Programmatic buys are more efficient. Really?

by Nigel Hollis

Last week I referenced Richard Thaler, winner of the 2017 Nobel Prize in Economic Sciences for his ground-breaking work on behavioral economics. We now accept that the old economic models of rationality are wrong and it makes me wonder whether we should be questioning some more up-to-date assumptions.

One of the things I liked was that Thaler states he spent much of his college years asking his professors, “Really?” Good question. If something does not make intuitive sense to you chances are that there is something wrong. I was also taken by this statement made by Thaler in an interview from 2015 about why economists assumed people were rational decision makers,

“It was basically because economists weren’t smart enough to write down models of real behavior, that they started writing down models of highly rational behavior – and they kind of forgot about humans.”

You know where I am going with this, right? I cannot help feeling that the massive shift to programmatic ad buys and targeting involves a similar mindset. Maybe we do not suffer from a lack of smarts when it comes to applying the technology, but I believe that in the rush to target and buy more efficiently we are forgetting the innate messiness of being human.

For instance, whenever a buy is made, assumptions are about what the behavioral data says about the intent of the targeted individuals. A person is in a certain age group and has made a search and visited the brand’s web site. They must be thinking of buying the brand. Nope. They already own the brand; it is not working out for them and they want to check the sales information before making a complaint. Seeing another ad for the same brand is just going to piss them off.

Look, I get it. Advertising relies on probabilities and targeting like this may help to improve the probability of reaching the right person at the right time (I’ll come back to that idea in another post). However, add in the fact that much of the data used to fuel programmatic buys is inaccurate or out of date and, according to some, buyers are ill-trained in how the systems work. No wonder such a high proportion of programmatic buys seem to miss even the simplest of targets.

We know that when due time and attention is given to using the right data – both attitudinal and behavioral – programmatic buys can dramatically increase the productivity of digital advertising. But this reward is the payoff from upfront analysis and planning, it does not just happen because someone clicks a mouse. So the next time someone tells you that programmatic is more efficient you might want to ask, “Really?”

Of course, I suppose it all depends whether your definition of ‘efficient’ is more productive or just cheaper. What do you think?