The battle to keep the programmatic business afloat

The perils of programmatic advertising have become a boardroom issue.

“It is a striking fact that today only about 40% of digital programmatic advertising investment reaches the consumer,” according to Ebiquity, the media auditor and pitch consultant that advises about 80 of the world’s top 100 advertisers.

Value is “being eroded by the multiple links between advertisers and publishers, fraud, lack of viewability and non-human traffic,” Michael Higgins, chairman of Ebiquity, says. “I don’t envy any business leader who has to tell his board and shareholders that they’re investing in anything that suffers up to 60% wastage. The trouble is that’s what many CMOS should be saying.”

But given Youtube’s brand-safety crisis and Procter & Gamble’s recent warning about the “murky” media supply chain, there’s a high chance that boards are now quizzing their chief marketing officers about programmatic.

When Ebiquity talks about “the multiple links between advertisers and publishers”, it is hinting at the media agencies and ad-tech companies that are all taking a cut. The suspicion is that agencies and others in the supply chain are funnelling clients’ money into programmatic because of higher margins. In a notorious case last year, when The Guardian bought its own ad inventory, it only got 30p for the £1.

Programmatic’s advocates urgently need to clean up their act. Context and audiences matter, as a group of two dozen UK regional newspaper publishers pointed out in an open letter this week, urging advertisers to reject what they called the “blind programmatic ad-buying” trap in favour of trusted, high-end content.

However, Luddites shouldn’t be seduced into thinking that the programmatic genie can be put back in the media bottle.

In a thoughtful piece on Campaignlive, Rob Norman, chief digital officer at Group M, pointed out: “Programmatic is nothing more than a mechanism for the automated connection of demand and supply, and of advertisers to consumers, using data to increase relevance – and speed to capture opportunity.”

In his case for the defence, Norman pointed out that programmatic does have “real costs”, including people, data and technology, and clients should look at whether it delivers better outcomes. Some City analysts argue that the alarm over programmatic could even benefit agencies because brands will think twice about taking their digital media in-house.

But the fact remains that, unless trust can be restored, the programmatic bubble is in danger of deflating.

“Programmatic’s advocates urgently need to clean up their act”