Home / Insights / Can ad misplacement be a threat to the existence of programmatic buying?

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Can ad misplacement be a threat to the existence of programmatic buying?

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by Nirupama Balasubramanian , Senior Client Partner
13 July 2017

Abstract

Digital advertising gaining over traditional medium and creating newer platforms cannot be considered as a new trend in the advertising industry. Diversification has been happening in the advertising spend towards digital channels for quite some time. Advertisers have begun to see value in investing more in digital forums as against traditional channels; they are slowly shifting their budgets to register more returns for the dollar invested. However, advertiser’s safety has remained questionable while investing in these forums. Events in the recent past of brand’s advertisements seen alongside abusive and irrelevant content in YouTube have increased the doubts in the mind of the advertisers. While the advent of online publishers and real time bidding platforms has brought in efficiency, it has also created confusion in the minds of the advertisers.

This whitepaper will elaborate on how advertisers are pulling away their investments from some of the digital forums and how programmatic buying has played havoc in digital ad buying space. It will also discuss if the option of returning back to old ways of digital purchasing is feasible and how advertisers need to safeguard their brand image while still continuing to invest in digital forums.

Introduction – advertising spend split

Spend on digital advertising has been on the rise for a long time now. Internet advertising has risen at the expense of print and has grown from 6 percent of the total global ad spend in 2005 to 30 percent in 2015. Percentage of contribution of digital medium towards total global ad spend is expected to increase from 29.9 percent in 2015 to 38.6 percent in 2018.

Spend on display (which is inclusive of traditional display, online video, social media) within internet sub- category is the fastest growing segment with an annual growth forecast of 15 percent until 2018. The growth rate in this segment is attributed to transition of buyers from traditional modes of digital buying to programmatic buying. This allows agencies to target audiences more efficiently and effectively. In recent years, a sudden decline is witnessed in the traditional display segment due to upsurge in mobile advertising. A decline of 1.8 percent has been forecasted in this space between 2015 and 2018. On the other hand, growth of online video and social media has been on the rise and expected to grow at 20 percent and 27 percent respectively between 2015 and 2018.

The main reasons for adoption of online video and social media are increasing availability of high quality content, better display, faster connections and increasing usage of social media websites through mobile phones.

Digital advertising supply scenario

The impetus to invest in digital forums is thoroughly supported by companies such as Google, Facebook, Alibaba, and Baidu who own the majority of shares of digital advertising spend in the market.

Though the targeting and revenue models are very different between Google and Facebook, they have been competing very closely for the advertising spends of different brands across the globe. Facebook primarily targets individual users unlike Google which allows advertisers to request specific themes. Cumulatively, they cater to about 50 percent of the global digital ad spend. Most of the top Fortune 500 companies have high stakes in each of these companies and investment continues to grow.

Digital media channels have become the main medium of advertising for many brands and they are no longer seen as a supplement to traditional advertising medium. Accordingly, the dependency of these brands on big media owners has increased.

Due to this, even a slight disruption in the delivery of services is not tolerated and leads to pulling out of advertisements.

Google facing the heat

Increasing cost of ad verification and the cumbersome process of having whitelists have always made brand safety a questionable factor in digital advertising. Recent mishaps faced by certain UK advertisers -- having their advertisements appear alongside extremist content on Google’s YouTube -- has raised serious doubts in the minds of the advertisers in terms of brand safety. As a result, many of the advertisers such as PepsiCo, Walmart, Starbucks, AT&T, and Verizon suspended their advertising on YouTube. More than 250 brands have stopped their campaigns appearing in YouTube and some have also gone to the extent of discontinuing the services of Google’s display ad platform that serves ads to third party websites.

Google has issued an apology and ensured to increase brand safety by taking a tougher stance on hateful, offensive content by changing the default settings for ad campaigns and providing marketers the option to exclude certain content or websites from their campaign. Google’s video ad impressions, served through the programmatic platform, have doubled in the last one year. Since the platform brings in the majority of digital revenue, Google has plans of employing more people to verify the process and rectify mishaps.

Despite Google’s reassurances, many advertisers are aware of the challenges in scrutinizing the content which gets streamed across thousands of websites without manual intervention. About 400 minutes of video content is added every minute on YouTube. It would be a daunting task even for a big conglomerate such as Google to investigate all the streamed video content.

