them to portion their impressions across multiple publisher sites, a welcomed change from traditional lock-in agreements of the past. Furthermore, programmatic offered brands granular targeting, allowing them to reach consumers in every phase of the web journey.
Getting right down to it, what does this nuance of paid media mean in terms of tangible results?
Essentially, programmatic advertising drives the omni-channel experience and enhances funnel capability. It allows advertisers to tee up highly relevant digital ads to motivated buyers across limitless touchpoints.
With sophisticated algorithms optimized to better utilize remnant media inventory, the hyped predictions of future application and performance began to snowball early on. Fast forward to now and some start to wonder, has programmatic lived up to the lofty expectations? Even with its merits of scale and honed-in audience targeting, what’s on the horizon for programmatic? Is the recent trend to move efforts in-house a matter of best fit? And above all, what do these things mean for your brand if programmatic is a near future consideration?
In order to answer these burning questions, a brief rundown of programmatic will more clearly illustrate why it’s necessary for your business to keep up with programmatic now rather than catch up later.
Humble Beginnings of Programmatic
The early days of programmatic weren’t exactly error-free. In 2012, research conducted by Audience Science estimated that ad budgets spent on programmatic were approximately 50-80% wasteful according to a research sample of major international brand advertisers. Most of these brands were paying for impressions that didn’t show to intended audiences and lost out on expected ROI due to mismanaged frequency. It was also noted in this report that impression frequency caps were far exceeded, with fingers pointing to publishers as having little to no regard for these caps and instead favored delivering the sum total of impressions covered in a campaign budget.
Despite initial hiccups, programmatic was named the Marketing Word of the Year by the Association of National Advertisers (ANA) at the close of 2014. Although many regarded the strategic process as the future of media buying, general confusion surrounding the dense terminology was a common stressor for voters and marketers alike.
Even still, the Harvard Business Review predicted programmatic to eventually spread across every addressable surface. In a curious turn of events, HBR’s expectation for creative execution (i.e. matching creative and copy contextually for placed inventory) to occur with the same level of rigor as real-time bidding in open ad exchanges came to fruition three years later with the arrival of Dynamic Creative Optimization (DCO).
However close or distant predictions were in the rearview, it is with most digital technologies that emerge in the Information Age that defects and setbacks are expected. Even the biggest buzzwords are no exception to this.
The Agency Advantage of Today
Ad Snags on Publisher Sites
Advertiser concern over ad placement still lingers after instances of ads appearing alongside videos promoting hate speech occurred last year on Google’s video-sharing platform YouTube. Major brands like Verizon and Walmart showed no hesitation to pull ads in fear of revenue damaging associations to be made at their expense. Google answered this growing concern with a promise to expand on current safeguards in place; allowing brands to opt in or out of specific channels, sites and broader types of content of their Adwords for Video and Google’s Display Network if they so choose. As major publishers attempt to move forward and make the overall programmatic experience more brand-safe, advertisers have started to consider other avenues of operation.
In-House Lags Behind
Although programmatic trims the excess of buyers in the market and removes cumbersome proposals, quotes and negotiations, it is not a fully automated process start to finish – it needs human interaction to monitor ad placement and make adjustments accordingly. Aware of this, some brands have decided to set up shop in-house and task internal teams with management of programmatic efforts. Hoping to protect and harness their first party data, advertisers who hand the reins over to internal teams in favor of a digital first agency stare down a handful of issues. In several contexts, it can be difficult determining how to get the most from a digital agency partnership. However, quite simply put, digital agencies have the upper hand in terms of budget, talent and bandwidth. The agency advantage also boils down to a few other key differentiators between the two:
- Programmatic isn’t as turn-key as search; it requires the specialization and training that agencies are more likely to have.
- Agencies are able to set up trading desks that plan, book and execute campaigns on the behalf of a client while also allocating resources to combat ad fraud (bots, pixel stuffing, ad stacking, ghost websites and masked URLs to name a few): a multi-tasking undertaking that can be overwhelming for in-house teams.
- Agencies have access to better quality DSPs that run on more exchanges than the preferred in-house Google Display Network.
- Agencies are better equipped to prevent mishaps with their brand safety partners: dedicated to seeking out fraudulent schemes and bots with active creation of block lists that filter suspicious domains.
Identifying a digital agency with an extensive display advertising portfolio to provide more clarity in the ad placement process as well as oversee dollars allocated towards programmatic campaigns on your behalf can seem daunting and time-consuming. But as it turns out, there are promising opportunities for Return on Ad Spend (ROAS) in the not so distant future.
The Tipping Point of Paid Media
More than four in five digital display ad dollars in the US transacts programmatically today, and that percentage is rising. By 2020, over 86.2% of all digital display ad spending will flow via automated channels. – eMarketer Report, 2018
Still, some buyers remain reticent of open market transactions due to spotty transparency that spans as far back as programmatic’s big debut, right up until now. Over the next year and a half, it's expected that a majority of dollars funneling into the programmatic display space will trickle into private marketplaces and direct transactions. Nonetheless, these predictions speak to addressable mediums on the brink of massive popularity:
In-App: advertisements would be programmatically served to a user playing a game or using an app on their tablet device or mobile phone. Not restricted to one platform or website, this grouping consists of ads served via video, connected tv and audio inventory like Spotify and Pandora.
Native Advertising: With third party platforms like Nativo and Outbrain, programmatic enhances native advertising using dynamic content, i.e. customizable images, video, infographics, Iframe embeds and more. Rapidly serving a relevant article or buying guide in a walled garden spot of a top publisher site (Fortune, ABC News, CNN, Wired, etc.) to audiences based on their previous browsing behavior amplifies impactful moments with content that doesn’t just read as desperate for a click.
So has the programmatic buzz lived up to its hype?
It depends on who you ask. In the case of Amazon, its aggressive switch to programmatic this year paid off handsomely with a first quarter ad revenue of 2 billion dollars. Although very few enterprises come close to rivaling the sheer size of Amazon, it’s worth noting that programmatic advertising, especially for eCommerce companies, is a bright spot from a product standpoint and profitability in the time to come.