16 April 2014 - 11:13am | by Improve Digital

Common myths associated with programmatic advertising

Sue Hunt, UK MD, Improve Digital Sue Hunt, UK MD, Improve Digital

Programmatic has long had the association of complexity, risk, and confusion, but as it continues to move up the industry agenda, growing in stature and revenue, media businesses know they need a strategy to embrace the shift in trading model. Sue Hunt, UK MD at Improve Digital tackles some common myths associated with the space, and how they can be addressed.

Programmatic will cannibalise my sales
It is still a common concern amongst publishers that embracing programmatic trading risks revenue by opening up back door access for agencies to buy the same space, at a lower price. This may be true if programmatic is only viewed in the context of “remnant” inventory. Unsold, unmanaged advertising space that rarely makes it onto a direct deal.

The industry has moved on. With the abundance of data available, and the sophistication of how that audience data can be applied to buys, every impression has a value. Making that content and audience available through programmatic channels has been proven to increase fill rates, yields and overall revenue. Performance, and increasingly brand budgets are being diverted to trading desks, so without a programmatic solution in place, these budgets will simply be spent elsewhere. They are rarely made available to direct buys due to the centrality of data and efficiency of technology.

At Improve Digital, our philosophy is to give the publisher safeguards to mitigate that perceived risk. Floor price controls can be managed to every level of granularity, with or without private marketplaces, ensuring audience and environment are traded at a fair price, complimenting not compromising direct channels.

I can reduce/streamline my sales team
Whilst technology can automate some tasks (and frankly mundane, manual tasks) the human element will always be critical. Bidding techniques and yield management need analysts and highly skilled optimisers. Bespoke sponsorship and integration deals need sales and execution expertise. Platforms need to be understood, translated and utilised according to commercial strategy and operational efficiency. Media has long been a relationship driven industry, where success comes from building a partnership, built on trust, service and commitment.

Transparency will expose my business to competitive risk
As we strive to bring brand advertisers to digital, let alone to programmatic, transparency becomes a necessity rather than a choice.

As consumers, we would rarely buy a product without knowledge of and trust in the retailer, and are willing to pay a higher price for that trust and quality. Advertising works to a similar expectation. Marketers want the assurance that their brand is appearing in an appropriate environment, and won’t risk spend without that guarantee. Demonstrating quality content and audience therefore can increase opportunity rather than present risk.

As we strive to engage and educate direct and premium publisher and advertiser brands, willingness to offer full transparency only contributes to the growth and general health of the programmatic trading space.

Doing nothing is low risk
With close to 25% of digital spend now flowing into programmatic, the market has already developed too quickly to sit on the sidelines and wait to see what happens.

Trading desks are operating at scale, diverting dollars from traditional planner/buyer routes, and winning incremental budgets. Research Improve Digital commissioned in 2013 still pointed to a supply shortfall across most sectors, and the buyer’s willingness to engage and partner with new suppliers of sought after audiences and content.

If current projections prove to be correct, and 2015 sees 40-50% of digital spend flowing through programmatic, then there is still opportunity ahead. Our role is to work with you to define that strategy, test, iterate but ultimately ensure publishers are positioned to succeed.

Using more than one SSP will increase my revenue
If we assume most SSPs and exchanges have access to similar demand funnels, and it is their proprietary algorithms, controls and service that drive performance, then using multiple platforms can present more risk than opportunity. Competition is diluted if inventory is manually allocated across platforms, and therefore not optimised to the highest bidder. Some impressions will always naturally remain unsold, therefore adding opportunity cost within each platform.

Technology will solve all problems
As revenue flowing through programmatic advertising continues to increase, so too do the requirements for technology, fulfilling needs across PC/video/mobile, brand safety, ad viewability, data management, to name a few.

This proliferation of players is great if fulfilling a defined need and commercial strategy. However, we do risk the negative impact of fragmenting the sector if technology is seen as a core driver of growth. Too much choice can cause confusion, potentially restricting the quality of inventory publishers make available and the spend marketers allocate. Assuming technology drives commercial strategy can also be a costly mistake, increasing pressure on yield, beyond market tolerance.

The key to successful technology is understanding core business needs and objectives, and selecting the technology that meets that need, rather than creating it.

Sue Hunt
UK MD
Improve Digital

Email: s.hunt@improvedigital.com
Web: www.improvedigital.com
Twitter: @ImproveDigital

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