Programmatic buying and ad misplacement:

Programmatic buying has been on the advertising industry scene for close to 3 years. The concept of buying ad inventory through a technology-rich tool that automates buying, placement and also optimizes advertising to create profitable advertising campaigns was a dream come true for many advertisers. However, the flip side of programmatic buying was fraud, misplacement of ads, etc. Limited human intervention in the programmatic buying process has made tracking and elimination of bot fraud difficult.

Though advertisers understand that purchasing inventory through programmatic tool brings in efficiency, they are now aware of the fraudulent practices. Advertiser’s objective of purchasing inventory using this tool has moved away from just buying the right target group to ensuring their advertisements appear in safe and relevant environment.

The recent mishaps along with inherent issues in programmatic buying have raised questions in the minds of advertisers with regards to buying inventory through automated systems. Many advertisers may contemplate going back to traditional modes of digital media buying. The bigger question now is whether investing in programmatic tool would yield the right benefits and help in showing the brand in a good light.

While many companies partnered with big data companies such as Google and Facebook to purchase inventory efficiently, there were other companies which created in-house teams to house the programmatic tool. These companies are now in dire need to justify the cost of investment made.

Turning the wheel back – is going back to traditional ways of digital ad buying an option?

Traditional modes of buying digital advertisements means going through hundreds of websites, getting in touch with many publishers, negotiating and finally purchasing inventory which may or may not be as targeted as the ones purchased against programmatic tool. Purchasing inventory means an algorithm looks across an entire network’s ad inventory and locks the most cost-effective slot and helps the advertisement reach a wider audience. The same kind of coverage cannot be achieved through manual modes of inventory purchase. With increasing competition among brands, the need to deliver more has become imperative. So ignoring a medium which provides maximum coverage at lesser cost should not be completely ignored for a few glitches. There are ways in which advertisers can contribute to reduce bot fraud activities in programmatic buying.

Blacklists and negative words:

Advertisers must specifically mention the category of sites and define unacceptable content. Companies such as Google have lists of categories which the advertiser can choose from and can target audiences more precisely. Blacklisting poorly performing sites will help programmatic algorithm to optimize the performance and also help the tool to learn the pattern in terms of opportunities which can be converted, the specific time of the day, geography, etc.

Advertisers can specify negative keywords that need to be avoided and should not appear alongside the advertisement.

Establishing the right audience:

Advertisers should concentrate on setting clear objectives in terms of target audience. The goal should not tread towards maximum impressions; rather the objective should be reaching the right people in a safe environment.

Placement of ads:

It is very important for advertisers to keep track of the places where ads are being run and the URLs of the same need to be held as a record. Third party vendors must also be pushed to verify the URLs before placing the ads.

Verifying third party data:

Third party data is widely used by advertisers to understand the dynamics of audience such as demography and age factors. The data is usually used in conjunction with first party data to segment consumers and target accordingly. It is very imperative that the data provided by third party vendors is authentic and real time. Advertisers need to validate the methodology used by the agencies to collect the information and ensure its authenticity.

IAB Quality Assurance guidelines:

Given the fragmented supply market scenario and intense competition, all agencies irrespective of their ability to provide programmatic services will offer these services. It is the responsibility of the buyer to identify companies that provide reliable and effective solutions on the basis of Quality Assurance Guidelines set by IAB. There are usually companies which are self- certified and those certified by third party agencies.

The latter companies usually have sophisticated tools, which offer effective filtering options.

Conclusion:

Avoiding programmatic buying due to ad misplacement is not an option for advertisers with high level of digital media spend. When optimization is the key to achieve procurement goals, companies have to find a way to work with digital companies to increase effectiveness of their advertisements with minimal negative impact.

Establishing strong relationship with agencies has historically helped advertisers to improve brand image and receive better gains. Interpersonal relationship is often seen as the tie breaker when a company goes for formal supplier selection process or during renewal of accounts. Clear communication on the requirements and maintaining a cordial relationship will go a long way in securing maximum gains.

It is highly unlikely for the Fortune 500 companies to give up on the usage of programmatic system and going back to traditional ways of buying in this digital era. While the stakes are high for these companies, the value and efficiency that automated buying can bring cannot be dismissed. Media owners such as Google will collectively learn from the pitfalls in the industry, find solutions, and continue to be market leaders making the digital explosion bigger and better than ever.

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