The Problem With 'Programmatic'

As a follow-up to my previous article on “The Premise of Programmatic,” I’d like to discuss some of the key problems of programmatic advertising and how they prevent the expansion of the quality and size of the overall market for programmatic transactions.

I am a believer in technological determinism. In the world of digital advertising, that means our technology-enabled ability to measure just about everything, means we will measure just about everything. However, this is both the blessing and curse, as agreement on what to measure, the unit of measurement, or how to calculate its result remains elusive. We as an industry need to stop arguing over measuring more elements and focus instead on reaching agreement on the foundation of what to measure.

This widespread lack of audience and measurement standardization also limits creative freedom around digital ad buying and ultimately affects the overall value of inventory. The highest-value deals still require buyers and sellers to pick up the phone to work through placement issues, agree upon the exact audience targets, which provider’s data will be used and exactly how that data defines different attributes, as well as the tools for measuring engagement, and performance metrics. The current necessity for using manual processes reduces the efficiency and overhead benefits intended by the programmatic process.



Standardizing Audience Data Definitions

One of the greatest strengths of online advertising is the ability to micro-target and test.  However, everyone has their own definitions of audience traits that are woven into their “secret sauce”; an auto-intender from one data company has different characteristics than the next. And in many cases, the measurement of gender can vary widely by data provider.

This lack of uniformity, while providing the ability to micro-target and test, results in too many “one-off” deals. Further, while these richer data sets enable brands to target smaller, more tightly defined segments of the population and measure their response to creative, frequency, location, etc, this dynamic creates immense confusion for buyers attempting to sort out which data sets are the most relevant for their campaigns.

Also, new data often overlaps with other existing companies’ data sets, introducing complexity that makes an “apples to apples” comparison difficult at best. These multiple data layers can cause one audience group or individual profile provided by a specific data vendor to look different from the same audience supplied by another vendor. As a result, brands may find themselves inadvertently bidding on the same impressions twice or more. Standardized audience attributes are critical across the board.

Agreeing on Unit of Measure

While the digital ad industry is still in its infancy and growing pains for standardization are to be expected, we can certainly take a page from other markets like television, with its simpler industry buying metric of Nielsen’s gross rating points (GRP). This almost universal metric -- while far from perfect  -- enables buyers and sellers to trade with the same currency and quickly strike large-scale deals. The digital ad industry is moving in this direction too, with Nielsen recently creating online campaign ratings (OCR) as the new unit for GRP measurement of online video (as well as other online campaigns). This step enables brands and agencies to complete their online media plans for video programmatically, clear about which inventory is being bought and sold for a specific demographic audience target.

Enabling Creative Freedom

Another stumbling block is that the majority of programmatic ads today are limited to standard ad units, which prevents brands from using rich media or other expanded types of creative advertising. To bring more brand dollars online and into the programmatic space, standardization of technologies is needed to support rich media, rising stars and enable any organization to call any ad from a standard ad server. Currently a small number of rich-media providers have partnerships with specific ad buying platforms. However, buyers must pay a premium to use these channels and are limited by the number of places to buy or sell ads. They are also hampered by a pervasive inoperability with the marketplace at large.

A plethora of varying audience attributes, non-standardized units of measure and limitations on creative freedom have created uncertainty for buyers, depressed prices and a reticence among brands to make digital ad buys. To continue evolving and proving our collective value to brands, it is critical for the digital ad industry to forge universal adoption of standards across the digital advertising value chain.

2 comments about "The Problem With 'Programmatic'".
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  1. Mike Einstein from the Brothers Einstein, June 19, 2013 at 11:21 a.m.

    Idiotic by any measure.

  2. Raj Chauhan from Adslot, Inc., June 20, 2013 at 2:28 p.m.

    Great points, Jonathon. We still have a lot of work to do in making the high value orders programmatic. Efficiencies for that will deliver the buyer and seller much greater return than the small, audience targeted buys that are commonly delivered via programmatic channels. I'm hopeful that the IAB's SafeFrame / 3MS program can solve for the "Creative Freedom" issues.

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