The Problems With Programmatic Advertising

Programmatic Advertising is a method of purchasing digital Ad inventory in real time, through the utilisation of technology, data and clever algorithms. In theory, advertisers can leverage data to run highly targeted advertising campaigns, making ad buying more efficient and offering a more cost-effective way for brands to reach their audience.

Globally, programmatic advertising is a massive industry. It is estimated that programmatic ad spend has increased at a rate of 71% since 2012, with an investment of approximately $39bn USD in 2016. The growth of the channel is expected to surpass that of social media and video by the end of this year.

With the size, scale and money associated with programmatic advertising – why do so many advertisers consider it to be problematic? The Rocket team recently went along to the IAB ‘MeasureUp’ conference to find out.

After spending the day listening to some fantastic thought-leaders in the Programmatic Ad world, it was clear there are three clear issues facing the industry and advertisers – Ad Fraud, Brand Risk and Viewability.

Ad Fraud:

When a brand buys programmatic ad inventory, they are essentially paying for ‘eyeballs’ or impressions on their advert. However, with an estimated 52% of web traffic deemed to be ‘bot’ or non-human traffic, advertisers run the real risk of wasting money on ads that nobody will ever see.  Brands often end up paying for fraudulent impressions that are derived from deliberate activity which prevents the proper delivery of ads to real people, at the right time, in the right place.

In 2016, bots accounted for approximately 9% of display ad views and 21% of video ads.

On top of paying for wasted impressions, bots also steal valuable cookies. According to the Integral Ad Science Report 2017 “Not only does this result in flawed publisher audience data, but buyers are misled into targeting non-humans and pay for unwanted inventory that bots have led them to.”

Brand Risk:

Just like in the offline world, positioning a brand advert is integral in its effectiveness. Advertisers carefully consider where they place a billboard, signs at sporting events or TV commercial slots. However, this poses challenges when it comes to online and programmatic. With the enormity of the web and sheer volume of websites and potential Ad inventory, it is not always possible to determine the page on which an advert is to be shown.

Brands run the risk of their digital advertisements to potentially be seen on websites which may be associated with adult content, alcohol, drugs, violence, offensive language, hate speech and other potentially negative pages.

This has an array of potential problems for brands. They run the obvious risk of negativity by association. Nobody would want their brand ad to be shown on a website promoting some sort of illegal activity.

Even more detrimental can be potential boycotts. Earlier this year there was a big push for people to boycott brands which appeared on the alt-right news networks Breitbart.com. Many advertisers weren’t necessarily wanting ads shown on the site, rather they were shown due to potential demographic targeting they had setup. The Chicago tribune reported that Breitbart lost 90% of its advertisers in two months after the boycott!

Viewability:

The final challenge for the programmatic industry centres around Ad Viewability. The Media Rating Council (MRC) determines “a display ad impression to be viewable if at least 50% of pixels are on screen for at least one second after the ad has rendered.”

The issues that advertisers face with viewability are numerous. Primarily, the length of view is of most concern. The longer that an Ad stays in-view, theoretically, the greater the chance of consumer action to be taken. Compared to direct buys, programmatic ads normally average around 10% less in respect to Impressions in View. So, it is argued that it is not as effective to purchase inventory programmatically as it is to buy direct.

Ad viewability can also be affected by fraudulent websites. Viewability rates can reach over 70% on fraudulent sites and ads have longer times in view at a narrower range of time spent on the page comparted to premium and other ‘real’ websites. This is largely because bots are optimised to act more efficiently.

With all these concerns at play it is no wonder the programmatic ad industry is under scrutiny at the moment. Earlier this year, Proctor & Gamble’s Chief Brand Officer called for a complete shakeup and pushed to have some of the murkiness removed from the ad supply chain.

Conclusion:

There is no doubt that programmatic is the future for digital advertising and we will no doubt soon be able to also purchase TV, outdoor and radio programmatically as well. But for now, it is prudent to consider your marketing strategy wisely before committing too much media to this channel.

At Rocket we run our programmatic through Google Double Click. Unlike traditional big media agencies geared to run on percentages of media spend, our business model is such that we are able to sit down with our clients to really evaluate media spend and weigh up the true or potential ROI of channel spend before we run campaigns. Most of our clients still get far better returns through traditional PPC and Social campaigns, so it will be interesting to see how the market shifts in 2018.

If you need a hand with your programmatic strategy leading into 2018, get in touch with us on 02 8310 2393 or send us a message at any time.

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