2018: the year of enlightenment for programmatic advertising

Programmatic display advertising and its related technology took a bit of a battering in 2017. Claims of largescale fraud. Appearing on the front page of the Times for ‘funding terrorism’. Being derided by arguably the world’s most influential marketers. Blamed for job losses at publishers. Hardly a highlight reel to be proud of.

But in years to come 2017 could be seen as the turning point for programmatic technology and the year that shaped its future.

Programmatic, a recap

In the early days digital advertising was the online equivalent of press. Identify a site you wish to advertise on, contact them, negotiate a rate, place the ad, let it run.

But as the web exploded it simply wasn’t feasible to go through this manual process for every site that you may want to appear on. Ad networks emerged. As the agency/advertising you only placed one booking, but your ad ran across hundreds of sites in the network, and so you achieved the scale you desired.

Everything was fine for a while, but networks still have their scale limitations. Providers pivoted from a closed network model to a ‘programmatic solution’ which promised hyper targeting wherever your customers were on the web.  ‘Right time, right place, right message’ is a mantra that has been churned out by providers and agencies alike as a promise of minimum wastage, maximum impact. A very appealing proposition to advertisers.

Transparency and conflicting incentives

The benefits of programmatic trading, and the technical nature of the transaction, created world of confusion which became a profit-making machine for the technology holders.

“Your ad will appear anywhere your customers are”, came to mean, “don’t expect us to tell you where it was shown.”

“dynamic pricing to minimise wastage”, became, “we will charge you a flat fee and pocket the difference.”

Couple this with a lack of knowledge or awareness around viewability and you have a market where providers are incentivised to buy the cheapest possible inventory, on poor quality sites, to maximise their own bottom line.  And in a world of post impression tracking and conversion windows, everybody thought it was working fine.

Then 2017 came along

Transparency and accountability had been emerging as a talking point for a while, but the incentive to do anything about it didn’t exist.

Publishers were able to sell poor or non-existent inventory.  Technology providers applied their fees regardless of the activity. Agencies or providers applied huge margins yet reported impressive campaign results. Why would they rock the boat?

The only incentive came from the advertisers themselves, and they weren’t afforded the transparency to pick away at the layers.

But when something makes the front page of a national newspaper it tends to get people asking questions. And when in the fall out one of the worlds largest advertisers halts all activity and promises to only work with transparent providers, people tend to follow their lead.

Where does that leave us? Applying the Gartner Hype Cycle

The Gartner Hype Cycle for interpreting technology hype identifies five key stages of a technologies lifecycle and is used by them to advise when clients should adopt a particular technological advance.

When you apply it to programmatic technology in advertising, it suggests that 2018 could enable the path to enlightenment to advertisers and the advertising industry.

The five stages of the Hype Cycle are:

  • Innovation trigger
  • Peak of inflated expectations
  • Trough of disillusionment
  • Slope of enlightenment
  • Plateau of productivity

The gartner hype cycle for programmatic

Applying these to programmatic technology and you can see why I remain optimistic about programmatic technology and its impact on advertising.

  • Innovation trigger – the need for scale in digital advertising beyond networks, coupled with the desire to target based on user data.
  • Peak of inflated expectations – Digital budgets (plus those from other channels) flood into programmatic as its targeting and performance capabilities are lauded by the industry.
  • Trough of disillusionment – The largest advertiser public assaults the supply chain and begins pulling budgets, the technology makes front page news for ‘funding terrorism’.

Enlightenment in 2018

So, unless we have not yet reached the trough, and there are more challenges to come, 2018 has us facing the gradual climb to enlightenment. And from personal experience I am already seeing this.

  • Advertisers are looking to understand more about programmatic technology and what it can do for them.
  • They aren’t going to through budgets at it without caution, but they will explore ways it can work to support their advertising goals.
  • They want to understand the supply chain and the technology involved.
  • They are auditing providers to ensure they have the capabilities needed.
  • They are seeking to understand where programmatic display fits within their digital channel mix.
  • They are looking to the future and how programmatic technology might impact other channels.

Sounds a lot like a path to enlightenment wouldn’t you say?

And with this understanding and education will come new implementations. New solutions. And a realisation that “programmatic” is not a media channel. But a method for buying advertising which has far wider reaching implementations beyond a few banner ads.

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