Programmatic Buying, Explained

A lot's been said about the ‘programmatic revolution’ of ad buying and it’s gradual assimilation into the TV advertising market. Yet what is becoming clear – more so than how the system itself works, in fact – is that it’s a method that remains full of flaws.

What Is Programmatic Buying?

Programmatic buying is essentially the automated purchasing of ad space using software. By utilising machines to buy advertising inventory – often through a process called Real Time Bidding, which involves advertisers bidding against other advertisers for inventory supplied by publishers and broadcasters – programmatic buying removes several tenets of the traditional media buying process, all of which rely upon human involvement. Such components of the process include negotiation, market analysis and campaign monitoring.

Targeted adverts reliant on ‘big data’ – huge databases of information often collated by third party sources to identify patterns and trends in human behavior – are then delivered to purchased ad space. Theoretically, programmatic buying enables advertisers to target customers by browsing habits, geographical location and age, but theory does not always translate into sound practice.

The Problems With Programmatic Buying

Whilst programmatic buying has received a lot of attention and been subject to much excitement, the actual percentage of businesses that have migrated to the system has been low. To be more exact, a recent report from the WFA has found that 70% still prefer the traditional method of buying advertising space. There are reasons for this.

You don’t need to trawl the outer reaches of Google search to learn about the issues brands running programmatic buying campaigns have been having with placement. Some of the horror stories that have emerged range from businesses whose ad placements appear alongside repugnant beheading videos, to unfortunate coincidences that result in the display ad for an alcohol brand appearing beside a news story about the damaging binge drinking culture in Britain. Instances where a brand’s image has suffered terribly due to poor targeting are there for all to see.

Indeed, over 50% of businesses that have utilised programmatic buying claim to be unsatisfied with the way their data is used, stored and gathered, with most citing a lack of transparency as chief amongst their disillusionment. The absence of clarity is a huge problem for businesses that demand accountability from their marketing activity. Ultimately, machines and algorithms do not care whether a company reaches its Cost Per Lead target.

With programmatic buying beginning to feature more prominently in the TV advertising sphere – most notably across the Atlantic – fresh concerns are arising over whether businesses receive value for money when procuring inventory on an automated basis. This is because programmatic buying uses remnant inventory – or in other words, leftover advertising space than hasn’t already been snapped up by other advertisers – which suggests that, whilst the whole notion of programmatic buying is built upon targeting capabilities, the quality of both the placement and any subsequent leads is far from guaranteed. From both a direct response and – more explicitly – a branding point of view, brands placing what is often blind faith in the delivery of their ad are taking a big risk.

Fixing A Model That Isn’t Broken.

Experience in the market and knowledge of the planning process in turn add value by boosting the efficiency of a TV advertising campaign. Independent agencies with a focus on targeted strategies invest time and resources into identifying precisely which channels, day-parts, months, weekdays and regions of the country are best suited for reaching distinct target audiences, and what’s more, specially-developed analysis software facilitates the monitoring of campaign performance on a minute-by-minute basis – meaning instant changes can be administered to areas of underperformance. The result? Maximised returns at lower spends.

This approach comes with the added bonus of spawning trusted working relationships and long-term associations. It’s this focus on the long-term – a uniquely human quality – that ultimately delivers the profits businesses require from TV advertising. According to Thinkbox’s Payback study, within two years of concerted activity, the average TV advertiser generates a 140% profit increase through TV.

A Market Already Big On Data.

‘Big data’ is another string you could be forgiven for thinking is unique to programmatic buying’s bow. Read any article on this and you would be led to believe that this is an unprecedented development that promises to explode the TV advertising market. This isn’t true. In fact, agencies have been building targeted campaigns based on the foundations of audience data for a number of years.

Smaller media buying agencies already operate a truly data-driven service molded to get the most out of client investment. Without access to such information, delivery of optimised, cost-efficient strategies would not be possible.

Conclusion

Programmatic buying is clearly a technology that offers benefits to certain types of businesses with certain objectives. It is also clear that this model will become more refined with time, with ComScore’s burgeoning ‘trust Profiles’ metric expected to improve accountability in the long run. Yet, on the other hand, the TV advertising industry is not on the cusp of a complete revolution at the hands of programmatic; there is room for both approaches, as Sky Adsmart’s continual development demonstrates.

The TV advertising market, which according to new research from Warc is poised to break the £5billion mark in ad spend for the first time after a sixth consecutive year of growth, remains a formidable ally to businesses pursuing sustainable growth – only, over the last decade, it has become an ally for any business, regardless of size and budget. So, perhaps it’s worth taking a moment to appreciate a market that, with or without programmatic buying, has evolved into a platform so finely attuned to serve the objectives of Britain’s vital SMEs.