The Opportunities & Challenges with Programmatic Advertising

by Jennifer Cooper

posted on 02-20-2015

Advertising has long been the predominant source of revenue for media and entertainment companies. Now a new factor is disrupting the media landscape and opening breakthrough possibilities: programmatic advertising. Although programmatic ads have been used for years to offer up digital display ads, they are now moving into digital video and video-on-demand. So what is now different about programmatic ads?

The growth in programmatic advertising in video carries both opportunities and challenges. Brands can now better segment and target audiences to ensure that messages have the greatest impact. But for media companies, programmatic ad delivery creates a new challenge of integrating various technologies to deliver the optimum result—automated, targeted ads serving across channels, devices, and audience profiles.

With this technology requirement, standardization across the industry is key. To achieve standardization, the industry must now shift to a more accountable, reliable, and consistent ad “currency.” Traditionally programmatic was used primarily for nonpremium content, but today, it’s moving up the food chain fast and being used to automate ad buying and selling even on premium and video content.

Part of the challenge is that the digital advertising world has traditionally relied on cookies to gauge ad impressions. Due to shifting advertising models, a single ad impression can now be delivered in many different ways, changing the underlying nature of how digital advertising is bought, sold, and measured. In a world where programmatically delivered ads can be viewed on mobile devices, set-top boxes, or social channels, cookies are obsolete.

Traditional methods for ad decisioning such as TV show ratings or magazine subscriptions don’t suffice for digital advertising. The decline in ad spend via traditional channels, especially print, is a red flag. Audience fragmentation across digital channels has made it more difficult to understand how to reach audiences and maximize the impact of advertising dollars across all channels.

Even in the digital world, many ad impressions are wasted. Nielsen defines “waste” as the number of ads that end up targeted to the wrong demographic. In the world of digital media, waste is on the rise. Adobe found that 50 to 55 percent of ads shown on TV Everywhere and Premium Video Ads are wasted. Advertisers need to run double the volume of advertising to meet their goals and avoid painful “make goods.” Still, if the waste issue was addressed, advertisers could recoup $15–$20 in CPM (cost per thousand impressions), on average, per campaign.

In the digital world, media and entertainment companies need advanced analytics and audience targeting capabilities to build out their advertising offerings. One of the biggest advances is the advent of the “viewability” metric, a digital measurement that tracks only ads and impressions that can be seen by users. In addition to revamping standards for measurement, new targeting methods and measures of ad effectiveness must be devised so media owners can better monetize content and advertisers can deliver ads to the right audiences and determine their value.

The key is tapping into the wealth of information readily mined from online channels to create more compelling advertising platforms benefiting media companies and advertisers alike. Solutions such as Adobe Analytics, Adobe Audience Manager and Adobe Primetime can enable media companies and advertisers to make more informed decisions, measure their returns, and win in the quickly evolving world of programmatic advertising.

Topics: Advertising

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