Commentary
Is Programmatic Ruining Advertising?
- by Cory Treffiletti , Featured Contributor, July 19, 2017
Programmatic is certainly not going away, but I do think marketers are starting to smell it for what it really is. It’s a cost-saving strategy, which attempts to create the same ROI for a fraction of the cost when compared to more “traditional” forms of advertising.
Most marketers evaluate their programmatic spend on a simple cost-benefit analysis. The outcome has to be either as good as, or better than it was previously. Most of the time the cost goes down because you pay fewer dollars to the agency to execute, plus your CPM decreases along with your control of the inventory.
The return simply needs to be comparable to justify the switch to programmatic, and I would hypothesize that to be the case the majority of the time. When you factor data into the equation, you may get some incremental out-of-pocket costs, but the efficiency of not exposing to the wrong audience almost always has a positive counter-effect. plus you get upside of performance due to the customization of the message.
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All in all, you get a higher ROI comparatively due to efficiency vs. the nominally higher out of pocket (which was likely offset by a reduction in actual media costs). . Everybody wins!
Of course, not everybody wins.
First off, programmatic has killed diversity of content in the marketplace, with the oligopoly of media dollars being spent on a short list of players. Google and Facebook win at the expense of many, many other open Web publishers.
That might not be a bad thing if we look back into the past and see the gluttony of poorly created publishers and networks that had a foothold in the advertising business for years. Still, I think everyone can agree that diversity of choice is healthy. There needs to be other options to force the leaders to continue to innovate and grow.
Secondly, programmatic has stifled better ad formats from being developed. With dollars focused on Google and Facebook, the innovations in formats are focused there as well. The secondary players are trying to achieve scale, and format innovations run counter to scale.
The rise of programmatic will potentially kill native advertising over the next couple of years, unless native advertising can achieve scale (which seems counterintuitive by its very nature).
All marketers want control — which I find ironic, because programmatic actually takes control away from marketers in more cases than it provides it. Yes, marketers can control their budget more, and they can optimize faster. Programmatic provides clarity for how money is getting spent, but not as much where and when. You have to increase your attention to manage those elements in programmatic, while the old way of doing business actually gave marketers more ability to manage the where and when by locking it all in through upfront deals.
I’m curious how many marketers fully understand the trade-offs of programmatic versus the apparent ROI. At what point do the message and its longer-term impact on the development of the brand start to weigh more heavily again, potentially overshadowing the short-term ROI?
I started out by asking, “Is programmatic ruining advertising?” Of course my answer is “no,” but I do think we shouldn’t focus solely on the efficiency metrics at the detriment of the longer term impact of a brand and its interaction with the mind of the consumer.
Programmatic is, to me, a short-term answer to advertising. It creates efficiency, but not long-term value. That value comes from finding the balance of short- and longer-term objectives.
Cory, while I agree with most of your observations, we should remember that, for branding advertisers, digital media is only one of many avenues for reaching consumers and it is not even close to being the dominant one---despite the bombast about digital ad revenues surpassing TV, "huge" usage gains for mobile video, etc. So you are talking exclusively about digital advertising and,to a large extent about direct response, search, sales promotional and other non branding activities. Nope, I think that "advertising" --which has its own share of issues to resolve---isn't in big trouble because of the pitfalls in automated media buying for digital media. Programmatic, which is basically a low ball ,low CPM, tonnage buying system with elements of targeting added, is not delivering the goods that were promised and costs a great deal to execute, to say nothing of those situations where ads appear next to "offensive" content. The solution, as many digital advertisers are learning is to buy direct.
Anyone buying programmatic is basically telling their client (or themselves) that all content is equal, given your ad can show up in some unpredictable and undesireable places online. It costs less than buying directly from premium publishers because it's worth-less. A pageview is not a pageview is not a pageview. Our publications are "Sealed Sites," meaning we don't allow programmatic to diminish the value of our content or set our rates based on a Blackjack app, or a mindless game, or a geo-tracking bot that shows me a hotel in California as "local" because I happened to look up where my sister was staying on vacation. All publishers with integrity need to move to Sealed Sites and return the real value to the astute advertisers.
