Programmatic advertising is expected to achieve record growth in 2018. However, the growth of programmatic has not meant that traditional direct ad buys are no longer relevant.
While it may have initially seemed as if the adoption of programmatic would lead to their demise, insertion orders (IO) have survived. In fact, it looks as though they’ll be plenty of room for the use of IO even as the programmatic market matures.
Here is why direct advertising remains popular even as programmatic grows.
Automation Is How Programmatic Excels, But Misconceptions
Programmatic makes use of technology that automates media buying. It is designed to reduce human error so that advertising platforms can have their staff focus on more productive, non-repetitive tasks.
Automated technology also improves the entire campaign process from inception to execution, giving advertisers the opportunity to gather and analyse data from their campaigns in real-time.
As a result, advertisers’ campaign optimization efforts are far more effective.
Programmatic has also become known for its enhanced targeting capabilities that allow advertisers to reach users across a myriad of targeting methods, including audience, behaviours, context, intent, and geolocation.
As more publishers sell premium advertising, the prices for programmatic inventory also declines. This makes programmatic an increasingly scalable way of purchasing inventory.
While all of these benefits sound extremely enticing, the fact is that there are simply no set it and forget it solutions in advertising. Programmatic on its surface seems to offer just that.
However, with programmatic comes some significant concerns.
Programmatic Fragmentation Creates Unnecessary Hurdles
One major hindrance to the growth of programmatic is that the programmatic market is still
Programmatic requires multiple platforms to execute budgets, which causes advertisers to in turn lose out on both performance and efficiency. De-duplication of cookies creates yet another problem, making tracking customer interactions exceptionally complex.
A recent study of EMEA advertisers found that over 10% of both buyers and sellers need teams of at least 10 experts in order to effectively integrate new tools within their company's internal stack.
For European advertisers, executing programmatic campaigns is especially difficult given that brands are also often dealing with multiple regulatory regimes and various currencies. In addition, with the General Data Protection Regulation (GDPR) now in place, advertisers are also required to vet the vendors they work with, in addition to their own companies, to ensure that their businesses comply.
Fragmentation is also a major reason why many brands that might have considered it have failed to bring their programmatic advertising in-house.
In comparison to IO, in-house programmatic advertising is simply too complex of an endeavour for most companies to even consider. This even extends to brands that have millions of Euros at their disposal for their media budgets.
IO Remains Relevant Thanks to Transparency and Performance
Another reason why traditional IO excels over programmatic is because it provides transparency of the value chain, which is something that programmatic still struggles with.
Although traditional IO advertising originally meant that agencies and advertisers only had the opportunity to choose from a select few digital partners, transparency has proven to be an effective trade-off that has allowed IO to remain relevant.
Advertisers Believe Programmatic Delivers Poor Results
Performance is also a major concern when it comes to programmatic. Some advertisers even believe that programmatic delivers poor results by default.
These concerns aren't isolated: a recent study found that more than half of advertisers believe that the programmatic agency model is beyond repair.
The study’s findings can be somewhat attributed to the fact that advertisers believe that programmatic quality is essentially limited to whatever results the algorithms can deliver.
Programmatic campaigns are still considered to be difficult to understand, thanks to a lack of transparency which contributes to ad fraud and brand safety concerns. Secondly, programmatic campaigns don’t require the same resources as IO campaigns at the same budget. As a result,
IO is often equated with high quality while programmatic is believed to deliver poor results.
A Potential Solution to Programmatic’s Transparency Problem
Fortunately, the technology needed to solve programmatic’s transparency problems already exists, delivering real insights into performance and enhanced fraud protection.
In fact, the lack of transparency that afflicts programmatic is actually not a technological concern in some instances. It is actually due to the unwillingness of some programmatic platforms to deliver the protections that brands need in order to reduce exposure to waste and prevent reputation damage.
With the anticipation that more programmatic vendors will work harder to address the challenges that have created so many problems for advertisers, brands are increasing ad spend. A new study from the World Federation of Advertisers, entitled “The Future of
Programmatic,” found that programmatic budgets are expected to increase by 11% by the end of 2018, globally.
In addition, 41% of advertisers surveyed reported that increasing transparency with programmatic vendors is a majority priority for 2018. A full 45% of respondents already believe that they've managed to establish fully transparent relationships with their programmatic partners.
IO, Automation, and Premium Inventory
Despite these advancements, programmatic is still a long way off from becoming the dominant tool for advertisers for every channel.
Let’s face it. The reality is that email advertising integrations are very complicated. Passendo is still one of the first platforms to offer email native advertising even as our company gains traction with advertisers and publishers.
As of today, the truth is 100% programmatic platforms simply do not exist. The fact that email lives in a post-cookie world is one of the top reasons why it is so difficult to integrate email with programmatic. Furthermore, we anticipate that most of the big players will continue to obtain inventory via private deals even as the market matures.
Although we don’t provide purely programmatic, that doesn't mean that we aren’t already working to make IO easier. More importantly, Passendo is already taking steps to automate IO for our premium inventory thanks to our recent Automated Guarantee (AG) integration with Adform.
AG refers to the direct sale of reserved ad inventory between a buyer and seller. Unlike traditional IO, automation replaces the manual IO process, creating a seamless experience that is akin to the ease of use benefits that programmatic has promised.
So don't forget about IO just yet. The future still looks very bright for IO.
With Passendo, you now have the opportunity to reach your audience via our top partners and innovative display and native advertising. To learn more about our email advertising platform, contact us at firstname.lastname@example.org.