July 22, 2017

Programmatic has been the trend over the last five years or so, but is it possible that  we may see a backlash against it in the next two years?

Programmatic is certainly not going away, but I do think marketers are starting to smell it for what it really is.  It’s a cost-saving strategy, which attempts to create the same ROI for a fraction of the cost when compared to more “traditional” forms of advertising. 

Most marketers evaluate their programmatic spend on a simple cost-benefit analysis. The outcome has to be either as good as, or better than it was previously.  Most of the time the cost goes down because you pay fewer dollars to the agency to execute, plus your CPM decreases along with your control of the inventory.  

The return simply needs to be comparable to justify the switch to programmatic, and I would hypothesize that to be the case the majority of the time.  When you factor data into the equation, you may get some incremental out-of-pocket costs, but the efficiency of not exposing to the wrong audience almost always has a positive counter-effect.  plus you get upside of performance due to the customization of the message.

All in all, you get a higher ROI comparatively due to efficiency vs. the nominally higher out of pocket (which was likely offset by a reduction in actual media costs).  .  Everybody wins!

Of course, not everybody wins.    

First off, programmatic has killed diversity of content in the marketplace, with the oligopoly of media dollars being spent on a short list of players.  Google and Facebook win at the expense of many, many other open Web publishers.  

That might not be a bad thing if we look back into the past and see the gluttony of poorly created publishers and networks that had a foothold in the advertising business for years. Still,  I think everyone can agree that diversity of choice is healthy.  There needs to be other options to force the leaders to continue to innovate and grow.

Secondly, programmatic has stifled better ad formats from being developed.  With dollars focused on Google and Facebook, the innovations in formats are focused there as well.  The secondary players are trying to achieve scale, and format innovations run counter to scale.

The rise of programmatic will potentially kill native advertising over the next couple of years, unless native advertising can achieve scale (which seems counterintuitive by its very nature).  

All marketers want control — which I find ironic, because programmatic actually takes control away from marketers in more cases than it provides it.  Yes, marketers can control their budget more, and they can optimize faster.  Programmatic provides clarity for how money is getting spent, but not as much where and when. You have to increase your attention to manage those elements in programmatic, while the old way of doing business actually gave marketers more ability to manage the where and when by locking it all in through upfront deals.  

I’m curious how many marketers fully understand the trade-offs of programmatic versus the apparent ROI.  At what point do the message and its longer-term impact on the development of the brand start to weigh more heavily again, potentially overshadowing the short-term ROI?

I started out by asking, “Is programmatic ruining advertising?”  Of course my answer is “no,” but I do think we shouldn’t focus solely on the efficiency metrics at the detriment of the longer term impact of a brand and its interaction with the mind of the consumer.  

Programmatic is, to me, a short-term answer to advertising.  It creates efficiency, but not long-term value.  That value comes from finding the balance of short- and longer-term objectives.  

by Cory Treffiletti , Featured Contributor
CORY TREFFILETTI, vice president of marketing, Oracle Data Cloud
Courtesy of mediapost



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