Advertisers worry about viewability, ad fraud and brand safety, but are creative personalised messages programmatic’s next hurdle, asks Alex Brownsell
The future of programmatic is assured, it would seem. Ever-greater numbers of advertisers are embracing automation, while publishers are starting to capitalise on programmatic efficiencies in a way that does not compromise inventory rates.
Confidence is running so high that some experts are questioning the need to refer to ‘programmatic’ trading at all. Last year, Arun Kumar, president of IPG Mediabrands’ trading desk, told M&M Global that within “three to five years” the media industry will speak only in terms of audience-based targeting.
Caspar Schlickum, co-founder and chief executive of Xaxis EMEA, agrees that programmatic is “no longer a word that mystifies and confuses”. Tim Gentry, global revenue director at Guardian News & Media, goes further, suggesting the very term is becoming “passé”.
Yet, for all this bullishness, 2015 saw the emergence of genuine obstacles to future growth. A number of these – ad fraud, viewability, concerns over transparency – are of the industry’s own making, while ad blocking is a symptom of consumer dissatisfaction. Can the programmatic juggernaut really be stopped?
“2015 was the year that programmatic became mainstream, with agencies and advertisers putting programmatic at the centre of their digital buying strategy”
The numbers would suggest not. A recent survey by IPG’s Magna Global claimed that worldwide programmatic ad spend will reach $37bn by 2019 and account for 31% of all display and video ad spend this year.
“2015 was the year that programmatic became mainstream, with agencies and advertisers putting programmatic at the centre of their digital buying strategy. Few, if any, publishers do not now transact in programmatic sales,” says Google’s UK head of publishers David McMurtrie.
While the take-up of programmatic has been led by the US and advanced media markets such as the UK, France, the Netherlands and Australia, automation is now being adopted across the world, even in the most resistant markets.
Rubicon Project’s international general manager Jay Stevens, for instance, tips Japan and Germany for belated breakthroughs in 2016: “There isn’t a single market that isn’t doing something in the area. If you look at the DSPs and trading desks, they have established themselves in pretty much every major market in the world. Now it is about advertisers realising the value they can get through automation.”
For Xaxis boss Schlickum, the development carries echoes of the maturing of search marketing a decade earlier. “It reminds me a little of when search was at a similar point in its development,” he says.
“At some stage, everybody realised that search was important and various people started building specialist businesses, and so a huge industry was born – but then the agency groups recognised search was a very important part of the media industry. In a lot of ways, we’re going to see something similar with programmatic, with a recognition that it needs to be integrated into the rest of the media strategy.”
Growing maturity
That maturity can be seen in a number of developments across the media industry spectrum. On the buy-side, Publicis Groupe heralded what some claim to be the death of the trading desk by moving its programmatic trading solution Audience on Demand out of its dedicated home VivaKi and into agencies Starcom MediaVest Group and ZenithOptimedia. Programmatic is becoming just another part of media planning.
Publishers have also introduced more innovative approaches to selling inventory through automated channels. The Guardian united with CNN, the Financial Times and Reuters to launch the ‘Pangaea Alliance’, offering advertisers access to more than 110 million online users and a credible, scaleable alternative to digital giants such as Google and Facebook. This model has been copied in markets as wide-ranging as Argentina, New Zealand and the Czech Republic.
According to The Guardian’s Gentry, who is project leader for Pangaea, the alliance method attracts advertisers seeking to tackle two key issues: environment and data. “You need a quality environment and to make sure that the data driving the execution is really high quality. Pangaea can offer a solution in both of those areas,” he says.
“There’s an acknowledgement that the way we have been working doesn’t provide the best solutions for anybody. Advertisers demand of their agencies lower and lower costs, and agencies focus very hard on using programmatic to buy cheaper media for short term returns, using some fairly blunt retargeting tools. Brands aren’t being built, and it creates an advertising experience that is bad for users.
“The forward-thinking advertisers, agencies and media owners are all thinking about how they can work together to demonstrate the long-term values of high-quality environment and fewer, better ads.”
Even traditional media owners are getting in on the act, exploring the potential for programmatic sales in TV and print. Indeed, Magna Global predicts that $10bn will be spent on programmatic TV in the US by the end of the decade, representing 17% of budgets for the medium.
