The advertising stack is bloated because there are too many hands reaching for a piece of the pie. But as we add systemic measurement into the mix, the economics of programmatic begin to collapse. Call it the straw that breaks the camel's back.
But the problem isn't any single piece of the stack, it's the model itself.
Think of it this way: our industry has always prided itself on reaching the right audience, with the right message, at the right time, but what's missing in this equation is a sustainable price-performance ratio.
As the industry leans into more robust measurement, we're going to need to focus on price, and as we do, a new model will have to emerge. Here's how.
Why is the current programmatic model faltering?
The economics of programmatic have always been complicated, but the return of the walled gardens and new privacy laws have added additional complexity.
A typical media buy can easily have 15 or more vendors involved. As a recent Adalytics report made clear, vendor fees are highly variable and they really add up—in some cases reaching 98% of the ad spend. That puts the squeeze on data providers and publishers who were already squeezed. It also enables bullying behavior on the demand side.
And, sadly, it undermines quality because opaque audience lookalikes and high-volume, low-cost, made-for-advertising sites tend to do a better job of filling a greater share of ad buys. None of that is healthy for their premium competitors (not to mention for programmatic as a model) who need to invest heavily to produce quality content.
The obvious check to such behavior is transparent measurement. But adding what is arguably a higher core value capability into the mix means that the number of vendors grows even larger, pushing more buying into lower quality inventory.
The inevitable performance failure of campaigns, combined with bloated cost structure, could eventually break the economics of the current model.
We need to focus on programmatic's value
Digital advertising has struggled to support a sustainable media ecosystem. On the sell side, data and media publishers face existential threats to their business. On the demand side, advertisers still struggle to attain the one-to-one messaging that was at the heart of digital's promise from the beginning.
Stuffed into demand side platforms (DSPs), is an entire sub-industry of lookalikes, bid-optimization, cross-device, brand safety, anti-fraud, etc. Going tactic by tactic, there's plenty of value offered within those sub-tactics. But because each tactic comes at a price, the costs pile up, putting negative pressure on data and media investments to the point where quality and costs are working against one another.
For digital advertising to succeed, money has to be allocated in a manner consistent with the value proposition each player is truly delivering rather than the margins of middlemen.
We need to rediscover the essential value of trees in the programmatic forest. That is, rather than thinking about replacing "the right audience in the right place" with another faux optimization scheme, advertisers, data providers and publishers need to work together to bring transparency to the audiences and media.
When we value audience transparency, everyone wins
One reason the advertising stack is getting to such an unsustainable state is that our industry never developed measurement tools that were as robust as the optimization technologies that have come to define adtech.
Optimization tactics are a key tenet of the adtech business model; but, in a way, that's ironic because the target audience for most retailers, pharmaceutical companies, politicians, or business-to-business organizations is not a mystery. They know exactly whom they are selling to. And in the days of postcards and stamps, the mailing list was discrete and transparent. The postcards got delivered—and delivery was verified.
But, the plumbing of adtech has turned the visibility to verifiable target audiences into an abstraction. Brand marketers lose sight of their buying audience—because, after all those impressions and optimizations, the people you reached and the people you didn't reach, comes well after the campaign is over, and remains, more often than not, still an abstraction.
Stepping back from the noise, can we agree that measurement should be about evaluating the quality of audiences and media?
If that is true, then getting the audience and media right is the gamechanger that our industry needs. When we have near real-time transparent measurement across channels on a live campaign, you can answer the right audience, right message, right time question.
And, while that happens, we can rediscover how to properly align the value of audience and media properties with what works for buyers, sellers, and all the other vendors that play a role inside the stack.
More Resources on Programmatic Advertising
Programmatic Media Buying: A Marketer's Guide
Five Simple Programmatic Strategies to Drive More Leads
Programmatic Display Advertising: Why CMOs Are Fed Up
Five Ways to Realize Greater Value From Programmatic Advertising
