“Automation applied to an efficient operation will magnify the efficiency… automation applied to an inefficient operation will magnify the inefficiency.” Bill Gates
If you’ve visited a marketing conference in the last five years, you’ll be familiar with the obligatory reference to the percentage of advertising bought via programmatic. This is the oft-overlooked problem with programmatic.
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The programmatic industry has become incredibly introspective in its achievements. Vendors compete with vendors and exchanges compete with exchanges on the various aspects of what it takes to be programmatic, but not necessarily on what programmatic is meant to be for. The means has been brought to the fore, while the solution has been largely forgotten. |
"The means has been brought to the fore, while the solution has been largely forgotten." |
So, back to basics, what is programmatic?
It’s fundamentally the automation of the purchasing process. Therefore, to assess the benefit of programmatic, instead of the common dialogue revolving around queries per second or how many exchanges can be plugged in simultaneously, we need to focus on what’s behind this automation.
Why is it being automated, and is it an efficiency or an inefficiency that’s being magnified by this automation?
Unfortunately, it’s not an easy question to answer. Programmatic is an industry built on complexity and murkiness. But if we look at programmatic within display media – the main channel run via programmatic – the overwhelming evidence points to an inefficiency being magnified.
Consumers are finding ways to turn off display advertising with tools such as adblockers – the common consensus is that around 30% of people now adopt such measures. This figure wouldn’t be too much of a concern for marketers if they were seeing increased value from programmatic. Yet many are instead growing distrustful of the return that is supposedly generated.
In fact, Marc Pritchard, P&G’s chief brand officer, recently called out the ad industry for what he sees as “a media supply chain that is murky at best and fraudulent at worst”. It’s this media supply chain that programmatic is magnifying.
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Here, we have a situation where both marketers and their customers are beginning to move away from programmatic. So, what needs to be done to stop this movement before it becomes irreversible? The first step is to re-think why we are automating. |
"The first step is to re-think why we are automating." |
At its core, most programmatic marketers will claim it helps to increase efficiency against KPIs – reach and engagement, or performance goals like attributed sales, for example. The problem is that this is not what marketers should be caring about.
These are proxy KPIs, originally designed to help guide investment towards the true business goals of revenue or profit.
Most programmatic products are built to find the most efficient way to achieve these KPIs. They don’t consider the ultimate company goal, only its own target for re-investment.
Take the case of a retailer’s sales target – to get more budget, the programmatic product will find the cheapest way to attribute a sale. As a product automates towards its target, it looks for the cheapest way to achieve this. Simply put, it gravitates towards those most likely to convert anyway, towards cheap non-viewable traffic, fraudulent content, or sites where users could be tricked into clicking.
Ultimately, it achieves the opposite of what it is meant to do.
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We need to reset the antiquated framework of programmatic – this is the second step. In display, the majority of products on the market identify users via cookies. But the cookie itself is an incredibly out-dated way to identify a user. Fragmentation of devices and the limited shelf life of cookies being 30-days, mean that automating based on cookies is, frankly, dangerous. |
"We need to reset the antiquated framework of programmatic – this is the second step." |
With cookie lifespans far shorter than the purchase cycles of most products, not being able to recognise someone properly and understand the volume of your advertising they are seeing can mean vast budgets are either wasted or that they annoy potential customers, directly reflecting on your brand. Identifying your customers has to be a primary concern before deciding to automate communication.
Brands cannot assume that programmatic is a net benefit. There needs to be clarity into what the true end goal is for both brand and programmatic vendor, and that this is aligned with business goals rather than KPIs. Further, if the so-called solution relies on cookies rather than true identification, then it cannot properly identify who your customers are, nor their value to you.
Instead of marketing to consumers, you’re likely annoying them with irrelevant adverts, damaging your brand. You could be doing more damage to your brand than you realise, far quicker than you would think.