Cory, this problem started over 4 years ago with Google. Google changed the rules for publishers by changing banner locations above-the-fold. What followed was the RTB's and programmatic when in to fill a big competition gap. Many publisher simply got tired of Google's strong arm dicatorship of advertising. Many publishers looked to add more banners to fill the revenue loss. At the same time, Facebook started to suck up ad dollars.
Now we video coming into play.
The real problem? Take the control of advertising away from a few big companies and help the publishers. I can tell you that no publisher wants to load up their websites with more ads and slow down their pages.
And the sealed sites, as you call them, should do their part by limiting inventory clutter. That's a big part of being premium, higher rates for quality audience in the quality publication.
Cory, one other point. Create a guarnteed percentage of revenue split between the advertisers and publishers. In return the publisher will agree to certain ad restrictions per page. Last put a cap on the total amount that Google and the other distributors can make in revenue. Level out the playing field.
Would it really be that irresponsible to say that all content is equal? If you're using data to fuel your programmatic ad buying, and that data is deterministically telling us that person A is interested in product A, and that person happens to be on a random app that no one has heard of... then who cares? We're in an age of data over content - audience over content.
Rob, it has ben demonstrated in TV that viewers who are more interested or engaged with program content are more likely to stay put and be exposed to the commercials in that show, so there has long been an effort by national advertisers to add engagement metrics such as viewer liking, attentiveness ad recall, etc. to the the raw Nielsens in their buying operations.The same is true for magazines, especialy when the content of the magazine is directly compatible with the message in the ad. This does not mean that engaged or attentive audiences automatically buy the sales claims or self-serving pitch the advertiser is making---here the linkage is not nearly as great as it is for ad exposure. I assume that the same situation applies in digital. Engaged users are probably more likely to see ads and compatible content drives this
Ed, I agree with you 100%. Let me add, the "promise" of Programmatic, going back four or five years, was actually much tighter placement in digital - "the right content for the right audience within the right environment at the right time". Programmatic was to have provided actionable insights into both online and offline target consumer behaviors. For the most part, this has been an abysmal failure. Instead what we have is less control and less quality of placement for the sake of lower CPM. The sad truth is, many marketers and their agency counterparts have no idea of what the "promise" of Programmatic was or is. What we have (with a few exceptions) is merely automated RTB of tonnage predicated on the lowest CPM sometimes aided by very basic data as buying parameters.
Absolutely Ed! If ad content is not engaging to its intended target segment, it will not capture attention and recall will be negligible. This is true in "traditional" media. It is especially true in digital. If an ad delivered on a digital platform is neither relevant nor engaging to its target, it will be ignored (thus wasted impressions). It also runs the risk of being intrusive. Thus the reason we have the issues we have with ad blocking.
All content may be equal, but the people consuming it are not. The 80/20 rule clearly shows why buying cheap tonage - the shotgun approach - does not create the best ROI if you look at actual sales measures.
More here...
http://pjlehrer.blogspot.com/2017/04/garbage-in-garbage-out.html
Rob, I agree with you except for one thing - Context. Finding the right person within the right context is important for maximum performance. Therefore, content is not equal.
Unfortunately, I think the word Programmatic is not being utilized appropriately here. There are many different tactics to deploy in programmatic buying that can combat any and all of the issues raised in this article and in the subsequent comments. I do however think that if we replace the word 'programmatic' with 'buying within open exchanges' then the article and comments ring true. We find though, that every way in which analog (traditional ways of buying media) media buying is great, can be performed through programmatic buying technology, and as Cory states, which brings a host of benefits that far outweigh the negatives.
As has been partly distinguished here, programmatic advertising is quite different for digital media and TV. When used as it should, programmatic advertising for TV is specifically meant to engage the viewer so they stay tuned. The problem is, it’s being sold in a manner that just piles on one ad after the other. The foundation of programmatic is to target a viewer so they don’t turn away. Instead, they are being inundated and worse still, the data being used is faulty because it’s based on a large demographic.
This is a blatant plug but we have a technology we use in our non-sub, ad supported TV Network and provide to others called SPAADE™, Spincast Addressable Advertising Delivery Technology Engine. It deliver a unique set of actionable sponsored ads to any video platform, location, and viewer, in real-time based on that viewer’s unique affinity, daypart, geographic data, demographic data and “psychographic” data. So the viewer stays engaged because the ad is meant for them. And privacy is not an issue because we don’t require or need a subscription to make it work nor do we need to load-up on ads for each title.