Other than a handful of experiments in markets such as Australia and the Netherlands, programmatic TV remained something of a pipe-dream in 2015 – but Léon Siotis, managing director, UK and Southern Europe, at SpotX, is adamant that experimentation will become meaningful ad dollars in the coming 12 months.
“No [broadcasters have] gone all in on programmatic yet, but you’re starting to see a lot of different experiments in different countries,” says Siotis. “If 2015 was the year to start testing programmatic in the broadcast space, then 2016 is going to be when it starts coming to fruition and we start seeing real dollars making an impact.”
Risking complacency
Yet not everything in the garden is rosy. Tom Bowman, senior vice-president of revenue development and operations at BBC Advertising, believes a programmatic future risks failing to materialise if complacency sets in: “Programmatic’s sense of inevitability depends very much on where you are [in the world]. And if we’re complacent about making the case for automation, then it might stay that way.”
Rising concerns around ad fraud, viewability, brand safety and ad blocking have provided as many trade media headlines as were generated by the breakneck rate of growth in the industry.
As shown by our survey of M&M Global readers, leaders from across marketing and media are deeply concerned by the threat posed by ad fraud, and claims that advertisers are losing as much as $18.5bn per year to fake ‘bot’ traffic.
The debate around acceptable viewability standards also boiled over following an intervention in June 2015 by Unilever’s chief marketing and communications officer Keith Weed, who argued that anything less than 100% viewable is unacceptable.
“Ultimately because it is being debated in an open and public space, it means all sides are working hard to eliminate it”
Weed told the Financial Times Marketing Innovators Summit in London: “Can you imagine your mum or dad going into a store and buying 50 PG Tips only to get them home and find there are just 45 inside, [because] as an industry we have agreed on 90% delivery? It’s absurd. It has to be 100% and we’ve got to find a way.”
With the amount of money flowing into this new system, it was perhaps inevitable that some “bad actors” would be drawn in and “suck some value out of the industry”, an argument proposed by Rubicon Project’s Stevens.
SpotX’s Siotis goes further, suggesting it is a good thing that this dirty laundry is being aired in public, as it helps promote the message that the industry is seeking to clean itself up. “We’ve only seen growth. Whether it could have increased further [without ad fraud and viewability issues] is hard to tell; we haven’t seen anybody pull spend specifically because of what is happening,” says Siotis.
“Ultimately because it is being debated in an open and public space, it means all sides are working hard to eliminate it, which is much better than a debate behind the scenes. Transparency across the board is a good thing.”
Creative tension
The greatest long-term challenge facing programmatic, however, is the perception that technology can be used to enhance audience targeting, but not the creativity of those messages.
A debate has been growing in volume over the past 12 months between those that believe technology is an inhibitor to marketing creativity and those who argue that true digital creativity relies on the ability to harness data.
‘Creative programmatic’, argues Xaxis’ Schlickum, can come in many formats, from creativity in the type of data being deployed to the use of data to better instruct the creative executive.
“A big trend in 2016 will be how we broaden this into the creative space,” says Schlickum. “There has been a lot of talk about creativity, and I’m spending a large portion of my time talking with our creative agencies. Technology significantly increases the intersection between insight, creative and media, and there is a huge opportunity for a business like WPP to bring those things together using technology, rather than co-ordinating through a client.”
Ben Samuel, marketing technology director at PHD, says programmatic practitioners should not confuse genuine creativity with “joyless templated creatives just showing the target audience the last products they looked at”.
“I can’t imagine something being seen as a great creative unless there is a significant degree of resonance with the consumer,” adds Samuel.
“Creativity doesn’t exist in a vacuum, so surely the levels of available data provide a real opportunity to improve.”
And at a fundamental level, argues Google’s McMurtrie, brands and agencies must “redefine what creativity means”.
“It is no longer about the 30-second TV spot or the banner ad, but instead about delivering a message that matters to the individual in the right moment, and the trade-off between the message and the value of the message to the user,” he says.
Despite the incredible rate of growth, programmatic must still settle the debate concerning perceived flaws around creativity, and weaknesses around viewability and ad fraud. Practitioners may wish to leave the term ‘programmatic’ behind, and focus on the benefits of technology.
But, before that can happen, a number of arguments must be won – meaning that 2016 promises to be another eventful year in the world of advertising technology.
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