Saturday, September 6th, 2014
BY MIKE KISSEBERTH
Digital advertising spend will hit nearly $140 billion this year. And as is typically the case with any industry growing rapidly, new innovations drive growth. In digital advertising, the rise of programmatic, in particular, has become a key innovation that continues to shape today's digital advertising-scape.
According to a recent study conducted by my company, Purch, where we surveyed high-level U.S. marketer and agency advertising decision makers spending $1 million or more on digital advertising, 78 percent confirmed their use of programmatic across campaigns. Yet, while programmatic has been widely embraced, views on its uses and benefits displayed by agencies, advertisers, and publishers are not necessarily at a consensus.
The importance of good metrics cannot be underscored enough when it comes understanding the effectiveness of a strategy and which of its underlying components do and do not work. But to what end do advertisers employ programmatic campaigns and how is their success measured?
According to our study, a vast majority of respondents (75 percent) say they measure their programmatic campaigns based on sales/conversion rates. This is sensible given the constant push for ROI. However, programmatic advertisers also included brand lift (51 percent) and reach (23 percent) among their top evaluation metrics, as well. Meaning that programmatic is being used and can be deployed to fulfill various advertising needs effectively.
When it comes to choosing a programmatic provider, advertisers are also split. While a majority of those surveyed have used agency trading desks (65 percent) and demand side platforms (61 percent) to purchase programmatic, the preferred programmatic providers are publishers (36 percent). They're followed by trading desks (23 percent), and DSPs (21 percent). This is obviously beneficial as advertisers can deal directly with suppliers, cutting out both the middle man as well as the uncertainty that comes with not knowing exactly where the ads you have purchased will actually be displayed.
The important criteria for choosing a premium programmatic (preferred or private auction deals negotiated with a publisher) partner is also viewed quite differently, with respondents citing audience insight and data (91 percent), ease of use (90 percent), credible metrics (87 percent), and transparency (87 percent) as some of the most important factors.
Our research also revealed that while agencies and marketers are both engaging more and more in premium programmatic sector, they are doing so for different reasons and benefits. For example, while agencies are more drawn to premium programmatic by the increased efficiencies involved with purchasing premium inventory (46 percent) and the removal of the "middle man" from the process (34 percent), marketers, on the other hand, cited less audience targeting waste (45 percent), and the reduction of advertising costs (38 percent) as the most attractive benefits of premium programmatic. However, although agencies and marketers did offer contrasting views on the most attractive outcomes of premium programmatic, a similar percentage of agency members and marketers surveyed cited more accurate audience targeting (28 percent versus 26 percent) as one of the most attractive premium programmatic benefits for them.
While growth has been astronomical, and the promise of premium programmatic is quite high, advertisers, agencies, and marketers alike are also cognizant of several challenges that still exist within the space. A lack of premium inventory (54 percent) and inadequate targeting to preferred editorial brands and audiences (37 percent) are among the biggest bumps in the road for premium programmatic. Our research also showed that a at least a quarter of advertisers are mindful and weary of a lack of human interaction (30 percent) and transparency (25 percent) that exists, meaning there is certainly room for growth (advertising fraud has become a huge buzz phrase, lately, exacerbating the transparency and lack of human interaction issues).
In the end, programmatic is exploding in adoption and spend. However, we have yet to reach maturity or complete consensus on optimal use cases and benefits. That will come with time, as the market continues to sign on. In the meantime, though, we have a good sense of the possible direction and can execute accordingly.
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