Programmatic Advertising Failed to Meet Expectations

It dead-ended with fraud and security threats

Programmatic has yet to meet its full potential. Getty Images
Headshot of Erik Huberman

Over the past five years, programmatic advertising has become one of the most common buzzwords in our industry. Reams of articles, white papers, industry conference panels, et. al., have been devoted to positioning programmatic as the savior of digital advertising. A few years back, it was even dubbed the “Word of the Year” in some editorial quarters.

All the excitement, while not really warranted at the time, was totally predictable. While real-time bidding (RTB) and automation in the open ad exchanges were gaining traction in the late aughts into the 2010s, it was very primitive. When the algorithms and the “pipes” got quicker, smarter and more efficient, the industry gave it a name for everyone to rally around: programmatic. The theory and the promise was that programmatic would allow marketers to create scale of impressions and engagement across the long tail of the internet in an automated way that would be informed by data signals from all across the consumer ecosystem. The industry has essentially bought in. EMarketer estimates that almost four of every five U.S. digital display dollars will be purchased programmatically in 2017, totaling $32.56 billion.

The past year has shown that the programmatic universe sacrifices quality at the expense of quantity.

That’s essentially how it was supposed to work. But as we rounded into the end of 2017, unfortunately, reality in this case had not met the hype. When the programmatic rubber met the road, drivers discovered way too many detours, potholes and poorly lit back roads crawling with bandits and ne’er-do-wells of many stripes.  The programmatic open exchanges were discovered to be rife with all sorts of bad ad inventory issues. Threats include ad fraud, such as bots and domain spoofing, as well as brand safety issues (think your brand’s commercial next to a jihadi training video on some obscure website pretending to be The New York Times). The third annual Bot Baseline report said that the economic losses due to bot fraud are estimated to reach $6.5 billion in 2017 worldwide.

The past year has shown that the programmatic universe sacrifices quality at the expense of quantity. And marketers are fed up and no longer willing to put up with it.

Or at least that’s what they have loudly and publicly demanded. Industry leaders like Marc Pritchard of Procter & Gamble have taken a more vocal stance, relentlessly pounding the drum for better accountability and quality of their digital media buys. Yes, there are plenty of companies making a lot of money in the digital ad supply chain, who have been getting away with willfully ignoring these plagues of fraud and brand safety issues for years. It’s nice that the powerful people with the purse strings are calling them out.  While I respect the passion and commitment of the Marc Pritchards of the world, there is a larger point that often gets lost in the current clamor.

That point that nobody is really making is that, even if you can avoid bots or extremist sites, the long tail of the internet is teeming with boring, irrelevant and crappy content, which aren’t great platforms for consumer engagement. While well-known, established sites offer good content, programmatic display networks all too often serve up disruptive, annoying consumer experiences with annoying pop-ups, takeovers and autoplay videos with audio.

Right now, practically the only place where programmatic is effective is on Facebook. Because of the innate dynamics of the news feed and the inherent user engagement advantages, ads served up programmatically on social and search are the most effective.

Marketers should focus their efforts on a select group of curated, engaging platforms instead of wasting money by sprinkling budgets across the nether regions of the internet. Before you brand me Mr. Doom and Gloom, please know that I actually do believe in the promise of programmatic. I am very optimistic that artificial intelligence or machine learning will continue to be enhanced and refined. But right now, AI is just not that advanced. As renowned futurist Ray Kurzweil has been known to say, standard machine learning has the brain of a mouse. Which means that humans are still better to do things manually to drive ROI.

When AI does mature and advance, programmatic will flourish.

@ErikHuberman Erik Huberman is founder and CEO of Hawke Media.