Programmatic doesn’t have to be highway robbery, but it usually is
Mark Ritson's belief that programmatic is as dodgy as a $7 note has a little too much truth to it, and it's a human issue, not a tech one, explains Simon Larcey.
You might think it strange that someone in the adtech industry like myself – someone with a vested interest in the success of programmatic platforms – should come out with a statement that programmatic buying is highway robbery.
In fact it saddens me to have to make such a claim, because it doesn’t have to be the case. The technology we have at our disposal is truly impressive, but now it’s time to see some maturity among the businesses who sell the product.
I would have never thought that I would publicly express my agreement with someone as controversial and infamous as Mark Ritson, but when I read a recent article where he decried programmatic for being as dodgy as a $7 note, I couldn’t help but agree with him.
Larcey: Why should a marketer pay an extra fee to ensure their ad is seen?
Despite the industry-wide calls for transparency, despite the claims that programmatic will save marketers money and allow unparalleled targeting capabilities, the fact of the matter is that most of the programmatic dollars being paid by businesses are sucked up by middlemen clipping the ticket.
When potentially only a quarter of the ads you are paying for end up being seen by a real live person, the model is broken. Ritson may be something of a professional alarmist, but the programmatic value chain really does resemble a “greedy orgy of ticket punching and commission charging”.
Of course plenty of agency folk with their own vested interests have come out swinging in the other direction, hailing programmatic for its ability to find audiences in an efficient and cost-effective manner.
It’s no secret that this mode of buying media is going to become predominant across all channels, from TV to outdoor to radio to print, in the next few years. The concern is not with the technology, but its peddlers.
The industry has felt the downward pressure in turbulent economic conditions, and some operators have seen programmatic buying and its opaque value chain as an opportunity to maintain margins and keep the wolves at bay. But it’s a short-term tactic. The adtech and agency businesses that excel moving forward will be those that take a very public and very transparent stand against the muddy chain of middlemen.
I recently read another article by a senior programmatic director which argued that programmatic isn’t a charity. The article gave a hypothetical example of a marketer paying $5CPM, arguing that only $2.62 should make it through to the publisher because a percentage should go to tech fees and audience analysis, and because a percentage should go towards guaranteeing brand safety and viewability.
Hold on a second. Why should a marketer pay an extra fee to ensure their ad is seen? If you buy an ad, you buy an ad, not the right to maybe have an ad. If a selection of ad impressions has a $5CPM, that’s what the advertiser should get, not some diluted CPM in an ecosystem of middlemen grabbing their piece of the pie.
Of course everyone has to get paid, but if you tell a client they are getting a certain CPM, then that is what they should get. Programmatic is not a charity, but it might as well be, because it is funding people’s livelihoods not business outcomes.
Ritson, debating here at Mumbrella360, is notoriously anti-programmatic
To use an analogy: let’s say you’ve dressed yourself for a job interview in a brand new Hugo Boss suit, Thomas Pink shirt with cufflinks, Gucci tie, Ralph Lauren boxer shorts and socks, a Tag Heuer watch, and a Prada wallet and shoes.
Your objective is to get that job and make the best impression possible. On the way to the interview you are robbed of your watch and wallet and your clothes are tattered and ripped. You arrive late and dishevelled, and make a very poor impression. It’s unlikely you’ll get the job, through no fault of your own.
This analogy describes programmatic in a nutshell. You set up a campaign and start the delivery. A starting bid price means you’re in the race, but the adtech ecosystem slowly rips that bid value apart leaving very little for the end publisher.
This means the impressions bought are minimal (or just outright rubbish) and the performance is not great. To generate any level of results you throw more money at it in the hope you make the impression and get the intended outcome.
You spend more money with the same non-responsive effect and can’t even blame it on one particular source, because you really have no idea why it’s not working. At least if you were robbed the old way, there was someone to blame.
This is not a tech issue. It’s a human issue. I love this business and I love seeing success. I don’t like seeing money wasted and work very hard to find ways to improve results for clients and to constantly set new benchmarks. There are always going to be tech fees and we are all here to make money. But fees need to be transparent and justified. If a business pays for a certain outcome, they should get that outcome.
The key for marketers is to choose wisely, minimise costs and maximise returns. The future of programmatic is truly exciting, but we can only tap into its potential if we remove the increasingly pervasive culture of mistrust that is infecting our industry.
Simon Larcey is managing director at Path 51
Simon Lacey this could open a can of worms but totally agree, programmatic is a great way of doing business but tainted in the hands of humans right now.
Technology is powerful in the right hands and troublesome in the wrong hands, it does not right now (and this could change) replace the smarts of a human.
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Bravo Simon.
And just to think that the situation is at better than it used to be.
To quote The Donald … Sad.
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Hey Simon
Good to meet you last week. I think we as an industry need to do a better job of a) being transparent (which is something we at PubMatic are fully focused on) and b) talking about the “value” that each piece of tech or partner adds. So we need to look at what the repercussions would be to marketers if they were to remove each element. Yes they may pay more, but the ROI may be severely negatively impacted if they removed some of the players who are (rightly) charging for their technology. Good to keep talking about the topic.
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Simon
You and Mark are both way off reservation
Where do you get off disparaging the $7 note like that?
Do you even own one? Have you even
held one in your hand?
I’m guessing not. They are epic. And almost impossible to get. I recently offered someone $200 for theirs and they laughed at me. They were going to keep it in their family for generations to come.
seems pretty un dodgy to me
From a marketing perspective it has been a huge success in the country that decided to mint it as legal tender. Look it up. Fiji.
Now the $8 note in the other hand
That’s dodgy
Cheers
Jeremy
Mate – def talk more with you about topic – catch up soon
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Kudos on the peace Simon, you hit the nail dead center… The solution is rather simple, just take the tech in-house..
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Re: “If you buy an ad, you buy an ad, not the right to maybe have an ad. If a selection of ad impressions has a $5CPM, that’s what the advertiser should get, not some diluted CPM in an ecosystem of middlemen grabbing their piece of the pie.”
Not true, advertisers and agency professionals have been buying based on a guesstimate of viewability for decades. Digital is a victim of its own transparency in that it is the only model where you can objectively measure whether an ad has been seen or not. How many advertisers can objectively say how many people have actually seen their TV ad or their print ad?
Viewability is an issue that has been affecting advertising from the beginning with the classic story of people getting up to grab a cup of tea during an ad break being no different to a digital ad that hasn’t been seen – the only difference now is that for dig you actually know how many have not been viewed…
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