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In programmatic, you get what you pay for

Programmatic buying, defined by AdExchanger as “the automation of media buying and selling processes and decisions, enhanced through data” is being seen as the silver lining in a cloud that’s been hanging over publishers’ heads since the dawn of digital. 

Potential benefits are many. Programmatic offers:

  • Better rate efficiencies with lower costs of transactions for both buyers and sellers
  • Faster processing speeds across all platforms
  • More personalisation of ads
  • Publishers more opportunities to offer advertisers premium target audiences that bring more value to brands and higher revenues to publishers
  • Greater efficiency of ad campaigns and scalability, helping publishers sell inventory that previously lay wasted

No wonder advertisers and publishers are jumping on board so fast. But with every silver lining, there always seems to be another cloud about to come in…

The Silver Lining: Programmatic is taking off

Programmatic is growing in leaps and bounds, expanding beyond desktop display ads and moving to rapidly to mobile, video, radio, television and even to print.

US dominates the market today, spending alone in programmatic advertising reached US$10bn in 2014 and is forecasted by to reach $15bn by next year.

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Some analysts have gone so far as to predict that 90 per cent of US advertising will be bought programmatically by 2017. This is an amazing forecast considering the Association of National Advertisers (ANA) discovered through a survey last year that only 26 per cent of its members even knew what programmatic was and used it.  

In the rest of the world, reasons for slower uptake tend to be related to the use of personal data and regulations concerning the internet. In Europe, uptake varies by country for different reasons, such as their adherence to established business practices; but the continent is definitely catching up, with the UK in the lead.

The only thing I know that grows that fast is a tidal wave.

The Cloud: Programmatic has pitfalls

Did you know that for every dollar invested by an advertiser using programmatic buying, only about 40 cents goes to the publisher? The supply chain for programmatic is long and complicated and with every step along that chain, money gets distributed. 

Trading desks, data management platforms/systems, exchanges, ad servers, networks and agencies all get a piece of the programmatic pie.

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So is programmatic really the holy grail for publishers? One begins to wonder when the dark (cloudy) side of programmatic rears its ugly head. And perhaps the ugliest of all, is…

Ad Fraud

Today over half of all digital ads displayed never reach the eyeballs of human beings, but they still generate “false impressions” that cost advertisers billions every year, while padding the pockets of publishers.

Ad fraud is rampant within the industry and it’s only a matter of time before advertisers start demanding more transparency into the viewability of their ads on publishers’ digital properties. If publishers thought today’s digital dimes were a sad replacement for print’s dollars, imagine what they’ll think when they’re knocked down to mere programmatic nickels. 

Ad fraud comes in many forms from outright corruption among impression/click thieves to ad fraud apathy among publishers who aren’t prepared to give up their fraudulent funds, to helpless ad agencies who don’t have the power to fix it and finally to brands that aren’t fully aware of its impact on them.  

In traditional advertising with higher price tags, these issues would not be left unaddressed. But in the digital world where advertising is so cheap, it’s like playing penny slots – there’s low pain on the investment side even if there’s not much gain in terms of ROI.  So why make a fuss?

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Never one to sugar-coat his opinion, Ad Contrarian and renowned speaker, Bob Hoffman put it this way, "Everything about online advertising is corrupt... The promises are corrupt. The data is corrupt. The suppliers are corrupt. And the buying and selling is corrupt...This industry is in desperate need of investigation."

In an attempt to win the war on ad fraud industry leaders have banded together to launch the Trustworthy Accountability Group (TAG). This is a noble first step to try and eliminate fraudulent traffic, combat malware, fight internet piracy and promote transparency, but will TAG become just another bureaucratic audit bureau? 

Brand Safety

The over-commoditisation of low quality ads threatens both brands and publishers alike. In the past, filler ads in printed editions helped balance out the layout of newspapers and magazines with reasonably good affect. In the digital world however, filler ads do not add the same value in terms of visual esthetics; in fact they seriously degrade it.

In addition, media buyers receive little to no guarantees from publishers in terms of brand protection. Despite all the big smart data being used to target ads personally and contextually, “mess ups” can happen, such as an all-inclusive vacation package ad displaying in close proximity to a story about a plane crash, or a feminine hygiene product ending up on men’s magazine home page. Even pornographic ads have slipped through website filters.

These blunders are more common than one might think and they happen often without publishers and advertisers even noticing. But the scary part is that consumers do and they’re taking action. Which brings us to the next pitfall of programmatic – an over-abundance of poor quality ads polluting websites and popularising the use of…

Ad Blockers

Ad blocking may be seen as a curse by publishers, but it’s actually a cry for help from consumers. It’s a desperate move by website visitors to create a better digital experience for themselves. If publishers won’t do it for them, users have only two choices – abandon the site or block the advertising.

Print fashion magazines have often been heralded as the poster children for beautiful and engaging, glossy ads.  Their quality-over-quantity approach addresses both user experience and higher monetisation objectives. Why can’t this same “quality first” mentality be transferred onto the web?  

If you want people to pay for content, you need to provide them as good an experience as they receive in your printed edition. Just because your website is built with bits and bytes doesn’t mean what’s on display (content and ads) shouldn’t be as desirable and beautiful as its physical counterparts.  

The Tidal Wave

The explosive growth of programmatic is both amazing and scary at the same time. It’s become the new shiny tool for publishers looking for a quick buck and advertisers wanting effortless access to inventory.

But what started out as an easy way to publish banner ads has turned into a hammer looking for another nail – the most recent being native advertising.

Native advertising revenues in the US are expected to reach $7.9bn this year with 26 per cent of native ads being delivered programmatically. Next year, that jumps to 34 per cent. 

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The trend towards automating advertising across all mediums makes one wonder when all content will be swept up by the programmatic wave and be crafted, curated and consumed programmatically.

Sounds a bit crazy now, but then again, if 10m self-driving cars can be on the road by 2020, programmatic news will be writing about them. The question is when.

When will machines replace editors, deciding what content should be presented to readers based on “their big data”?  When will magazine content be created by computers just commodifying articles, ads, video and imagery from around the web and then auctioned off to the highest Real Time Bidder named News-bot?  

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