The future of programmatic – by Digitalis

“The rise of programmatic has redefined how advertising inventory is traded and delivered”

Traditionally bought and sold manually by ad networks, ad inventory sales are now mostly automated and transacted in real-time digital market places, known as exchanges. These transactions, the core of programmatic trading, are underpinned by advanced software solutions and large volumes of data.

But concerns remain about programmatic advertising. How reliable are the exchanges? Which data is the right data?

Planning to escape advertising’s Dark Ages

The increase in technology providers, on both the supply and the demand side, has resulted in complexity issues magnifying the impact of programmatic. With so many platforms seemingly offering identical “end-to-end” solutions, developing any form of clarity is increasingly difficult, resulting in concerns over shady and fraudulent activity.

“It feels like we are in the Middle Ages; we haven’t really cared about hygiene – throwing food on the floor and letting the cats and dogs eat it. Then, in the 20th Century, doctors came along and created vaccines for these hygiene problems. That’s what it is needed now.”

The doctors of programmatic could well be be strategists and planners. Human insight is needed to navigate the supply chain, to accurately weight the value of impressions, develop a roadmap for digital advertising and establishing bidding strategies – whether through open or private auctions –.

Playing the slippery field

The reliance on human insight and expertise lead to the assessment over supply chain confidence and suspicions that the supply chain, in its current state, plagued by the hygiene and transparency problems outlined above, doesn’t always add value.

Supply chain clarity is a large reason why advertisers are being driven to Facebook and Google, and is a major concern for programmatic trading.

“Programmatic advertising is like a chaotic tradesman market for fruit in a developing country. In this analogy, as an example, the ads are the fruit, and the ultimate goal is to get your fruit into a large supermarket chain (i.e. Walmart, Tesco, Carrefour…) – that’s Facebook.

If they can strike a deal with a shipping company and Walmart, to manage the delivery process then they are winners. But there’s this rogue trader in a van, promising to take my fruit and distribute it with real value – and he happens to have the data and gimmick sheets to prove it. But really, he takes my fruit drives up and down the road a few times, before dropping them off to the guy next door who doesn’t need them. So the process is a failure, despite the hectic activity around it”.

Data driven? Or data impulse?

How to judge data, how to harness it, and how to gain authentic data are all critical aspects in the process. Understanding the right data – for example which touchpoint offers a business the correct information about their audience – holds the answer to understanding the benefits of programmatic advertising. With the right information we all have a much better chance of finding the right customer:

“A lot of data is now available to buy from third parties – it is gathered, packaged and sold. This means there is now the market for whatever you are specifically looking for, resulting in lots of stale information. If you are asking for what you actually need, then it has to be provided in real time. Although, where does this data come from? Where does it originate?”

On the topic of data, the introduction of the General Data Protection Regulation (GDPR) – a new EU law activated in May 2018 regulating the use of personal data – has added uncertainty into the mix. It is key to become well versed in this new regulation, as the penalties for violation can be severe – up to 4% of global direct turnover generated.

Scalability as the solution

And a last consideration into the topic is consolidation, scalable end-to-end solutions, as the solution to inefficiency and fragmentation in the marketplace, where any concerns over transparency, hygiene, or “rogue man in a van” salesman could be alleviated. Infrastructure can be developed to bring in-house various capabilities along the supply chain. However, in here there is an obvious and latent problem, benefitting the larger incumbent players at the expense of the smaller.

One solution is header bidding – a tool that empowers publishers to gain more from their inventory. Through simultaneously offering inventories to multiple ad exchanges, publishers increase their yield and revenue. However, a complicated set-up, and concerns over publishers’ page-load times, creates a certain level of risk.

So back to square one, it still comes down to two companies:

“Header bidding is really important as, in theory, programmatic offers publishers the best opportunity at the highest possible price. Header bidding is the latest iteration as we are moving quicker from server to server. But who is driving the market? Facebook and Google.”  

Programmatic trading is here to stay, but the data needs a clean-up to be brought out of the Dark Ages.

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