The Programmatic Study

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The Programmatic Study


Jun 14, 2017 by Mark Maier

Are the waters murky in the Programmatic Buying world?  That's the thought in a Forbes article that makes a case for a closer examination if you resell the services or recommend it for your clients...

"Programmatic media is the automation of media buying and selling processes and decisions, enhanced through data. It is fast becoming the dominant protocol to buying digital media which is expected to surpassed TV for the first time this year. Programmatic is projected to reach nearly $33 billion in 2017, or 84% of U.S. display ad dollars, after growing 31% last year, according to eMarketer.

Programmatically transacted media offers many alluring benefits to advertisers: targeting precision, scalability, real-time optimization, and unprecedented leverage of big data. And as programmatic buying becomes more popular, higher-quality inventory is becoming more available.

It had estimated that the programmatic “technology tax” could exceed 60% of an advertiser’s media budget, where less than 40¢ on the advertiser’s dollar, reach the consumer, while the majority is claimed by agency fees and intermediaries. Questions have been growing around the “hidden costs” of the programmatic ecosystem and, thereby, the inherent lack of transactional transparency. These concerns have been exacerbated by non-disclosed buying agreements for programmatic media, which do not allow for the close inspection, analysis, and auditing of a buy’s transactional details, namely, costs, and fees.

The growth of programmatic media has paralleled the growth of the agency trading desks and independent trading desks. These can play a valuable role but, at times, have conflicts of interest. Working with an agency trading desk almost always results in disclosure challenges.

A new study by the ANA, and AD/FIN, a trading research firm, shone new light on programmatic buying. The study, which was released at the ANA Advertising Financial Management annual meeting in San Diego last week, covers 30 major brands in automotive, banking, beauty, CPG, fashion, and travel, spanning almost 2 years, from May 2015 through April 2017.

Here are key “programmatic governance” principles going forward:

• Programmatic media may be complicated, but it can be demystified. Transactional transparency can be a reality when advertisers take active control of the raw transactional data at the heart of every programmatic purchase (winning bid log data and metadata) and, by verify contractual compliance through audit.

• Disclosure and transparency should be approached from a legal, process, and technical perspective.? The challenge of programmatic transparency is not just technical – thousands of sites, millions of impressions, 24/7 buying — but, it is  also a legal and procedural challenge.

• Fee models should be custom-tailored and easily understood. There is no “one-size-fits-all” model for programmatic media and the fees associated with its execution. There are numerous models in practice deploying all combinations and permutations of agency, trading desk, DSPs, managed service, self-service, and various ad tech. Variation is extended to payment models, as well.

• Advertisers with clear programmatic KPIs are in better control of their programmatic investments. Given the inherent complexities and costs of the programmatic supply chain, the precise role and KPIs to be achieved need to be clear to all involved.

• Disclosure and transparency will put Advertisers in greater control, but performance still drives the bottom line. While proper disclosure leads to better governance and supply chain management, it does not guarantee that the media partners will deliver better results than in a non-disclosed arrangement. Therefore, having in place a clear methodology for financial transparency tied to KPI performance is a must.

Advertisers which did not explicitly plan for and address programmatic disclosure issues, were much more likely to find themselves faced with a myriad of challenges to transparency. Non-disclosed transactions may incur additional costs.

At the end of the day, programmatic media can be significantly demystified for any advertiser seeking better governance and digital supply chain management by taking control of their transaction data.

 


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