Programmatic is evolving, it shows great promise, but there are some issues.
Like a new miracle drug, programmatic promised to revolutionize the advertising industry by giving agencies greater access to digital inventories and removing the friction from the buying process. While programmatic buying has delivered well on the promise for many media companies, like any long-term drug trial, some participants have been left suffering side-effects, questioning the outcomes, or are simply wondering if they received the placebo.
Certainly, the worst consequence has turned out to be the real cost of programmatic buying. Advertisers expected that more frictionless buying would be more affordable than direct ad sales. After all, programmatic implies automation and efficiency.
Media is a great reflection of the overall economy and when times are tough one of the first things to be trimmed back are advertising budgets. With less to work with, questions of effectiveness come to the forefront of every advertiser’s mind.
The reality is the current model of the programmatic supply chain diminishes the purchasing power of the advertiser and in turn the value of seller’s inventory. Higher agency fees have been just the tip of the iceberg for advertisers. In a damning study published in May 2017 by the Association of National Advertisers, it was found that the programmatic supply chain can consume more than half of every advertising dollar spent.
Besides the high cost, it turns out that digital reach doesn’t consistently deliver the advertised performance either. Between a hodgepodge of measurement techniques, sophisticated fraud, poor audience targeting, and campaign placement that sets off brand safety alarm bells, major brand advertisers such as P&G (announced on the 2017 Q4 earnings call) and Unilever (mentioned in a keynote speech by former CMO Keith Weed) are reevaluating the real utility of this technological drug.
As with any experimental drug, programmatic technology has its place and has already revolutionized parts of the advertising industry, showing glimpses of powerful potential. Sometimes the most impactful drug trials are protocols where new products combined with proven solutions and techniques, create a powerful synergistic result.
As media sellers begin to digitize their advertising platforms and business models, they shouldn’t point to the shortcomings of traditional linear models, but instead remember that programmatic alone is not a miracle drug without any downside. Perhaps the solution to unleashing the full potential of programmatic is in combining the programmatic technology that removes friction from the buying process with traditional models and practices that deliver truly effective advertising campaigns, while improving efficacy and dampening programmatic side effects.
One thing is certain, the publisher who can provide buyers with the speed of programmatic purchasing across their media properties with the fidelity of their traditional linear models will be the true pioneer that provides the advertising industry with a drug a media enterprise can’t live without.