Open web programmatic’s popularity has increased dramatically over the past decade and now makes up a significant proportion of most advertisers’ media investments. For marketers, programmatic advertising presents potential for improved targeting and reduced costs via automation. However, programmatic is not without its challenges and when used incorrectly, can become a big area of inefficiency for businesses.
The Association of National Advertisers (ANA) recently released its latest ‘Programmatic Media Supply Chain Transparency Study’ and PMW delved through the results to uncover some useful insights and strategies for marketers. Here’s five things every marketer should know about the $88bn global market that is programmatic advertising.
1. Information asymmetry is a serious issue for advertisers
Information asymmetry is an imbalance between the quality of information possessed by different parties in a transaction. In terms of the programmatic supply chain, sellers typically have more or better information about the quality of media inventory being sold in auctions. As a result, buyers have a tendency to overpay for their programmatic inventory and in turn access to audiences, leading to inefficient and therefore unproductive media investment decision making - resulting in substantial waste.
Solution: Media often makes up the largest area of marketing expenditure within an organisation. Advertisers should attempt to be more active in the stewardship of their media investments. One way to facilitate this is to not outsource their media management to external agencies and instead, handle programmatic media spend internally.
2. Data access is lacking
In compiling the ANA’s report, a myriad of organisations were unable to even contribute to the study because they were unable to gain access to log data from DSPs, SSPs and Ad Verification providers. As many brands don’t own their supply contracts attached with specific data rights, they are blocking their own access to valuable data. This causes an overall lack in transparency and leads to further programmatic inefficiencies and waste.
Solution: Having the right to access data is the best way to foster transparency, so your organisation having direct contracts with all primary supply chain partners - DSPs, SSPs and Ad Verification vendors - can be extremely useful. Alternatively, if using an agency, your organisation should ensure your client/agency agreement requires the agency to obtain and provide access rights to supply chain partner data.
3. Advertisers prioritise cost over value
A reason for the lack of transparency in the programmatic space, as identified in the report, is that incentives driving advertiser behaviour are often misaligned with the goals of their marketing campaigns. By prioritising cost-per-impression over value-of-impression, marketers are missing a trick because not all impressions are made equal. Chasing cheap CPMs will likely lead to a cascade of downstream ad quality issues so remember, not all “cheap” inventory is “quality” inventory.
Solution: Prioritise “quality” media buys. By marketers reframing their priorities to better balance low cost inventory in programmatic with ad quality - meaning viewable, fraud free and brand safe - they should be able to realign advertising incentives with behaviour that better achieves a marketing campaign’s goals.
4. Sustainability efforts can be enhanced
As PMW has already established in its recent State of Sustainability in Digital Advertising series, the ad industry has plenty of work to do in this space. Programmatic advertising is very energy intensive which results in high levels of carbon emissions, so it’s important for advertisers to optimise where they can. Made for Advertising sites in particular create more carbon emissions than the average site due to poor optimisation - Scope3 found that MFA sites are 26% higher in Co2 emissions than non-MFA inventory.
Solution: The longer the supply chain, the higher the carbon emissions, so consider if there is any scope to cut back elements of your organisation's supply chain. A good place to start is looking to reduce expenditure on MFAs and demanding that the sustainability impact of all programmatic media purchases be made accessible. A rule of thumb to consider, as put forward by the report, is that more productive buys can often lead to lower carbon emissions.
5. Made for Advertising (MFA) websites represent 21% of impressions
Beyond sustainability, MFA websites present several other programmatic hiccups for advertisers. The study claims MFA websites typically use sensationalist headlines, clickbait and other provocative content to attract visitors. They usually feature low quality content and use tactics such as pop-up ads, auto-play videos, or intrusive ads to maximise ad revenue. Startlingly, these websites represent 21% of impressions from the study and 15% of spend, indicating that advertisers are not in control of a large chunk of their media placement decisions.
Solution: Advertisers should streamline the number of websites they use. The average participant in the study used 44,000 websites for advertising their programmatic inventory, creating a high probability that some of their budget was spent on non-viewable and fraudulent inventory. Streamlining this process can be done in the form of “inclusion” lists. The ANA believes there are simply too many websites for exclusion lists, with an estimated 4,500 MFA sites alone. By creating inclusion lists that your organisation’s partners are aware of, advertisers can reduce the risk of wasted spend - remember to proactively monitor these lists for compliance.