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The problem with programmatic … and finding the right digital tools

  • 6 min to read
problem with programmatic

If you’re doing marketing, more than likely, you’ve probably heard of programmatic advertising.

Programmatic’s theory is sound. Instead of buying space on a platform — like a newspaper, radio station or television station — you’re “buying” the audience.

For example, a college administrator is tasked with trying to get an MBA program off the ground. With programmatic he can target:

  •  People with a college degree who have an interest in continuing education
  • People located within a 25-mile radius of campus
  • Commuters in and around the campus
  • Income levels
  • And more

With programmatic, you buy the desired audience based on desired geography, demographics and behaviors of the consumer’s online history.

Think of Big Brother stalking you online, keeping tabs and trying to sell you stuff.

A growing trend

Programmatic has seen great growth in recent years. According to a report by Invesp:

  •  62 percent of US marketers use programmatic to achieve brand awareness
  • The amount of money spent on programmatic is expected to have increased more than 226 percent from 2013 to 2018, accounting for nearly $37.88 billion
  • 32 percent of marketers surveyed said more than 50 percent of their online budget was programmatic and 98 percent said their programmatic spend would remain or increase in the coming year

Combine a desired audience with a relatively low cost compared to other forms of marketing, and it’s easy to see the appeal. The theory makes sense to marketers.

But the theory is flawed. Programmatic has problems.

Lots and lots of problems.

Fraud, fraud, fraud

I can’t write it more effectively than the first couple of paragraphs in this article by AdNews.

Programmatic media is ineffective and doesn't deliver returns for advertisers as only 20% of the spend reaches the consumer, was one of the revelations that shocked advertisers at the AANA transparency event (March 21, 2017).

Nick Manning, chief strategy officer of Ebiquity, gave a brutal assessment of programmatic media and its role in the digital media supply chain and described it as “the biggest problem in the industry”.

“[Programmatic spend] is the biggest problem we have in the industry right now in terms of wastage and inefficiency. The point is that programmatic isn't working terribly well, we believe, but nevertheless money is gushing into programmatic even though it's inefficient," he says.

How does this happen? Two ways.

First, there is bot traffic, which in 2016 accounted for 52 percent of all traffic to websites, according to a report from Incapsula.

Think about it, more than half of the traffic to the sites that programmatic delivers to are not humans. And depending on the site, it could be much higher than that.

The other problem is delivery. We’ve used a third-party vendor for purchasing programmatic for clients, and we were consistently confused by how often 70-90 percent of the campaign on a weeklong, two-week or month-long buy delivered in the last day or two. It didn’t pass the smell test.

It’s one reason we’ve stopped offering programmatic as a primary marketing buy.

So, between bots taking traffic and unreliable vendors executing the exchanges, the programmatic market is ripe with fraud. And they know it.

Check out this quote from a DigiDay article, Confessions of an ad tech veteran on fraud: ‘Advertisers need to react to what’s happening’

The funniest conversation I’ve ever had with an agency was when I told them a campaign they had run was 90 percent fraudulent, and their reply was: ‘Oh, I know, but it really performed well. The click-through rates were phenomenal.’ I re-emphasized that those click-throughs were fraudulent; the ads weren’t seen by humans, and their response was ‘The client is happy. We’re renewing the contract.’

You might think that groups are looking into the problems with programmatic, right? Yes but with no teeth.

But if fraud were only part of the programmatic problem …

Progmattic safe?

Your brand is at risk

In the old days, one problem with programmatic was the concern that you couldn’t control where the ad would appear.

For example, let’s say you sell kitchenware and have a promotion on knives. The concern was that your ad might appear next to a crime story involving a stabbing homicide. Not an ideal market pitch.

In today’s world, it’s much more dangerous for your brand. Your ads can appear on sites you want nothing to do with. Hate sites. Fake news sites. Or on YouTube hate videos.

