written by: Fong Tsz Ching, Fong Fong

Advertisers are spending a lot on programmatic digital display advertisements in recent years. It is expected that the spending will increase from USD$17.5 billion in 2015 to USD$45.94 billion in 2019 [1].

Programmatic advertising helps automate the decision-making process of media buying by targeting specific audiences and demographics [2]. These ads are placed with artificial intelligence and real time bidding. Examples are the ads appear on YouTube and Facebook. However, programmatic advertising is not as flawless as expected.

The issue of brand safety

Source: https://integralads.com/capabilities/brand-safety/

Research findings from Integral Ad Science shows that 23% of ads maybe placed next to violent content; 29% of ads are risked placing next to adult content [3]. Ad misplacement affects brand image with the loosely audited nature of programmatic advertising. While targeting specific audience, media advertisers are not doing enough to filter unwanted web destinations.

Outbreak of YouTube ad crisis
In the first half year of 2017, YouTube faced a monumental advertising crisis. The Times of London published an investigative report in February, reported that the brand ads inadvertently appeared on extremist videos [4].

Source: https://www.thetimes.co.uk/article/big-brands-fund-terror-knnxfgb98

Following the report, over 250 brands suspended their campaigns from YouTube, including big brands like HSBC, L’Oréal and P&G. The response from Google’s European head Matt Brittin revealed the fundamental problem of programmatic advertising. He suggests that there are countless videos uploading to YouTube every minute and thousands of websites adding to Google AdSense network each day, therefore it is difficult to check every content [5]. It shows that the advertising platform is not capable of tracking where these programmatic ads go.

The problem of reach and viewership
Ad misplacement is not the only defect of programmatic advertising, adding to the pile is the actual viewership. According to research by Alphabet, the mother company of Google, 52% of its ads are never seen by humans [6]. A study from Infectious Media also shows that 54% of all digital ads aren’t seen by anyone [7] at all. Hence, half of programmatic ads cannot reach any potential customers. It leads to the intriguing question of whether half of the programmatic ads spending are wasted.

Questions waited to be answered
It is reported that 80% of digital display ad spending in the US goes to programmatic advertising [8]. Marketers are questioning: Whether it is worth spending so much money on programmatic advertising, or even digital advertising? How could the issue of ad misplacement be tackled to warrant brand safety and viewership? Has the power of programmatic ads been over-rated? P&G has withdrawn ads from YouTube and cut a total of USD$140 million marketing spending in the second quarter of 2017, and still maintaining an organic sales increase of 2%. Its rival, Unilever has also reduced digital marketing spending in the same quarter. However, it has achieved a global organic sales increase of 3%.

Admittedly, there are a lot more dimensions to consider for any conclusive remarks to the relationship between programmatic advertising and sales. However, it is surely a time of reflection for advertisers to re-examine the truth about programmatic advertising and digital marketing; and rethink the role of a tool without human touch in brand promotion.

 

[1] http://www.adweek.com/tv-video/programmatic-digital-display-ads-now-account-for-nearly-80-of-us-display-spending/

[2] https://marketingland.com/library/display-advertising-news/display-advertising-programmatic-media-buying

[3] https://integralads.com/capabilities/brand-safety/

[4] https://searchbonus.eu/times-big-brands-fund-terror-through-online-adverts/

[5] http://www.businessinsider.com/why-advertisers-are-pulling-spend-from-youtube-2017-3

[6] https://www.theregister.co.uk/2017/03/21/google_to_advertisers_help_us_build_a_better_swamp/

[7] http://www.infectiousmedia.com/viewability-infographic-reveals-54-digital-advertising-isnt-seen/

[8] http://www.adweek.com/tv-video/programmatic-digital-display-ads-now-account-for-nearly-80-of-us-display-spending/