Commentary

Why Marketers Should Be Wary Of Programmatic Advertising

In a digital-first world, the rapid growth of programmatic advertising over the past few years should come as little surprise. Programmatic ad spend grew globally, per Marketing Week, from $5 billion in 2012 to $39 billion in 2016, outpacing the growth on other digital channels, such as social media and online video.

The popularity of programmatic is because many marketers see it as a tool to help them increase efficiency and target audiences more effectively. But while many marketers have been quick to embrace this new technology, it has its own issues: lack of transparency and a complete reliance on algorithms.

Going the programmatic route can be problematic when trying to go after a targeted, sought-after audience. Switching to programmatic also means rethinking the metrics marketers have traditionally used to measure success, including KPIs and ROI.

Additionally, the chance of having one’s content show up next to inappropriate or extremist content and being unable to remove it could have a potentially catastrophic impact on a brand.

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All these issues combine to present a compelling case for being wary of relying on programmatic advertising entirely.

Some marketers have expressed concern with letting the platforms themselves dictate the metrics that are measured.

Marc Pritchard, Chief Brand Officer for Procter and Gamble, told Ad Age the lack of an industry standard “means every publisher needs to measure different viewability approaches for dozens of platforms, agencies and clients,” at the expense of the brand.

Instead of allowing marketers to act more efficiently and effectively, programmatic algorithms can end up confusing marketers and advertisers even more with the types of metrics being measured. Potentially, that obfuscates the success or failure of an ad campaign.

Then, there are areas of digital advertising where programmatic just doesn’t work.

In the Hispanic market, for example, many budgets have moved to programmatic but haven’t been spent successfully. Several reasons can be cited, but mostly it comes down to the fragmentation that exists in the current U.S. Hispanic digital media market — and the resulting inability to target at scale.

This fragmentation is the result of a market that consumes content in multiple languages and in a myriad of places. Both make it difficult for advertisers to determine where to spend their money.

Further, in a market where marketers have traditionally struggled to find accurate information about purchasing behavior due to a lack of accurate data, utilizing a programmatic approach leaves open the possibility of inaccurate targeting. Or, at least, targeting based on information that may be outdated or misleading, neither of which is in a marketer’s best interest.

This is not to say that marketers should be shying away from online advertising; rather, the point is that marketers need to put a bit more care into crafting an advertising strategy for markets that are harder to reach.

They should not rely solely on a programmatic approach.

As the latest big advertising trend, programmatic advertising shows no signs of slowing down. Many view it as the future of the marketing and advertising industry. Marketers, however, should remain cautious about putting all of their eggs in this one particular basket for every campaign, especially if they are concerned about maximizing campaign performance across the board and brand safety.

For brands looking to target specific groups, scale is a real issue, particularly if quality data and inventory on those groups is lacking.

Finally, it’s difficult for programmatic to perform well against the KPIs and ROIs that advertisers have traditionally anticipated reaching — especially if advertisers have to aggregate information from multiple platforms and publishers.

Taking into account the limitations of programmatic for many digital advertising initiatives, it’s best to take a more hands-on approach by working directly with inventory sources and trusted partners.

Marketers need to educate themselves in order to be aware of the potential pitfalls that programmatic can cause -- and understand where and when utilizing programmatic advertising will work for them. And, equally important, when it will actually work against them.

1 comment about "Why Marketers Should Be Wary Of Programmatic Advertising".
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  1. PJ Lehrer from NYU, October 3, 2017 at 10:41 a.m.

    I really have to question whether buying programmatic is either effiecient or effective given that it ignores the 80/20 rule.  More here... http://pjlehrer.blogspot.com/2017/04/garbage-in-garbage-out.html

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