The globally programmatic buying ad spend was $5 billion in 2012 which then rose to $39 billion in 2016!
IAB estimates by 2018 programmatic spend will have grown from 28% in 2013 to over 80% of marketing spend, but is this still the case?
What is Programmatic Buying?
Programmatic buying is a more effective way of targeting the audience you want to display your advertisements to. You can limit the ads to what time of day they display and how often they appear. This is all managed via a piece of software used to automate the buying, placement, and optimization of media inventory via a bidding system.
By automating the process, it means everything can be done in real time and doesn’t rely on human touch. With programmatic buying the owner or brand can tailor a specific message & creative to the right person.
How is programmatic buying different?
Programmatic buying is all about spending as little money as possible but getting the best resource out of it. Placement and optimisation is meant to be a lot more efficient as its done by computers and algorithms. By using this system, you are removing the difficult areas that normally crop up such as, tagging requests and cutting down on marketing time.
The best part is it is all done in real time! When a webpage is loaded and there is space available for an advert, all information is gathered about the user and the context of the site. Within milliseconds this is all sent back and forth to an ad exchange. The ad space is then auctioned to the highest bidder and then placed on the page.
Programmatic is supposedly growing fast but marketers need to educate themselves. They need to make sure they are working closely with their media buyers to avoid any unwanted surprises.
Is the issue with programmatic buying, transparency?
One of the biggest issues between brands and media buyers is trust. Media agencies refuse to give out information about where the ads will sit, putting the transparency of this process in to dispute. Brands are told by media agencies to just trust them. How can you trust someone however who may allow your ad to be on a hate site?
This is where many of the challenges are occurring. Media agencies have targets to hit and when they have no quality publications they open the campaigns up to sites who sell inventory at ultra-low costs. It’s becoming a lot more about the price rather than the quality. Media agencies are firing as many ads as possible to large scale audiences as cheaply as they can!
What you should know about Programmatic Buying
There will always be pros and cons about programmatic buying in the industry. I have highlighted a few things of interest below;
• In-house programmatic buying is the fastest growing within the category according to the ad-tech company Index Exchange. In 2013 11% of the ads were bought through in-house teams in Index and then in 2014 this grew to a staggering 15%.
• Mobile is an issue with programmatic buying due to the targeting capabilities being all cookie related. Cookies within mobile are ineffective making it harder for ads to be show on mobile as well as display.
• Fraud will always be an issue, there’s no avoiding it. You can only take more precautions. A lot of fraud stems from Publishers listing their websites on the ad exchange as another more reputable website. This then allows them to display the ad anywhere without the buyer even knowing where it will end up. All you can do is be more vigilant with your media agencies and make sure you have full disclosure with them.
• The big players will always have it easy. Around 7 years ago there was more opportunity in programmatic buying but now you’re in competition with all the top players.
• A positive for your advertisers is that the technology within programmatic buying allows you to purchase ads that are more viewable than others! You can even drill this down to only buying the top 10% of ads viewed for the longest amount of time.
Is programmatic really dying?
You’re probably hearing a lot of talk around programmatic buying dying out. In fact it remains the most popular method of purchasing display as placements. However, there could be one very simple reason why people seem to think its phasing out.
Ad week recently reported that programmatic buying now accounts for 80% of the US display spending. That’s quite a sizable percentage for something that is supposedly phasing out. A few of the US companies that use programmatic buying are; MediaMath, Eyereturn Marketing and Airpush Inc all using the price model CPM.
Is the pricing model the issue?
MediaMath is a leading Independent programmatic company. Eyereturn Marketing is also a leading North American Ad Tech and Big Data Company: Rich Media, Ad Serving, Programmatic and Real-Time media buying. What you may take from those company examples is they’re more likely to have the money and time to waste learning how it works. Using pricing models such as CPM may also impact why only larger companies use programmatic.
CPM can be a very untrustworthy payment method as you pay upfront but you’re not guaranteed what your return will be. Unlike CPA you’re not being paid on performance base. Could this be a huge factor as to why not many people try programmatic? They don’t have a hefty sum of money to throw away just to find out if something is going to work for them in the future.
What’s your opinion on programmatic buying? Is it for the big companies who have money to waste or does everyone have a chance?