The forecasts for programmatic’s future point clearly in one direction and that is its dramatic ongoing growth every year at least until the end of this decade. What will be different to this growth, however, will be how it is manifested.
Hitherto, programmatic’s growth has been almost exclusively from RTB, with a little private marketplace activity thrown in.
The promise of programmatic direct
Excitingly, what is just starting to take its turn in the spotlight is programmatic direct (or ‘automated guaranteed’, depending on your terminology preference). By this of course we mean digital ad campaigns whereby the deal is negotiated directly between media buyer and seller and the pricing and inventory are guaranteed, but with automation leveraged for the campaign to run in an efficient, optimised manner.
This is good news for publisher, agency and advertiser alike and gives them far more control over campaigns.
However, no-one will be reaping the promise of programmatic direct growth if the industry cannot overcome the three key issues that threaten its expansion.
Issue 1: Too many mouths in the ad chain taking a bite
Under the existing typical programmatic campaign model, the publisher – scandalously – only ends up receiving around 30-40% of the ad spend, with the remaining two-thirds swallowed up by the ad tech, whose role is supposed to be to optimise the campaign. With such low returns, the publisher’s capability to produce great content is impacted.
But let us not forget it is great content that fundamentally drives the brand spend that is needed for growth.
Issue 2: Numerous programmatic obstacles created by lack of accountability
A consequence of the programmatic ad marketplace being too crowded with participants and subject to the vagaries of placement and inventory that ad tech often brings to campaigns, is that the issues that have plagued programmatic advertising for years still remain to be fully addressed. This is for the simple reason that nobody is sufficiently accountable for them.
Ad fraud, brand safety (i.e. the brand appearing in the right environment) and viewability are all serious challenges for programmatic that generally don’t occur in other kinds of advertising. These will continue to act as brakes on programmatic’s growth until somebody is made to be responsible for them. That will not happen until the process is simplified.
Issue 3: Everyone speaking different languages is inefficient
Whilst all players in the programmatic marketplace seek to leverage data in as optimum a way as possible, they often end up not getting the benefits they should.
This is not usually due to the data itself – which is often of high quality – but simply because it is not universally accessible or transparent and therefore not trusted across the industry.
It ends up getting watered down, stretched and bent to try to fit the needs of the media value chain as a whole and nobody really ends up getting the benefit that they should from it.
The need for a common data currency
If you think about the reason we use money, it demonstrates where we need to get to as an industry with programmatic to mitigate the issues above. We all use money because it is a consistent measure of value and means we can negotiate with others to find the true value of a product or service.
Currencies are backed by governments and they work because people trust in their value. But if a publisher tries to sell an audience for an ad campaign and the buyer cannot clearly see just how compelling a target that audience represents, it is very difficult to agree on a cost that offers value to both sides.
Thus the single key factor that we must implement as an industry in order for programmatic direct to reach its potential in the coming years is a single, high quality data currency that facilitates the buying and selling of programmatic. To be credible this data source must satisfy three criteria:
Transparency – its provenance, methodology and sample size must be of high quality and clear to all who would use it.
Granularity – if the dataset is to work for all players it must enable insights into a broad range of consumer behaviour and characteristics, right down to the most micro level. This way efficient, detailed target audiences can be built and reached.
Available to all – a data source can only be a credible currency if both the buyers and sellers of media have the same access to it. This is essential for programmatic direct to work.
Only if this is the case can all media players evaluate the value of reaching an identified target on a particular piece of inventory and price in a way beneficial to all.