Unlocking The True Potential Of Programmatic Ads

Despite a plentiful of issues, brands are increasing their programmatic ad budgets with each passing year. Globally programmatic advertising grew from a USD 5 billion industry in 2012 to USD 39 billion in 2016 reflecting a CAGR of almost 70%. Even in 2017 it is slated to grow at a rate of 31%. Despite an apparent slowdown, it eclipses the 25% rate of growth of social media advertising and 20% rate of growth of online video advertising.

Despite the promises, many believe that programmatic ads have not had its full impact. The promise of targeting the right person at the right time with the right message has an allure for all marketers but the clouds around programmatic advertising make it a distant reality. Marketers need to educate themselves on its intricacies to unlock the full potential of programmatic ads.

History of Programmatic Ads

In 2003, Google launched its very own ad-network called AdSense to allow advertisers to reach out through third arty partner websites. In April 2007 Google acquired DoubleClick for a sum of USD 3.1 billion and later integrated and launched DoubleClick Ad Exchange in September 2009. Websites and advertisers of any size could trade ad units exactly like the NYSE. And thus Programmatic Advertising, as we know it today, was born.

But why did we need programmatic ads? There are two reasons for that: Firstly, marketers could reach targeted audience. Because almost all of online information is stored, marketers not only know the context of the page or the past browsing history but also the age, gender, location and other intricate details. Secondly, websites could monetize their traffic. Suddenly even smaller publishers found a source of advertising revenue that was largely restricted to the bigger players.

Quality vs Quantity Debate

Print advertising was simple. Marketers knew the daily circulation of print media and an ad space could be valued on which page the ad ran on, the size etc. However online advertising brought a new paradigm. How does one value an inventory? Eyeballs for a page is more abstract and can in no way substitute circulation.

Secondly, the focus of programmatic advertising seems to be on price over quality. Marketers want to grab as many eyeballs of a target segment at as little price as possible. No one seems to be worried about traditional marketing measures like branding, recall etc.

To unlock the real potential of programmatic ads, marketers should first determine what do they expect from programmatic ads and what are the metrics they will use to judge this value. For some marketers it might be in their interest to reach as many people as possible without questioning quality. But for some it may not. Once the metrics are decided, it is important for marketers and agencies to be objective about it and press their supply partners for data.

Frauds and Bots

Digital impressions are fleeting, which gives rise to possibilities for fraudulent activities. For programmatic ads to succeed it is important that we as a community take steps to address it. The good news is that marketers already seem to be making progress. By recent estimates, ad fraud would result in a loss of about USD 6.5 billion which is down 10% from 2016 figures.

However it is clearly not enough. By using some basic data engineering and machine learning it is possible to weed out fraudulent traffic from genuine traffic. Marketers that’s are able to leverage their data better would have lots to gain over others.

Clarion Call for Transparency

Programmatic ads are engulfed by jargons that many marketers don’t understand and hence feel like it’s a black box. Since ads are bought programmatically targeting audiences based on demographics, website visits etc, marketers often don’t know where their ads appeared or when they appeared or who saw them.

We need to start talking in a parlance that everyone understands and share data around programmatic campaigns: what was the spend, what were the margins for intermediaries, how many inventories were bought, how many were actually seen, how many of these people actually fall into the defined target segment etc.

Leveraging Data to Advantage

While frauds, transparency, ad quality are very pressing issues, they can all be addressed or alleviated by data. By analyzing the data marketers can find answers to most questions around the ad campaign, performance, spend, reach etc. A strong analytical tool can not only allow you to monitor these performance metrics but also allow you to make data cuts around geographies, regions devices etc.

The power of programmatic ads is in its data and brands that can harness it will stand to gain a lot from it. By analyzing past campaigns one can know what has worked and what hasn’t. Slowly this starts building trust among marketers. With more trust, brands will be able to increase the share of programmatic ads in their advertising budgets.