Programmatic’s Problems Are Impeding Its Promise
Programmatic promised to be the savior of online advertising–better, cheaper, more transparent, and more efficient than anything we have ever experienced. Only it hasn’t delivered, has it?
Not only is programmatic more expensive than we anticipated, more middlemen than ever seem to be taking a piece of every impression. In the days before automation, advertisers paid publishers directly for media. Perhaps two other parties were in between–possibly a server, an aggregator, or network–who touched the impression and extracted fees.
In the programmatic era, rarely fewer than 12 parties are involved, and each party takes a piece. These could include a publisher’s ad server, a buyer’s ad server, yield optimization services for the buyer and the seller, a DSP, an exchange, a data provider, and several others, all taking their cut of each impression. A $1 impression suddenly costs $5 because each of these platforms, networks, and solution providers takes 10% here and 40% there.
That brings us to the transparency question: Does anyone know what percentage of that $5 actually went to the media and how much of a cut each party took? Not likely; our industry just isn’t comfortable with that level of honesty.
Programmatic isn’t easier either, although it may seem so to those who entrust the entire process to their agencies. Some within those agencies say it’s actually easier to buy a million dollars in TV media than it is to buy 50 cents in programmatic.
Managing all the systems, ensuring they play well together, figuring out how to target, controlling the creative process, and analyzing reporting across platforms is as complicated as it sounds. The ecosystem is so convoluted that advertisers will make the decision to work exclusively with AOL or Google simply because it’s so much easier, even if it’s not the best solution for their businesses. Ask anyone who has tried to bring programmatic in-house how that went, and you’ll hear how complicated it can actually be. It has been said that it feels a lot like working in an office where everyone is on a different word processing system–and none of the documents are compatible with any of the other systems.
Incidentally, this only adds to the expense because beyond the hard media costs, full teams are required to manage the processes, all vendors, and point solutions.
Is Programmatic A Failure?
We all know these problems exist, but can we call programmatic a failure? Do we throw the baby out with the bath water?
The answer is certainly no.
Automation remains the future of ad tech, and despite its flaws, programmatic has laid a strong groundwork for the future automated landscape. The reality is that there will be no universal “programmatic language” that all publishers, platforms, and systems will speak. Everyone will need to work together and in their own unique ways. (Think Facebook, Google, AOL, and TV networks like Comcast.) The promise of programmatic is still whole and shiny; it’s the implementation that’s broken.
In the early to mid-’90s, in the Age of the Publisher, marketers and publishers approached digital media like any other. Large companies like Yahoo and AOL dominated the market and multimillion-dollar campaigns took several weeks to deliver and gave marketers plenty of time to make decisions.
Soon came the Age of the Ad Network, where ad servers and ad tags emerged to simplify the transactions between publishers and marketers and help target audiences across millions of new websites.
Now, in the Age of the Programmatic Platform, campaign execution has become more sophisticated, but workflow is fragmented and complex, leading to inefficiency and the challenges of ad fraud and viewability. Marketers frequently rely on a multitude of tools to manage digital campaigns across search, display, email, and social channels. There is transparency into the process, but the sheer number of platforms needed does not lend itself to better pricing.
The Hub As A Platform-Agnostic Solution
Automation looks to solve the key challenges of making operations easier and more simple, marketing rather than trafficking and experimentation, achieving performance across the ecosystem, and having true transparency into pricing and performance
Currently, we as an industry are focused on how to make buying media cheaper and more profitable. We all have our vision centered squarely on the media budget, while marketers are running around cobbling Excel sheets and PowerPoints together to create reports. No one is looking at the end user. No one is thinking about how we can use this process to actually make marketing more effective and streamlined or how to make the marketer’s job easier instead of exponentially more complex.
What we need to do is take an execution-agnostic approach to programmatic that focuses on solving problems in message sequencing, message creation, and plan generation. We need to think about how we can create efficient operations across platforms and unify reporting so that it takes every medium, every screen, and every touch point into account. Today, marketers are managing campaigns in Facebook, in their DSP, and in Google. Each platform requires a different login, produces different reports measuring slightly different KPIs, and uses data differently for targeting.
This isn’t a problem that can be fixed with duct tape and paper clips, though nearly every advertiser and agency tries. It is, however, a problem that may be solved by integrating all platforms and point solutions, allowing marketers to do what they’re good at–from creative thinking to strategy and analysis–and let the platforms do what they’re good at, which is automating digital marketing and advertising. Perhaps then we can start to see the promise of programmatic realized.