Programmatic: The Good and the Bad
When discussing programmatic advertising, a common theme comes to mind. verytime we seem to solve the problem, we return back to where we started.
The theoretical advantages of programmatic advertising for a marketer are substantial. Lower transaction costs, more precise targeting, greater flexibility, the ability to optimize creative and media in real time and more competitive pricing should result in more efficient and effective marketing. Such benefits are possible if marketers have greater insight and control when purchasing their media, especially in real time.
However, this is where we circle back to the issue of cyclical shortcomings. While many in the marketing and advertising industry aim to push progress in programmatic, progress is relative. The internet reflects humanity– both the good and the bad. With articles ranging from COVID misinformation to the discussion of support for neo-Nazis, ads may fall victim and inadvertently support such causes. The industry is going to automate, but how that automation is developed will have a great impact on preventing brands from supporting unsafe content and mitigating issues such as over-frequency and self-bidding.
These issues are real; the marketing and advertising industry should invest in addressing these qualms and collaborate in solutions that will treat all participants in the value chain fairly.
New Beginnings with Premium Video
But don’t worry, there is opportunity to be more thoughtful– beginning with premium video.
During FreeWheel’s recent Council for Premium Video, the term on everyone’s mind was “programmatic,” which is now in the midst of a massive leap forward.
FreeWheel, the media and technology branch of Comcast Advertising, presented its latest Marketplace Report, explaining that video ads grew by 81% during the first half of 2022, with 27% actually being attributed to programmatic transactions.
During the council, industry leaders discussed the pivotal shift they have seen toward programmatic advertising, particularly in the premium video ecosystem. This shift has also been highlighted by the budgets that we are seeing being incorporated into programmatic, as well as the audience targeting that is aiding in the success of this change.
But wait, this sounds positive in nature? What about the negative aspects that premium video may address?
There are fewer quality publishers and a few trusted partners through which marketers can purchase inventory in premium video; this is why programmatic can be different in relation to premium video and connected TV. The premium video marketplace reflects supply constraint instead of demand. This different marketplace profile makes it more practical for marketers to work directly with publishers and their partners to ensure they purchase placements in high-quality, brand-safe environments. In turn, this ensures the targeting of the right audiences and the simultaneous maintenance of the efficiency that arises from automation and the effectiveness of data-driven decisions.
This prompts the question– what’s driving the shift to programmatic?
As with any major industry move, the movement from direct insertion orders (IOs) to programmatic ad buys is based on flexibility, controlled ad environments and, most importantly, results.
There has been a massive shift in programmatic (as we’ve previously established); however, it’s the way in which programmatic is transacted (programmatic, guaranteed programmatic, direct private marketplace deals) that has quickly helped it become commonplace. Crackle Plus now sees about a 50% to 60% portion of its business being transacted on a programmatic direct basis, enabling a sense of flexibility in regard to shifting budgets, both for the advertiser and client.
While the viewing landscape is growing, with basic linear and streaming TV now including AVOD and FAST channel, connected TV (CTV) and TV everywhere, the need to simplify the advertising aspect of this medium is growing. With viewers fragmented across different devices and streaming services, it can be quite difficult for advertisers to know whether they should purchase a certain show or platform. With programmatic guaranteed advertising, ad inventory is capable of being reserved. From a publisher’s perspective, this type of transaction allows them to better manage and forecast their inventory as the volume and price are committed upfront by the buyer. From a marketer’s perspective, programmatic enables priority access to premium inventory and less risk of under-delivery against the target audience, as well as greater transparency in terms of placement and context.
Programmatic’s ability to streamline and automate segments of these deals, in turn, gives clients greater control over the elements they know require more attention. FreeWheel’s report uncovered that 85% of programmatic deals are guaranteed, easing advertisers’ concerns regarding the protection of their ad buys. This, inherently, accounts for the increase in buys that we have witnessed this year. FreeWheel projects that by 2026, half of all ad buys will be programmatic. Moreover, programmatic is becoming more incorporated in core buyer strategies early on during upfront negotiations. Ultimately, advertising companies that include both linear and digital are best situated to capture their total audience and maximize reach.
The distribution landscape of premium video is constantly expanding, but so is audience engagement, too. The Video Marketplace report highlights that the number of households that possess four or more subscription streaming services have increased by 218% since 2019; industries of all sorts are joining this movement. Consumer packaged goods, auto, quick service restaurants, various financial companies, and any other business that utilizes heaps of data to target a specific audience is leaning into programmatic due to the reach that it provides.
However, just because data-driven decision-making is currently all the rage does not mean that
it is absolutely necessary for every ad buy, too. Of course, even with these large shifts to programmatic, certain types of programming will benefit from the “human touch” that comes from direct IOs and placements. Overall, the goal of programmatic as a transaction type is to simplify the entirety of the ad-buying process.
Ultimately, both buyers and sellers of premium video advertising require accurate visibility into the available pools of inventory and the audience they represent. By working more closely with their publishers and partners, marketers can help move the industry forward in a way that results in more value for all members in the ecosystem.
The Ward Group understands the importance and gravity of collaborating effectively with our vendors. Contact us today and embark upon your programmatic journey with our highly-skilled media stewards!