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Five Myths of Programmatic Trading

An increasing share of online display advertising is moving towards programmatic due to its inherent efficiency and improved performance.  By 2017 59% of UK digital display ads will be traded programmatically and programmatic trading will grow to a $32.5bn industry across the UK and eight other countries according to forecaster Magna Global.  

However, trust in programmatic buying has a long way to go.   According to an April 2014 polling by STRATA, just 12% of US senior ad agency executives said they trusted programmatic buying to properly or accurately execute their ad orders and 58% remained undecided.

Here are five common misconceptions about programmatic trading and how they can be dispelled.

1. Programmatic trading is only for Direct Response Advertisers

In its infancy programmatic trading was used almost exclusively by direct response advertisers, often in the service of CPC or CPA campaigns.  This has now changed. Today automatic trading includes more insights about consumer profiles and behavior than ever before. As such, it can only improve ad performance for all types of ads including video.  In fact, SpotXchange and IHS project that European programmatic video spending will reach €368.8m by 2015.

2. Too many programmatic ads are never seen, or don’t reach the right people

It’s true that programmatic advertising is more open to abuse.  Since ads are served in an open marketplace instead of going direct to a publisher there are more opportunities for fraud.   However advertisers can demand transparency and use buy-side tools to ensure they receive high-quality impressions. Verification technology can identify and omit BOT traffic and ensure that all ads are in fact secure and viewable.

3. Programmatic inventory is cheap or remnant

Despite initial reluctance, many premium publishers are embracing programmatic selling as part of their sales mix. While several make inventory available via public exchanges, many publishers are exploring alternative “Programmatic Premium” offerings. These include “private exchanges” which offer preferential “first-look” access to inventory with an opportunity for pre-negotiated pricing terms.

4. There are too many limitations on ad creative with programmatic trading

Automated trading processes work best with formats available with large scale and a degree of uniformity. There will always be unique, custom formats that require more of a human touch. As programmatic comes of age, a wider variety of formats will become standardised and publishers will create programmatic marketing platforms that plug into all major inventory sources across display, mobile and video.

5. TV will never go programmatic

TV is going programmatic - it just might take a while.  As programmatic trading reaches critical mass, advertisers and publishers will begin by tackling the mobile challenge, eventually stripping out the complexity and creating the basis to extend real time campaigns to mobile video and TV ads. The recent announcement that RTL is investing in SpotXchange indicates that the industry is moving in this direction.  Also the fact that the GRP audience measurement used for TV has now been adapted for online shows a movement towards a common language to help advertisers compare offline to online video ad performance. 

In conclusion, programmatic is coming of age.   The advantages of automation through the entire process of targeting delivery and optimisation is an advantage for all types of ad formats and video is no exception.

Mark  Jones

Mark Jones

Editorial Executive at PerformanceIN. Mark reports performance marketing news and manages PI's network of guest contributors.

Originally from Plymouth, Mark studied in Reading and London, eventually earning his Master's in Digital Journalism- before making his return to the West Country to join the PI team in Bristol.

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