These concerns are real, and a message is being sent. Check out this headline from the Guardian:

“Google and Facebook 'will lose millions in ads over extremism fears'”

AT&T and Verizon pull ads from Google over extremist videos

It was such a concern that JP Morgan Chase went from appearing on 400,000 websites via programmatic, down to 5,000 sites. The reason? Their programmatic ads were appearing on hate sites, with headlines such as actor Elijah Wood revealed “the horrifying truth about the Satanic liberal perverts who run Hollywood.” (New York Times)

Dropping 395,000 sites lead to two interesting changes. One, by whitelisting the sites they appeared on, JP Morgan Chase kept its brand identity intact. Two, the company saw little change in the cost of impressions or the visibility of its ads on the internet.

The change illustrates the new skepticism with which major marketers are approaching online ad platforms and the automated technology placing their brands on millions of websites. In recent years, advertisers have increasingly shunned buying ads on individual sites in favor of cheaply targeting groups of people across the web based on their browsing habits, a process known as programmatic advertising — enabling, say, a Gerber ad to show up on a local mother’s blog, or a purse in an online shopping cart to follow a person around the internet for weeks.

But as the risks around the far reaches of the web have been cast into stark relief, some advertisers are questioning the value of showing up on hundreds of thousands of unknown sites, and wondering whether millions of appearances actually translate into more sales.

JP Morgan Chase narrowed the window from the initial 400,000 sites by looking at sites that actually delivered a conversion, which dropped it down 7,000 sites . Then reviewing the sites, there were 2,000 more sites they didn’t want to be associated with. Now they’re down to 5,000 sites but with similar conversions.

In short, the scale of programmatic isn’t all it’s cracked up to be. When it comes to online advertising, true ROI doesn’t come from scale, but from the right websites.

right digital


Right websites, right tools

So, you want to have an online presence, but what is the best approach? Here are three ideas:

  1.  You can do what Chase Morgan did and whitelist thousands of sites, and review thousands of more sites to blackball. But that kind of defeats programmatic’s purpose, doesn’t it?
  2. You can look into Private Marketplace (PMP) in which groups of online publishers create their own network. You can more easily view who is on the sites and know that they’re trusted.
  3. Or you can go to websites direct. Not just websites. Premium websites.

In the interest of full disclosure, Colorado Press Network is the subsidiary of the Colorado Press Association, and part of its mission is to help our members, mostly made up of newspapers, and so it will come as no surprise that looking at newspaper websites — premium websites — is a recommendation.

But think about this: Newspaper media has the highest trust factor of all media in terms of content and substantially on trust for advertising.Colorado newspaper ranked No. 1 in trust for local advertising information, according to a June 2017 Pulse Research study on media consumption. 

  • 15 percentage points higher than TV
  • 20 percentage points higher than radio
  • 22 percentage points higher than social media

In addition to that, premium sites have much better results than programmatic.

  •  Display ads on premium sites had an average brand lift of 67%, delivering premium performance
  • Premium sites are 3x more effective in delivering mid-lift metrics, such as favorability, and performed better in upper funnel and lower funnel than programmatic
  • Direct sold ads perform have 10% better viewability than programmatic display web ads.
  • Direct sold videos had 59% viewability rate, compared to 35.5% programmatic (9% programmatic were deemed fraudulent)

And you’re still buying audience on premium websites, like newspapers. In fact, newspaper media consumers are more affluent, better educated, more likely to spend more, more community engaged and more active. 

Sounds like a good audience to me.

And if you’re concerned about taking the time to purchase on premium sites like newspaper websites, companies like Colorado Press Network or other state press association’s advertising services can pull that info for you at no upcharge, creating a one-stop shop. There are several PMPs buys as well on news sites.

I won’t lie, premium sites like newspaper media cost more than programmatic. But they’re worth more to your ROI and your brand. And don’t forgot programmatic has its own cost: unreliable numbers, ineffective results and potential damage to your brand.

In short, you get what you pay for. And don’t you want results – premium results?

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Jerry Raehal is the CEO of Colorado Press Network and the Colorado Press Association. He likes playing with his children, grilling food and pretends to enjoy working out. .