What is Programmatic Advertising? – 5 Myths Debunked
There’s a lot of noise out there, and as more marketers continue to adopt programmatic advertising, we will try to clear the air. Which brings us here—about to shed light on a few of the grey areas within the complex digital ad world we all know and love. Let’s bust some myths!
1. Programmatic ad buying and real-time bidding (RTB) are one in the same.
A common point of confusion in the world of digital media buying, this is one of those “same, same—but different” situations. Technically, programmatic is the automated format of ad buying – one computer talking to another computer to execute campaign operations, while real-time bidding is just one type of programmatic buying. Programmatic ad buying alone automates certain tasks (insertion orders or ad tagging, for example), which ultimately empowers ad buyers to build more sophisticated strategies, pull better analyses, and pivot more effectively amid industry shifts.
Real-time bidding, or RTB, is a technology protocol or mechanism for automatically bidding, buying, and selling display impressions via an auction format. It’s the lightning-quick auction that takes audience data into account, to assess the value of an impression to a certain advertiser (BannerConnect, 2017). In short, advertisers compete for an impression, or ad space, on a web page with automated bids. The highest paying bidder wins the auction and placement on that particular web page (which is then loaded immediately). Therefore, while RTB absolutely equals programmatic, programmatic does not exclusively equal RTB; RTB is but one piece of programmatic.
Read more about other differentiators on our blog, here.
2. Ad fraud is only prevalent in programmatic.
Let’s be honest. Between click farms, bots, and human traffic (yes, the end users are real), fraud is prevalent in today’s world. According to Juniper Research, advertisers lose $51 million per day on ad fraud, which may add up to well over $19 billion in wasted ad spend by the end of 2018 (SearchEngine Journal, 2018). Those numbers aren’t small. However, according to the Association of National Advertisers (ANA), as media agencies have improved controls and filtration processes, fraud experienced in programmatic buys, is no longer riskier than general market buys.
The Integral Ad Science (IAS) 2017 Media Report data states that when appropriate precautions are taken (automatic pre-bid filtering, for example) the fraud rate isn’t that different at all—in fact, they saw slightly lower fraud rates on programmatic buys for desktop displays in the US (Integral Ad Science, 2017). The video numbers (in the US) are barely higher for programmatic, and it plays out the same globally. Overall, programmatic has either lower rates of fraud or a very small difference, as long as the proper precautions are being taken.
3. RTB is low-quality or bad inventory.
Have there been cases where suspect publishers supplied the RTB ecosystem with questionable inventory? Yes. However, most of the quality players (SSPs and DSPs alike) actively work to remove such inventory from the marketplace, as low-quality inventory benefits nobody in the long run.
In today’s landscape, we can potentially purchase the very same impression that would otherwise have been available to a Direct Buy campaign. In the beginning, RTB was viewed as a means of monetizing inventory that was not directly sold—this is far from the truth today. Advances such as header bidding, means that for many publishers, every impression is potentially available through RTB. Header bidding is a new, unified auction conducted by publishers outside of their primary ad server, which allows advertisers to cherry-pick impressions at the highest priority; it is also known as “first look” (AdProfs, 2018). Header bidding has enabled publishers to maximize their revenue by taking the best price available for any given impression—in many cases, that may be a directly sold campaign, but if a programmatic source offers a higher CPM, the publisher’s ad server can choose that source instead.
Attitudes have also significantly shifted amongst publishers. Previously, publishers may have viewed RTB with suspicion and intentionally withheld valuable inventory. Today, however, most publishers recognize that making every impression available for purchase by the highest bidder is truly in their best interests.
4. Programmatic is a “black box.”
The “black box” terminology doesn’t come from programmatic buying, but rather, the business models companies offering programmatic buying services choose to offer. An advertiser can engage in real-time bidding by sending an insertion order to the company that runs their campaigns and send back only basic stats. In that regard, it’s not that different than buying directly from an ad network. However, advertisers also have the option of working with partners who promote transparency and show them everything—or even take the reins themselves and decide how every aspect of the campaign should run (outsourced managed services). For most major DSPs, what a self-service customer sees, is exactly the same as what a buyer who works at that DSP can see.
At its core, programmatic buying promotes transparency and increases the amount of control buyers have when it comes to when and where their ads are displayed. Reporting will vary by vendor, and platforms that pride themselves on providing maximum transparency will report on multiple levels of granularity, including but not limited to: campaign, domain, placement, creative, and more (MarketingLand.com). The programmatic advertising industry as a whole is continuously searching for more transparent methods, including better tools for reporting and tracking.
5. Machines do all the work.
Programmatic buying is both an art and a science. Sure, the algorithm (scientific component) gets most of the glory, but people are still needed to pull the levers. Basically, the human element is crucial to thoughtful execution. Algorithms are only as good as the data that feed them, and data is only as good as the strategies it informs. There is also something to be said about thinking long-term versus short-term. Algorithms generally address the details of any campaign in any given moment, but (human) experts have years of experience and accumulated knowledge about what works for the brands they buy for. Most algorithms will have to learn this over and over again and don’t have the benefit of long-term insights.
In addition, there is a strategy behind the optimization of the ad campaigns and media buying implementation (yes, humans, this is where you come in), as well as the personal relationships that come into play between the programmatic firms and agencies. The internal culture of a programmatic firm can also dictate success. Chances are, if employees feel engaged and trusted, they will perform to the best of their ability. People are the innovators, groundbreakers, and builders that optimize campaigns to yield the highest results, develop brilliant creative, and work together to decide what the future holds. Automated platforms help bring data to life, but the whole picture wouldn’t be complete without human intuition.
As noted by IAS, political, economic, cultural, and media trends can all impact media quality metrics and also be reflected by them. As the ad tech industry continues to ebb, flow, and grow, it’s important to stay abreast of the major shifts and intricate changes that make this digital world so exciting. On that note, consider these myths—busted!