At a recent conference, the chief marketing officer (CMO) of a major food and beverage brand said, “I don’t have an ad-tech problem, I have a marketing problem.”
This is right on.
We need to focus on making sure that advertising technology delivers performance at scale. Programmatic will only exit its awkward teenage stage if we focus on solving real marketing problems instead of wasting time thinking up new ad-tech buzzwords to package into media buys.
If 2014 marked the year that programmatic “arrived,” 2015 should be the year that it actually solves some marketing problems. Unfortunately, two leading proposed programmatic “fixes” actually prevent programmatic platforms from unleashing their potential – delivering advertiser performance at scale.
Viewability Is Not an End Unto Itself
Impression fraud is the major issue crippling programmatic traffic, and yet the industry’s response seems hung up on something else: viewability tracking. “Pay us to guarantee that you only pay for ads that are viewable!” goes the battle cry of ad-tech vendors after they terrify marketers with made-up statistics about purchased impressions that no one ever sees. It’s a ruse.
Of course it’s a problem if advertisers are paying for programmatic ad placements that aren’t visible, but the reality is that placements will sometimes get buried below the fold, the user will not scroll down, and the ad server will still count these ads as impressions. Just like drivers may look at the road instead of a billboard, and TV viewers might walk around the house to get to 10,000 steps on Fitbit rather than watch commercials, sometimes people miss digital ads.
This is not a tragedy – it is a problem with the CPM pricing model. Even if every ad was 100 percent viewed, have we solved the CMO’s problem? Just because people see something doesn’t mean the advertiser is getting value.
Selling viewability is an ad-tech solution that ignores the larger problem: CPM is a weak pricing model — borrowed from lesser mediums (print, outdoors, TV) – because it is almost completely disconnected from user engagement. Even if advertisers are certain that they are only paying for viewable content, they can’t be sure that their ad content is having any measurable effect when we rely only on impressions as a performance metric.
The reason that a CMO moves marketing dollars to digital in the first place is because we promised that we could deliver measurable performance metrics beyond the simple impression. As display, video, and native ad formats move to programmatic, now is the time to move to cost-per-click or another other cost-per-engagement model. Why does search take 2 percent of users’ time but almost half the ad spend? Because it charges based on user engagement. Viewability is important to the extent that it identifies bad actors from the ecosystem. Programmatic will solve more marketing problems than it creates once vendors help advertisers track user engagement. Once we agree to pay for clicks and trackable engagement, that CMO won’t care what the viewability metrics say.
Vertical Exchanges Limit Scale
The other solution to programmatic fraud is to avoid bad actors altogether by buying traffic through private exchanges. These exchanges rely on personal one-to-one relationships, which, again, undercut the central benefit of programmatic. Without a large, diverse marketplace, programmatic bidding and matching is useless, and advertisers miss out on scalable opportunities to find new customers. Since a private exchange is limited in scale – it cannot deliver on the promise of programmatic.
Large premium exchanges, with inventories that rival open exchanges, can deliver the security of a private exchange by holding publishers accountable to performance metrics. Advertisers need the ability to access new customers as their attention fractures across the “Internet of everything.” Private exchanges are niche plays and will never make up the bulk of a digital strategy. Also, any advantage derived from a vertical-specific exchange can be matched by vertical-specific targeting and optimization within a large, end-to-end, premium exchange.
When we sell accountability through viewability instead of performance, and when we offer up private exchanges at the cost of scale, we are using ad-tech to make digital buys as weak as traditional media buys. We must deliver solutions that play to the unique strengths of digital: measurable, scalable performance that is unduplicated by any other media. Marketers want us to solve their problems by delivering new customers. Let’s not mistake quick-fix ad-tech features as real solutions.
Programmatic is taking over the digital advertising world, and at an even faster rate than expected, according to eMarketer, which raised its forecast for programmatic ad spending in the U.S. on the back of growth in mobile and video programmatic buys.
Election 2016 is already like no presidential race before it, and one of the most striking aspects of this year’s race is the disparity ... read more
Video consumption keeps increasing and Facebook is serious about a video-first world, encouraging us all to explore its full potential. Ian Crocombe, ... read more
Mike Andrews Ph.D is Chief Scientist (Forensiq) at Impact Radius, and is carrying out some fascinating work around digital marketing and ad ... read more