“Data, tech and content should be used to put the human audience at the centre of what we do with programmatic.” Ruth Zohrer, Head of Programmatic Marketing at Mindshare
Programmatic advertising is the automated buying and selling of online ad-space, driven by algorithms and AI in real time while tracking consumer behavior. In the past, a publisher had to negotiate terms with an advertiser for different values of ad inventory and manually process the order. Today, software makes the purchase of digital advertising a split-second affair. It is no surprise that global programmatic ad-spend has more than doubled in the past 5 years from $68.2 billion in 2017 to $155 billion in 2021!
The mix of participants in this digital cocktail are several. We have the ad agencies and brands that use a demand side platform (DSP) to define budgets and impressions, as well as, provide the ads. The publishers use the supply side platform (SSP) to integrate ads into their online content. The ad servers deliver the ad technologically and generate the statistics. Finally, we have the consumers at the receiving end of this digital chain.
It is this author’s belief that acknowledging the strengths and vulnerabilities of the key stakeholders will pave the way for a fair, structured and ethical way of conducting business within the digital ecosystem.
Key Stakeholders – Advertisers & Ad Agencies
The ultimate goal for advertisers and ad agencies is to find the right consumer for their brands. Programmatic advertising enables a real time, cost-effective process which means paying only for specific digital impressions across multiple publishers at lower administrative costs. This new found efficiency allows the human interface to focus on strategy, optimization and effective targeting in a hyper-segmented market. The bureaucratic element of in-person meetings to renegotiate every minor change is no longer a necessity. The time saved has allowed advertisers to be more creative and innovative with their campaigns. Let’s take a look at some examples like The Child Rescue Alert and The Economist. Both used programmatic advertising to immense success. The former saw a jump from 50% to 70% in successfully locating missing children. The latter built a visibility threshold of 64% in the US and a campaign ROI of 10:1 on a media budget of £1.2 million. Their content was designed to build curiosity and drive action without being intrusive.
There is, however, a downside to programmatic advertising. Hackers thrive on the internet and bot fraud can artificially drive higher spends for brands to the tune of $6.5 billion per annum. Brand safety is a constant hazard because the contextual placement of an ad can be unpredictable. For e.g. Verizon, the cellular giant ended up on videos of extremist clerics that forced them to revise their ad strategy on Google and YouTube. Cheating is another issue faced by marketers when publishers fail to meet their end of the bargain. Publishers often commit fraud by manipulating the impressions count and manufacturing revenue. These risks can pose a minefield for the brand and the advertisers and deter the old guard from embracing change.
Key stakeholders – Consumers
Consumers enjoy the privilege of being spoilt for choice. Every day is filled with mind boggling opportunities and sales pitches. Personalised options are available to them for product purchase, content and information. In effect, there is a barrage of opportunities as soon as they come online.
Unfortunately, all that glitters is not gold. Unauthorized monitoring and tracking of consumer behavior raise serious privacy and security infringement concerns. Consumers are subject to random spamming which can be annoying and intrusive. Smart consumers do use ad blockers and wall themselves off from being inundated by unwanted ads. Then we have the fundamental impact of algorithm-based marketing. It tends to show up similar and repetitive ads perpetuating a limited worldview. E.g. OTT platform users are shown a set of recommendations based on their supposed preference. It results in a narrow and repetitive set of viewing options. Similarly, social media throws up news content based on consumer preferences thus seeding more partisan and polarized opinions. These are serious frailties in the system that make the users susceptible to manipulation.
The digital ecosystem is fraught with fraud and security risks. The industry needs to come together to build ethical measures that address these concerns. Most of all, brands that respect their consumers and keep the interests of consumers in mind will be the ones to reap the incredible and manifold benefits of programmatic advertising.