PROGRAMMATIC: THE PROMISE & THE PROBLEMATIC

You know when a new (-ish) marketing topic gets serious coverage in the general business media, the topic is a fundamental one. The June 27th Globe & Mail Report on Business cover story was titled “How automation is shaking up the advertising industry”^[1] and described the dramatic change in online media buying to a technology that the marketing industry likes to call “Programmatic”.

The basic concept behind programmatic is simple:

It’s a network of real-time online data exchanges, just like online stock exchanges, were buyers & sellers of online media space bid & offer prices in the time it takes a viewer’s web page to load in their browser. The buyer doesn’t actually bid in real time, of course, they have set an upper limit on what they are willing to pay for the specified media space defined as most likely to be viewed by a desired target group.

Beyond this, programmatic gets complex in a hurry:

Advertisers are buying demographics, psychographics and purchase history/behaviour that has been anonymously linked to individual browser cookie data. This information about an individual (browser cookie) is a constantly growing in breadth and depth.
The programmatic “ad exchanges” are owned by individual companies, Google’s Adx being the largest. These ad exchanges do not work together, they compete with one another. Only the biggest players can afford to build a programmatic exchange with any scale.
There are multiple intermediaries between the publisher (owner of the media space) and the buyer. Interestingly, it looks like the media owners (publishers) are paying for the intermediaries, not the buyers.
Programmatic exchanges encourage marketers to work with them directly, rather than through their media agencies. Media agencies have a tough time keeping up with the complexities of programmatic. Keeping up is even harder for marketers.

The promise of programmatic is wonderful: it allows the marketer to buy the best target consumer at the best time and even in the right place. Note that no one’s technology is advanced enough yet to be definitive on the best time and best place aspects of the big promise.

Here’s where I think programmatic gets problematic:

1. Bot Fraud
It’s easier to cheat the media audience numbers in the anonymous digital world than it is in the face-to-face analogue world. Last year, research by the US Association of National Advertisers estimated that $6.3 B USD of global online ad spending goes to ads that no human eye sees.^[2] In context, that’s 16% of all relevant current global online ad spending.^[3] However, for online video, bot fraud represents over half of audience traffic. Traditional media has never been free of audience fraud, but it is much harder to commit at any scale and much easier to discover and remedy.

2. Devaluation of the media environment
Programmatic treats all impressions equally. One of the concepts that needs to transition over from traditional media is that not all impressions (formerly GRPs) are of equal value to a brand. This includes the content of the media property and the other advertising served up along with yours.

3. Mobile is not very programmatic
For mobile technology reasons, programmatic cannot identify mobile users the same way it can identify tablet & computer users. This is the missing element preventing programmatic from following individual users cross-platform. For many brands, mobile is becoming the most important online medium.

4. Devaluation of brand building
The big promise of programmatic is reaching the consumer at the time they are buying. When issue #3 above gets solved, that means at the point of sale. This makes perfect sense for big brands in low-involvement FMPG categories. High-involvement purchase decisions are influenced differently. In this instance, a brand needs to earn its place in the consumer’s brand set. That usually takes time and multiple media outside the realm of current programmatic. It’s also important to note that the creative format of programmatic is identical to ‘traditional online’, so it has limitations in basic brand building compared to offline media.

It’s clear that the goal of programmatic is to control the buying of all media. It won’t be technology that prevents that from happening, it will be the legitimate concern that a very few companies (meaning Google & Facebook) control all media. Unfortunately, marketers who are working directly programmatic exchanges are not going to hear an objective discussion of where programmatic is problematic. And the media companies promoting programmatic are the biggest, most powerful media companies in the world. Stay tuned.

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