The Programmatic Advertising Dilemma
Posted on Monday, December 30, 2013 at 9:33 PM
Should you accept programmatic ads in your publication?
By
William Dunkerley
They say there's a bonanza awaiting
publishers from "programmatic advertising." In the last issue of STRAT,
our lead said, "They say there's a bonanza awaiting publishers from
'native advertising.'" So it seems there are a lot of bonanzas awaiting
publishers. Most involve very impressive innovations spawned by the
emergence of digital publishing.
A Case Study in Hype
It's
worth asking how many of these innovations will ever live up to the hype
surrounding them. In all candor, I've found that they contain a strong
element of unfounded hype and a weak component of demonstrable efficacy.
Even worse, there seems to be a deliberate intent to mislead.
A
recent Advertising Age story is a case in point. The headline
reads, "Mobile-Ad Revenue Explodes, Finally." Adjacent to the head is a
chart titled "On the Move" that covers the years 2012 to 2017. One curve
labeled "desktop" shows a modest decline in "desktop" ad spending.
Another shows a dramatic boom in "mobile" ad spending. The visual
coupling of the headline and the chart certainly makes an indelible
impression. Any publisher might take away from this that going after
mobile ad revenue is an urgent priority.
But
if you look at the whole chart, including the fine print, that message
is not nearly so strong. First of all, the article plays a trick on
readers with its definitions. "Desktop" is what it says it is:
advertising aimed at consumers using desktop computers. But "mobile"
isn't simply mobile. That dramatically upward curve includes
"classified, display (banners and other, rich media and video), email,
lead generation, messaging based and search advertising" and it includes
tablets. What's more, only the 2012 data point is entirely data-based.
The data points for the other years (2013 to 2017) involve an element of
speculation.
Ad Age is generally a good magazine, one that
we rely upon a lot for industry news and statistics. My point here is
not to denigrate the magazine. But this one article stood out as being
representative of the kind of hype we see in many venues that encourages
unjustifiably high expectations for innovations that lack a track record.
I
encourage publishers to explore all the innovations that are coming
along. But I see all too many betting their futures on things that may
turn out to be just hype.
What Is Programmatic Advertising?
That
brings us to programmatic advertising. What is it? A website called
"Latin Link" offers this clear definition:
"Programmatic
buying basically involves using an automated platform to buy ad
impressions. You enter in your customer data, budget and campaign
objectives. The programmatic buying platform does the media buy for you
based on an auction for available impressions, taking into account the
data you entered. The platform also matches up the ads each user sees
with the available customer data. The idea is that each Internet user
will see an ad that fits their specific needs and interests. For buyers,
this means that they only pay to reach the clients they want to reach."
Like
native advertising, this innovation started out in the digital world.
And, as with native advertising, there are those wishing to import
programmatic buying into the print world as well.
Five
Problems of Programmatic Advertising
Programmatic advertising
offers publishers a few strategic problems, whether we're talking
digital or print.
First of all, a programmatic platform can stand
between the publisher and the advertiser. At most successful
publications there's more to that relationship than simply the deal to
buy. Publishers can provide both qualitative and quantitative market
insights that advertisers can use to hone their ad messages. In turn,
advertisers can give publishers insights into the market from an
advertising point of view, which can help publishers focus audience
development in a direction that will be mutually beneficial.
Second,
if the decision to place an ad is reduced to an algorithm, people will
find ways to game the system. A whole industry has developed, for
instance, to help clients game Google's search algorithm, a practice
euphemistically called "optimization." But I think you get the idea.
Third,
it's hard to imagine that an algorithm can take into account all the
factors that go into a really smart ad buy. Two magazines, for example,
can have almost identical demographics. But one magazine could have
earned a high level of reader trust and respect. As a result, its
readers may have a high propensity to buy what they see advertised in
the magazine. The other magazine may be a fly-by-night publication with
low-quality content and little reader loyalty and trust. If the latter
offers the best price, which one will the algorithm chose?
Fourth,
what about repeat exposure? If ads are going to bounce around to
wherever the right demographics can be found at the best price, will
advertisers lose the benefit of repeat exposure from running contracts
with hand-picked publications? That would yield ads that are less
effective, and if advertisers find that their ads are becoming less
effective, will that result in reduced budgets?
Fifth, it's worth
remembering that, for many readers, ads are content too. One reason some
consumers read a given magazine is that the ads interest them. With
conventional ad selling and buying, the publisher can exhibit a level of
control over what kind of ads are solicited. In a sense, the complexion
of the ads contributes to the character of the magazine. If, as some
hypesters predict, most advertising buys become programmatic, publishers
will lose control of what they're delivering to readers. That might even
cost them some readership.
So that's the programmatic advertising
dilemma. As a publisher, should you sign up and begin taking on
programmatic buys? That may seem like an attractive proposition for a
publication that has had trouble selling ad space. However, will that
move bring in short-term revenue at the expense of long-term interests?
Perhaps finding ways to increase the effectiveness of your conventional
ad sales efforts might be a safer bet? I think it probably would.
But
maybe you could do both! If you were to control or limit the extent to
which your publication carries programmatic ads, and boost the
effectiveness of your conventional sales at the same time, you could
have the best of both worlds.
William Dunkerley is principal
of William Dunkerley Publishing Consultants, www.publishinghelp.com.
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