The programmatic advertising ecosystem is experiencing the kind of challenges associated with any other maturing technology or market. Increased privacy standards due to GDPR, CCPA, combined with changes in third-party cookie tracking policies have all raised new questions over programmatic advertising. These kinds of challenges appear as technology develops and grows into its own world, some aspects of new technology seem justified and effective in early development and market growth but over the long-term cause negative effects to some market participants and the market then evolves to correct this.
While privacy and regulation are issues that will continue to affect programmatic advertisers in 2020, alternatives will be found and the market will mature. A much more troublesome issue that we are seeing the market is that brands and advertisers are uncertain about the effectiveness of programmatic media buying. There is a growing feeling in the market that programmatic advertising promises to save publishers and advertisers hours across their programmatic processes, but without the right knowledge and support systems to avoid unnecessary complications and reduce repetitive manual efforts, programmatic advertising can verge on being more of a burden than a blessing.
Stefan Ropte, Product Managing Director with ADvendio, has almost 20 years of experience of working in IT and project management. With his key focus for ADvendio being product development, Stefan has always kept a keen eye on innovation, taking a future-focused view on new technological advancements applicable to the realm of media advertising. We spoke with Stefan to discuss his thoughts on the challenges associated with programmatic advertising and his views on how publishers and advertisers can overcome these challenges in order to drive efficiency.
Can you give us a brief description of programmatic advertising for those who may be unfamiliar?
Programmatic advertising is essentially a means of buying & selling digital media via a machine or computer interface, mainly API connections. Put simply, programmatic advertising is the trade of media inventory without a human interface.
What challenges are publishers and advertisers currently facing in setting up programmatic advertising channels?
With such a variety of platforms to manage, problems arise regarding driving efficiency due to three key issues: Data Management, return on investment (ROI) optimization of multiple exchanges and unified reporting across all these data points:
Firstly, the vast amounts of data generated can be mind-boggling if not managed correctly. With more than one ad exchange to manage, big data capabilities are necessary in order to have any chance of extracting actionable insight from this sea of disconnected data points.
The pressure to optimize revenue across multiple exchanges
Publishers and advertisers are tasked with optimizing the effectiveness of their ad inventory. With programmatic, this, unfortunately, means that they feel pressured to leverage multiple Supply-side platforms (SSP) or Demand-side Platforms (DSP) for buying & selling advertising inventory effectively. This puts pressure on ad operations to upskill team members on each individual platform to ensure the smooth operation of these separate systems.
Multiple exchanges mean multiple systems capturing similar transactional data. Achieving a clear overview of this information across multiple systems is either not possible or requires enormous amounts of manual effort, with many still employing outdated reporting with Excel spreadsheets. This is not even taking into account the need to normalize and enrich this data to really make it useful for identifying any potential optimizations or trends in processes. Automating this data collection makes management and analysis available in real-time and doesn’t disrupt other business activities through hours of manual management.
What is currently limiting the effectiveness of programmatic advertising?
The problem with setting up any programmatic advertising process is that it requires a completely different skillset from direct or linear advertising activities. This creates a challenge for publishers and advertisers in training team members to manage programmatic campaigns. Campaign Managers require much more technical skills, which in turn are harder to find and more costly.
Of course, I have already mentioned that having processes spread across multiple systems rather than keeping all in one is a big factor for effectiveness, if all advertising processes could be managed within one system this would further increase efficiency across the board.
How do you expect this to change in the future?
As with any emerging technology you would expect the market to mature and become more efficient over time as knowledge disperses across the industry. Take the fintech industry for example. At one time you went to a bank that managed all your needs from deposits and withdrawals to mortgages. Now, customers manage their own banking via their online portal/mobile app. The knowledge has left the walls of the bank and has been dispersed to the public. The same will happen with programmatic as the technology and market evolve and that knowledge spreads.
What tips would you offer publishers, advertisers, and agencies who are trying to improve the efficiency of their programmatic activities?
The four most important areas to consider for effective programmatic advertising processes include sourcing experienced staff, the breakdown of organizational silos, identifying ready-made solutions and leveraging automation.
Sourcing Experienced Staff
I would recommend that any company setting up a programmatic advertising process for the first time should plan and research heavily before implementing any changes. Sourcing experienced staff who have a clear understanding of the differences between programmatic and direct IO advertising will help to avoid common and often costly mistakes.
Breaking down organizational silos
While understanding the differences between traditional linear & digital activities, breaking down the divisions between the two functions is also crucial. Bringing together direct & programmatic processes and data with holistic and seamlessly integrated technologies can help both functions to perform optimally.
Identifying ready-made solutions
I would also highly recommend that time is taken to research potential out-of-the-box solutions that could be used to reduce the time taken to get started and leaves time to focus on the core of their business: buying & selling advertising inventory, not IT systems and development.
One of the most important factors to consider is automation. While you can have all of the systems and processes you require, if this is dependent on manual efforts, activities will always feel strained and restricted. The key to driving efficiency is the automation of transactional data from integrated exchanges for reporting and analytics activities, as well as targeted inventory and campaign management.
What benefits can campaign management automation provide to publishers, advertisers and agencies?
Leveraging automated syncing of transactional data from integrated servers & exchanges can provide many avenues for effective campaign optimization. First, the obvious benefits come in having that extra time to analyze real-time reports and dashboards. With this level of insight at your fingertips, it can help maximize inventory revenue or provide the best inventory slots to clients by highlighting trends in the data over time.
This data-driven approach will also allow for a greater understanding of your target audience, their purchasing habits, price points, and interests. All of this information can be then leveraged to optimize future campaigns.
As campaign management becomes more automated, it is then highly scalable. Removing the need to invest heavily in hiring large volumes of staff. With just a small number of skilled staff, you can effectively manage all needs, by leveraging smart automaton. With extra time saved on repetitive processes less experienced campaign managers are afforded more time to upskill, to ensure the prolonged sustainability of teams.
How do you see widespread automation affecting the advertising industry?
As I mentioned previously I believe it is only a matter of time and natural innovation before automation is an integral part of all programmatic activities. This shift will affect workforces, campaign budgets, and campaign results, all in a positive way to make the market more efficient. I believe this will also lead to a dramatic reduction in the ad tech fees associated with ad exchanges in today’s market due to the consolidation and efficiency of the value-added chain.
Programmatic advertising is a technology in transition. With many challenges facing the market today that can be difficult to manage in the short-term and this may turn away many aspiring advertisers from getting involved. In the long-term, programmatic advertising ticks many boxes for advertisers and will promote a more efficient and cost-effective market overall.
For advertisers and publishers to make the most of their programmatic activities, effectively bridging the knowledge gap and ensuring correct systems and processes are in place make up the priority factors to consider and address. Automation should play a large part in ensuring the effectiveness of your programmatic processes. Without streamlining the data-intensive activities involved in best-practice approaches, you may get bogged down in the sea of data that needs to be managed.
Programmatic advertising should be seen as a complement to traditional linear activities, combining these activities with complementary processes and systems will save huge amounts of manual effort. This ensures that analyzing and optimizing advertising inventory transactions becomes your area of focus rather than manual entry and handling of data.