TAKE A CLOSER LOOK AT PROGRAMMATIC
Sojern’s Josh Beckwith says the race to the bottom is ending.
The need for transparency in programmatic is vital. Our industry suffers from a lack of confidence that has led to structural realignment across the media landscape. We’ve had our share of setbacks with issues like, high-profile data breaches, ad fraud and privacy challenges (GDPR compliance, anyone?). These have all contributed to a general sense that programmatic can’t be trusted. But, in spite of all of this, programmatic still delivers great business outcomes for advertisers and it continues to experience double-digit growth.
The introduction of programmatic brought with it the idea of true engagement and transparency. Buyers would now know who was seeing their ads and why. Personalised marketing, fuelled by unprecedented levels of consumer data, meant that real-time customisation of marketing messages was possible, along with a deep understanding of consumer online behaviour. This promise fuelled the explosion in programmatic ad buying.
The programmatic race to the bottom
Before programmatic swept up the industry, the digital ad market supported significantly higher CPMs. As programmatic gained popularity, rather than using it as a chance to establish transparent norms, it became a race to the bottom. Everything needed to be cheaper, faster, but not always better. Take video, for example, where CPMs direct from a supplier would easily be a $20.00 CPM or more. Now, with programmatic, similar impressions can be secured at $2.00 CPM or less. But it shifted advertisers away from premium content to almost exclusively long-tail publishers to find their audiences.
The knock-on effects of switching away from premium to long-tail publishers were many. With fewer resources and with no brand reputation at risk, long-tail publishers had little incentive other than to maximise inventory at the lowest price. Ad fraud went up as the quality of inventory went down. This in turn diminished the end-user experience, driving away the most valuable users who either installed an ad blocker or dumped free ad-supported content in favour of high-quality subscription-based content.
The result? Programmatic became a code word for cheap ads and cheaper audiences. Lost was the promise of true engagement and transparency.
Getting back to transparency
Global drinks brand Coca-Cola recently stated that it wants its media to be based on fairness not cheapness – the best quality technology, inventory and prices. This is a step in the right direction. We’ve see where the race to the bottom leads, and it isn’t a place that any of us want to go. The passage of GDPR created severe penalties for companies that misuse consumer data. This was the nail in the coffin for the race-to-the-bottom era. It created a floor to this phenomenon, and had the intended consequence of forcing the industry to focus on the end-user experience and not just the lowest CPM possible.
The way forward is for the industry to build on this and get back to the original promise of providing engagement and transparency for advertisers. The strength of programmatic is delivering on real business outcomes but we must consider the level of transparency that is required in the process of achieving this. The key to success in this industry is balancing a legitimate level of transparency with performance. Those who seek out only complete transparency may spend the rest of their days getting close, but no cigar.
J OSH BECKWITH Senior sales director, Middle East & Africa at Sojern