If Programmatic Ad Buying is the future, why are advertisers not buying it?

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August 16, 2017 by Paul Dughi

programmatic-ad-buying.pngWe’ve heard so much about “Programmatic Ad Buying” in the past two years, it’s almost become a joke around our place.  Everybody tells us it’s coming and we’d better be ready.

If you’ve ever bought a self-serve Google ad or a Facebook ad, that’s really the kind of thing we talk about when talk programmatic ad buys.  It’s the ability to place an ad and target the audience without having to talk to anybody.  A software program knows the available inventory and prices it accordingly, allowing you to go in and claim that space without human intervention.

It’s the wave of the future, they say.  So, I spent a good portion of the last three years investigating programmatic advertising – both form the sell side and the buy side. I work for a TV station and Programmatic doesn’t work cleanly with our legacy inventory systems.  A couple of companies have tried to graph onto the exiting systems and offer inventory for purchase.  I was a beta tester of one of the largest.

It’s a great idea.  Companies would come to us and tell us what they were willing to pay to run a TV commercial on our air. They would provide the spot for review, which we could download.  The system would interface with our inventory system (what TV calls its traffic system) and show available inventory and the “lift” from the ad buy.  In other words, based on what we already had booked, would there be an increase in dollars or a decrease because we’d have to bump something else out.

In theory, it saves time for both parties and expedite the process.

In three years of testing, every single programmatic spot buy except for one would have lost money for our TV station.  In some cases, the rates offered amounted to pennies on the dollar – literally.  One company wanted to buy a prime-time spot that typically sells for between $800 and $1200 for a 30 second commercial.  They offered us $8.

Programmatic ad buying for our online products work differently.  It’s a much more seamless process.  As part of ad networks, we offer up a portion of inventory which people can buy.  For most publishers, it’s used as “backfill” when not every available ad space is used.  Most “backfill” spots bring in some dollars, but significantly less than other ads.  Pennies and dimes on the dollar.

Don’t get me wrong:  there’s a place for Programmatic advertising.  I really do believe it’s the future for a lot of purchasing.  For the right advertiser and the right advertising in the right medium, it can work.  Typically, though, campaigns get their best results when the right mix of media is added in.

It’s about the right message, aimed at the right consumer, at the right time.  It’s going to take a lot more progress for machines to learn that.

MediaRadar analyzes media spend across platforms (digital, print, mobile, video, native) and it noticed an interesting trend.  In the past year, the number of advertisers using Programmatic ad campaigns dropped by double digits.  Programmatic ad buys are down 12% year-to-year in 1Q 21017 versue 1Q 2016.

If advertisers’ results are similar to what I’ve seen, I understand why.  In the meantime, we humans can craft a great campaign and make sure the ads get in front of the right people at the right time.

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