5 Things You Won’t Believe About Programmatic Advertising

Despite its efficiencies, programmatic isn’t all rainbows and unicorns, and much is often left unsaid. Until now.

Brands and agencies alike certainly appreciate the efficiency that programmatic brings from a pricing standpoint. They also like its scalability, the way it brings in immediate returns, and that it clearly shows how messaging is optimized.

But the truth of the matter is, programmatic isn’t all rainbows and unicorns, and much is often left unsaid. Until now. CMO.com reached out to the industry to get perspective on some of the unspoken truths behind programmatic. Here’s what they told us.

1. Brands Are Starting To Bring Programmatic In-House

An AOL study from October found that 68% of brand advertisers plan to bring programmatic in-house in the next 12 months.

“That’s a massive number and a massive undertaking,” said JoAnna Foyle, AOL’s SVP of client services and operations. “It’s a massive undertaking because you need to be rethinking how you structure your advertising spend, your organization, and how you set up your technology stack and manage your data.”

According to Tim Waddell, ‎director of product marketing at Adobe (CMO.com’s parent company) and the company’s resident programmatic expert, the lack of transparency in pricing is one of the reasons why brands are now bringing programmatic in-house.

“We are seeing a lot of interest from customers to bring advertising management in-house and running it on their own,” he told CMO.com. “This is because they want more insight into the costs of technology and media vs a black box scenario. Agencies are recognizing this trend and realizing that transparency is a critical topic in the market.”

2. Setting Up A Private Marketplace Is No Small Feat

Some companies jump into programmatic, and especially private marketplaces, thinking it’s easy. Many companies think the efficiencies abound and costs plummet after the initial setup. This is not the case, according to Joe Laszlo, VP of industry initiatives at the Interactive Advertising Bureau (IAB). Many companies think that private marketplaces, in particular, are turnkey solutions, he said. However, a lot of fine-tuning needs to happen.

“In real life, private marketplaces can be incredibly beneficial for buyers and sellers alike, but there’s a lot of work that goes into setting up a private marketplace correctly so that you get those efficiencies,” Laszlo told CMO.com. “The IAB actually put out a checklist last year that goes through all of the things that buyers and sellers alike need to do in the process of setting up data, a private marketplace, just to remind everybody that it’s not like you flip a switch and the cost savings start rolling in. It takes a lot of planning and a lot of effort and a lot of thought to use them successfully.”

3. Programmatic Isn’t Transparent

Programmatic, while it does aim to make things a lot more efficient, doesn’t necessarily make them more transparent and, in some ways, makes the process of transacting, buying, and selling ad inventory more opaque. That’s a challenge, IAB’s Laszlo said.

“It shouldn’t dissuade anybody, but I think it’s something that people need to keep in mind when they think about maximizing the value of programmatic,” he told CMO.com.

This “opaqueness” comes up the most when it relates to location data. When a company is transacting programmatically and a piece of ad inventory with location data is appended to it, there’s an automatic mistrust of that location data because you don’t really know where it’s coming from, Laszlo said. It could be accurate, generated by the GPS on a device and routed with the end user’s knowledge, or it could be somebody knows they can get a slightly higher bid by making up a latitude and longitude and sticking it into the RTB description of the piece of ad inventory, he said.

“At the end of the day, automation is bringing all sorts of new data streams online that can make a buyer much more confident that they’re reaching somebody who’s going to be likely interested in their message,” Laszlo said. “But you don’t always know where that data is coming from. There’s a level of trust that’s still needed between an ad buyer and the DSP that they’re working with, between the DSP and the various DMPs that it’s working with, and all the different acronyms up and down the chain.”

4. Programmatic Is Complex

Many brands view programmatic as a “magical solution” that solves all of marketing’s challenges, Adobe’s Waddell said. But programmatic requires a lot of technology, data, and audience building.

“The No. 1 issue is making your programmatic technology work together with existing technology,” Waddell told CMO.com. “Operations, IT–everyone’s got to be involved to some degree. And for those companies that are bringing programmatic in-house, it’s even tougher. I’ve seen discussions out there on the market where it’s hard to find the right people. There’s not a huge mass of them just sitting out there waiting to be hired.”

And the trouble doesn’t end once the technology is all set up and ready to go. There’s also the issue of data. With programmatic, data is key, but marketers are still struggling with harnessing the right data. According to Waddell, marketers need to be using the data to build audience profiles they’re looking to target.

“Once I’ve got the audiences defined, I’ll need a DMP and someone who knows how to run programmatic for the business, whether it’s someone in-house or at an agency. And I’ll also need the analytics system as well,” Waddell said. “Now that I know the people I want to reach, I actually need to reach them. Should I use search, display, social, email, TV? Or maybe video and mobile? Maybe I’ll decide to dabble in each. Well, guess what? Now I need technology that connects to all those different data sources.”

5. Programmatic Won’t Ever Replace The Human

Media buying will never completely become a machine-only function, according to Warren Zenna, EVP, managing director at Mobext.

“It’s always going to be easier and more effective if you go at it from a direct-buying approach, particularly if you are really interested in not only the message, but in the environment in which the message resides,” Zenna told CMO.com. “So even though we have these programmatic PMPs that do, in fact, close out a lot of inventory that you distribute across–let’s call them nondesirable publishers–it’s still not as good as directly tying right into the publishing networks in a way we know is successful and consistent.”

That’s also why programmatic, while it works well for direct response campaigns, is not as effective for branding, he added. “We’re finding for many of our clients who are more interested in branding than direct response, automated buying doesn’t really work for them to get the kinds of outcomes they want,” Zenna said.

Programmatic will be a big topic of a discussion at Adobe Summit March 20-24 in Las Vegas. Click here to view the agenda.

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