Brands Are Rethinking Their Programmatic Buying Strategies to Reduce Risk

MediaRadar study shows that one-third of advertisers cut their ad spend

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Some major household names in the digital advertising world have been reducing their programmatic buys in the name of brand safety, according to a new study released today by MediaRadar.

The ad sales intelligence company found that approximately one-third of digital advertisers reduced their programmatic ad spend from 2017 to 2018. EBay, for example, dropped their programmatic ad buy by 66 percent while Nestle lowered it by 57 percent. Walmart and Spotify each pulled back their buys by 52 percent, and Honda reduced theirs by 50 percent.

Though the MediaRadar study suggests that brands are fleeing the world of programmatic buys in response to those kinds of grisly situations, the truth is a bit more nuanced. Rather than eschewing programmatic buys entirely, Jason Kint, CEO of trade organization Digital Content Next said brands are switching gears from public ad exchanges to their more privatized counterparts where brand safety blunders are less likely to happen.

“Programmatic has been a bit of a brand safety risk for a number of advertisers,” said Todd Krizelman, MediaRadar’s CEO. “These kinds of big American brands are sensitive, and they’re moving their dollars.”

The study, which encompassed 10 separate brands including those listed above, tracked an $85 million decrease in programmatic spending between 2017–2018. MediaRadar declined to comment on the total dollar amounts spent, either through programmatic or direct buys, for each brand.

The dollars, according to Krizelman, are shifting toward direct buys where advertisers can have a tighter grip on where their ads end up. Some shifts were minimal. Spotify, for example, only increased their direct buys by 15 percent, while others like eBay, whose buys soared by 100 percent, were more dramatic.

When asked about the total dollars spent on programmatic buys and whether their dollars were actually being pulled in the name of brand safety, each of the brands involved in the study declined to comment.

“When talking about the larger ad-tech landscape, brand safety is not the sole reason brands shift their marketplace approach,” said Aleksandra Injac, the U.S. programmatic practice lead at Mindshare. “There are a number of other factors that come into play when a brand is deciding whether or not to put more spend into programmatic or not.”

The numbers found in MediaRadar’s data come on the heels of a news cycle that’s bursting at the seams with brand safety snafus. Last month, major brands such as Nestle, Disney and Epic Games, which is the owner of the breakout hit Fortnite announced that they’d be pulling their pre-roll ads from the streaming site after learning that their ads were appearing on children’s videos that served as a digital hub for pedophiles. This, in turn, led to a change in YouTube policy.

Meanwhile, a CNBC report from earlier this month found that a handful of companies have been shuttering their ad buys on Facebook and Instagram following the platforms’ most recent scandals surrounding data privacy.

Platforms like this are “truly unmanaged,” Kint said. “There’s really nobody you can call at Facebook to ask, ‘Why are my ads running in the same feed where opioids are being sold?'” he added.

These buys can happen a few different ways. For example, with programmatic direct, an algorithm facilitates a direct buy between the media buyer and publisher. Meanwhile, with private marketplaces, trades are still performed programmatically but higher-spending buyers are given preferred access, either to inventory or to a premium placement. Both of these examples still fall under the programmatic umbrella to some degree, but they’re a far cry from a truly unmanaged open marketplace.

Though working within these more elite tiers of the programmatic realm often comes with a higher price tag, high-profile brands are starting to realize that they can’t afford not to pay up. A report filed by eMarketer this past October predicted that more than half (51 percent) of all programmatic buys will take place in private marketplaces by 2020, a boost from the 46 percent of programmatic buys that are happening over those channels at present.

“Programmatic isn’t going anywhere, but brands are becoming more picky,” said Kint. “They’re choosing fewer vendors and only choosing partners that can guarantee safety.”

@swodinsky Shoshana Wodinsky is Adweek's platforms reporter, where she covers the financial and societal impacts of major social networks. She was previously a tech reporter for The Verge and NBC News.