Hate, Love, Hate: Publishers and Advertisers May Soon Sour on Programmatic

According to a recent study by Operative, publishers are finding ad tech so confusing and riddled with pitfalls that many are becoming just as disenchanted with programmatic ad buying as advertisers.

That doesn’t mean that advertisers and publishers aren’t still pouring into the ecosystem; automated digital ad sales have risen steadily for years, but the increased spend and inventory shifts appear to be out of necessity rather than any widespread belief that ad tech is a win-win system.

The Operative survey of more than 350 publishers and advertisers revealed that publishers are earning less than 10% of their income through automated buying. Hindered by a lack of operational resources to successfully manage a shift towards ad tech while continuing to support direct sales growth, many publishers remain ill-at-ease with moving full-on towards programmatic until the benefits and risks are clear.

Some of the key sticking points mentioned were an absence of transparency in the “tech” side of ad tech, and some publishers’ lack of in-depth knowledge of how programmatic translates from high concept to day-to-day operations and ROI benchmarks.

According to a study by Optimal in cooperation with Wells Fargo, publishers are deeply concerned with the difficulty of managing attribution, as well as the rise of ad blockers, the use of which is predicted to cost publishers an estimated $12.5 billion in lost revenue globally in 2017.

Publishers’ mounting uneasiness was perhaps inspired by advertisers’ overall mistrust of ad tech as an industry. A recent study by Signal and eConsultancy, reported by The Harvard Business Review, showed that only 12%, from a pool of 350 senior marketing executives, felt “comfortable” with the ad buying ecosystem as it is.

According to another survey of 59 brand advertisers from the World Federation of Advertisers (WFA)– which represents more than $70 billion in ad spend–almost 90% of respondents were reevaluating their media buying budgets because of programmatic’s enduring client-facing problems. Despite a significant rise in brands venturing into programmatic during the past three years, issues such as rampant ad fraud, the difficulty of identifying excessive transaction fees, and the complexity of audience measurement were cited as significant concerns.

While programmatic buys are predicted to account for 73% of digital ad spend this year, approximately 60% of leading ad agency buyers described themselves as “fearful” of the ecosystem’s haphazard range of audience quality, up from 48% in 2015.

Recently, leading industry standards organizations such as The Internet Advertising Bureau (IAB) have begun offering educational programming and analytics tools– such as a free CPM calculator released in 2016– which were designed to make the ad buying process more transparent for advertisers.

“There is a lack of communication between buyers and sellers about the ad technologies being used by each side, as well as the fees that are removed in the bidding process before publishers’ net CPMs are realized,” the accompanying IAB report read. “This creates a discrepancy between buy and sell side inventory valuations, which has the potential to erode trust in the marketplace and reduce inventory liquidity.”

 

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