Looking back at programmatic – looks like we were right

This article was first published on MediaPost on 6/13/14

Programmatic Is The Solution, Not The Problem

The recent article “The Coming Subprime Advertising Crisis” points out flaws within the advertising industry as it evolves.  While there are core elements of the advertising ecosystem that need to be addressed to ensure that we deliver value in the ecosystem, we cannot blame programmatic media or data-driven targeting.On the contrary, programmatic media and data-driven targeting are part of the solution, and key parts of a well-oiled advertising algorithm. They are not the problem.

It’s time to address some of the common comparisons in the digital ad space and why these myths need to be debunked. Bundling impressions together into networks, platforms and exchanges is akin to bundling good and bad mortgages together and ensuring the entire package is great. Real-time bidding means a buyer can evaluate every single adimpression in real time.

With a few exceptions, rarely is there obfuscation of inventory.  In actuality, RTB is more similar to buying equities — where you can buy a known stock for a known price in a clean, well-lit marketplace. Stock by stock, call option by call option, a buyer can purchase an equity knowing a significant amount of data in real time. This is precisely why RTB took the place of ad networks that were purveyors of obscure pools of traffic. Programmatic buyers use RTB systems to transact, eliminating much of the aforementioned “risks” of bundling impressions.

Just as the housing loan market rewards ROI, so does advertising. Blaming programmatic platforms for participating in a commercial ecosystem where ad buyers (investors) are looking for a return is like blaming the stock exchange for bad investments made by buyers or bad business decisions made by listed companies.

Programmatic platforms, when done right, are transaction systems meant to help ROI. And as in investing, everyone has a choice of where they believe they will find that ROI. Programmatic isn’t just about efficiency, it’s about efficacy. And just as the real estate market dwarfs other markets, making it less apparent to see comparable ROI in other markets, digital advertising — display and video in particular — is dwarfed by television; advertisers can choose to move their media ROI into other markets.

Another point made is that we reward the creation of impressions by bundling “valueless” inventory into packages and selling them to investors, unaware of what they are purchasing.  But today’s platforms allow for bidding by fold count, viewability measures, and other more qualitative metrics. Impressions that are measured only by click-through rates haven’t been a completely viable metric in years, but CPA goals still abound — meaning many advertisers still desire massive reach.

Since custom creative deployments are saved for only large, expensive campaigns, we’ve ended up in a world where value-based inventory can still exist. Many brands know that the low-cost distribution offsets higher priced deployments, that their CPA goals still work, and that RTB gives them transparency into which impressions are actually valuable — and that the data they now have access to actually feeds a machine that allows them to start taking advantage of new impressions. Bundling isn’t the problem — with data and transparency, buyers have more control than ever.

Finally, advertising IS too big to fail; we just need to make sure that programmatic continues driving the ineffective channels (old-school ad network bundling without transparency) out of the game.  The future of advertising lies within programmatic; as long as the industry continues to evolve, advertising will remain successful for brands.  No one can put their life savings in advertising, but millions of consumers see better-targeted advertising, and thousands of advertisers have the data, transparency and control that financial markets continue to lack.

Contrary to the article cited above, “data consumer profile ROI” isn’t “jargon.” Platforms don’t “cloak it all in some programmatic…jargon.” Again, programmatic delivers transparency and controls in a way that would have helped avoid many of the very issues that occurred in the mortgage crisis. Imagine if every investor could pick and choose which mortgages they put into their mortgage backed securities, and if one went bad, they could not buy it again. That’s programmatic control — and that’s precisely what was missing in the financial markets that the ad markets offer. While the advertising industry absolutely needs to continue to evolve, work together and focus on quality as devices connect (and users disconnect), we have to do it for ourselves.