Much like "The Fast and the Furious" franchise, programmatic advertising just keeps going and going. And to extend the comparison, get ready for more in 2017.
Heralded as "the future of online advertising," more than two-thirds of digital display ad spend is now programmatic. This year, eMarketer predicts it will surpass $22 billion -- a nearly 40 percent increase over 2015. That means more and more marketers are using technology to automate buying, placement, and optimization of digital media inventory at scale, with precision in finding the right audiences.
Yet trepidation continues to exist among agencies and advertisers over the concept. To many, there's still confusion around the differences between "real-time bidding" and "programmatic." I've identified the four complaints about programmatic advertising that I continue to hear -- which, I believe, are largely or completely unfounded.
Programmatic is overly complicated
The verdict: Largely unfounded.
Many advertisers assume programmatic campaigns are difficult to kick off. In reality, doing so is easier than it has ever been.
Of course, ad buyers could spend an awful lot of money immediately if they're not carefully monitoring their campaigns, but the tools available in the market are built for anyone with basic knowledge of how advertising works. Best practices, tips, and techniques are readily available and often free. Webinars and instruction are available on-demand.
I'd venture to say that none of us who works in this industry has had formal school education on "programmatic." We've all learned along the way through the methods I outlined above. The people who are telling you that programmatic is overly complicated have a financial incentive to do so.
To get started, I recommend evaluating demand-side platforms for their ability to support your team, understand your business objectives, and provide flexibility in testing different approaches. I'd also spend a little time getting to understand the underpinning of ad tech: ad serving.
Programmatic is a black box
The verdict: Largely unfounded, but I understand why there are concerns.
There are advertisers who feel programmatic buying involves pouring a lot of money into a black hole, never to be seen or heard from again. Yes, the Association of National Advertisers has pinged agency trading desks for lack of transparency in inventory markup in the past, but I still consider this an unfounded concern.
Take the notion to heart that knowledge is power. To avoid feeling like you're wasting money, you have to take ownership of the process. Before signing a contract for software (or even adding a vendor to a media plan), ask questions about margins and media markups. Make sure you are as upfront and transparent as you can be with your vendor or in-house buying team in terms of your business objectives, your key performance indicators, your ability to add tracking pixels your site, and your tolerance for risk.
Once your campaigns are running, continue to ask questions about performance and insights (e.g., "What percentage of my money is going to working media versus third-party supply chain partners?" and "Why were certain data and inventory partners chosen?").
Programmatic is fraught with crime
The verdict: Founded, but…
Ad fraud is a part of our culture, unfortunately. Much the same way a credit-card provider will work with its customers to offset and reimburse for fraudulent purchases as well as prevent future fraud, companies are buttoning up their policies to eliminate the root causes of wrongdoing.
Though it's all but impossible to eradicate ad fraud, you'll want to ask potential vendors how they are screening for ad fraud and what their approach is to those caught acting in bad faith, either on the publisher or advertiser side.
Most importantly, don't overreact. It's a cat-and-mouse game, but you don't need a Megaton bomb to eliminate a mouse. Digital ad marketplaces have refined vetting of their inventory suppliers. When you want to learn more, a publisher, ad exchange, or sell-side platform should be able to explain its approaches, why they're effective, and how it knows they're working.
You need big budgets to see value
The verdict: Largely unfounded, as long as your setup is strong.
You can argue that the more you spend in programmatic advertising, the more you get -- just by sheer effectiveness and efficiency.
However, it doesn't mean you can't get results with a modest budget. If you have clearly defined KPIs, an understanding of what resonates with your audience, and a little faith in the data, programmatic can work well at various spend levels. The big question is: Should you budget additionally for a partner organization to manage the campaigns for you (with a cost on top of the media that's procured), or do take on programmatic yourself? It really depends on how you'd like to allocate your budget.
Doing programmatic in-house requires checks and balances to prevent costly mistakes. Failing to set a budget cap, for example, could drain your resources within hours. One small mistake in setting it up could cause your campaign to crumble. An ad-tech partner already has expertise about the nuanced platforms, which limits your risk of overspending. And many vendors offer lower margins as incentives for higher monthly ad-spend commitments.
However, while a partner can limit your exposure to costly risk and offer flexibility when ad spending is ramping up or down, it may use that same information to benefit other clients, depending on how your contract is written. Keeping programmatic in-house ensures that your data is protected from prying eyes.
Finally, an in-house route requires a substantial investment in ad-tech competencies. Your staff members will pull the levers, so it's important to evaluate how much time they would take to do this as well as the upfront investment to train them. However, doing so affords you better insight into the breakdown costs of sustaining a team, data fees, tech subscriptions, etc.
The bottom line: Different setups can have different results for an advertiser.
Setting a new precedent in advertising
Make no mistake that programmatic is one of modern advertising's most fundamental building blocks. With programmatic, you'll have access to the largest, most diverse audiences and numerous data points -- all in real time. This is necessary because advertisers have to reconcile a growing demand for personalized experiences with a growing audience.
It's time to get over the hang-ups. Don't get run over by programmatic advertising. Grab the steering wheel, and take it for a spin.