Programmatic ad-buying is surging. According to a new report by eMarketer, this year, four out of every five digital display dollars in the U.S. will be transacted programmatically. But the shift in ad sales has come at a cost. With programmatic transactions exploding, advertiser scrutiny of those investments has also—justifiably—grown in tandem. Unfortunately, their findings have not been positive, with buyers identifying a series of sizable and growing problems within the category. Here are three of the most common.
Automated media buys streamline ad operations by removing human participation. This has greatly simplified transactions for buyers, while also reducing costs. But is the trade-off inventory quality? In a recent investigation of Google’s YouTube, it was revealed that major advertisers had ads programmatically placed alongside offensive content. The Guardian, for instance, uncovered pre-roll ads for a pharmaceutical company running against YouTube clips claiming “feminism is cancer.”
In response, 5% of YouTube’s top advertisers discontinued campaigns there last month. Even with brand-safety mechanisms in place to black/whitelist specific types of content in programmatic platforms, automated ad buys suffer from a lack of vigilance more common to direct deals with premium publishers. And in the pharma space, specifically, brand safety is critical because inappropriate or off-brand content adjacencies can violate FDA regulations.
Increasingly, advertisers are realizing that programmatic auctions are rarely “well-lit,” with little to no transparency provided by vendors and agency partners. Simply too many players are out there, with zero common standards among them. For example, guidance concerning fees and prices (CPMs and fees are often combined, confusingly), the bidding process (buyers frequently and unknowingly bid against themselves, causing unintentional inflation), inventory quality, and attribution is difficult to come by.
This is partly why the world’s biggest advertiser, Procter & Gamble, announced in January that it would review all agency contracts this year. P&G decried a “murky” online advertising ecosystem. The lack of transparency, driven by programmatic, is preventing advertisers from understanding the true value of the media they buy while also weakening opportunities for campaign optimization.
According to the IAB, ad fraud costs the U.S. advertising industry more than $8 billion annually. Now, bot-based click fraud has always been a problem; however, programmatic has aggravated the issue like never before. According to the ANA, programmatic ad buys see nearly 75% more bot activity than direct buys. This is because programmatic ad-buying environments, given the number of intermediaries participating in auctions, do not necessarily differentiate bot-based traffic and real, human traffic—at least not effectively. The complexity limits fraud detection, costing advertisers billions and diluting publisher inventory. For comparison, nearly 10% of all digital ads delivered programmatically are fraudulent versus just 2% of digital ads in direct deals with publishers.