In Pro­gram­matic, You Get What You Pay For

The Insider - - CONTENT -

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 per­son­al­iza­tion 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 move in…

THE SIL­VER LIN­ING: PRO­GRAM­MATIC IS TAK­ING OFF

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

US dom­i­nates the mar­ket to­day, spend­ing alone in pro­gram­matic ad­ver­tis­ing reached $10 bil­lion in 2014 and is fore­casted by to reach $15 bil­lion by 2016.

Some an­a­lysts have gone so far as to pre­dict that 90% of U.S 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% 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.

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?

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-com­modi­ti­za­tion 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 aes­thet­ics; 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 mon­e­ti­za­tion 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 were ex­pected to reach $7.9 bil­lion this year with 26% of na­tive ads be­ing de­liv­ered pro­gram­mat­i­cally. In 2016, that jumps to 34%.

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 10 mil­lion 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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