The Pros and Cons of Programmatic Ad Buying

by | Aug 18, 2014

If you’ve looked into video advertising itself, you’ll surely have come across the term programmatic ad buying. In this blog, I’ll talk about the pros and cons of buying ads like this, and why it’s such a popular way for advertisers nowadays.

What Is Programmatic Ad Buing?

So what are programmatic ads, anyways? To help explain the meaning, I’ve decided to look at some other definitions.

  1. “Programmatic” ad buying typically refers to the use of software to purchase digital advertising, as opposed to the traditional process that involves RFPs, human negotiations and manual insertion orders. It’s using machines to buy ads, basically.

  2. Programmatic Buying describes online display advertising that is aggregated, booked, flighted, analyzed and optimized via demand side software interfaces and algorithms.

  3. The use of technology to automate processes and the use of math to improve results.

In short programmatic ads are pre-determined algorithms that – when all checked off – buys an ad automatically.

One of the common questions at this point is to ask “So, it’s like real-time bidding?” The answer, like all great answers to life’s tough questions, is yes and no. Real-time bidding is a form of programmatic ad buying.

Remember how programmatic ad buying is automatically-triggered actions? Well, real-time bidding refers to this: when these criteria are matched, bids for that ad spot (that single impression) is placed. See how that’s a form of a programmatic ad?

To illustrate the other side of this point, certain platforms will allow you to buy the spot directly (without having a bid auction with other marketers). Still programmatic, just no longer real-time bidding – it’s called “programmatic direct” and things like Facebook Ads API and the Google Display Network are such.

In any case, onto the pros and cons!

Photo by Christian Stahl on Unsplash

Pros of Programmatic Advertising

Efficiency– Before the days of programmatic ad buys, online spots were bought by these things called humans. They would sit at their desk and call up other humans and bargain and trade money for ad spots. Comparably, this was slow, resourceful, and unreliable. Nowadays, all people have to do is create an algorithm that does it for them. It’s kind of like that story where a man spent two weeks creating a program that turned his 40-hour week into a single click of a program and he spent the rest of his 39 hours doing something else. Another good metaphor is that you used to have to be on the floor of the NY Stock Exchange to buy stocks.

Developing Technology If you’re the type who’s glass is half empty, another way of saying this is that the technology currently kind of sucks. On the other hand though, if you’re the type that’s half-full, the knowledge that the technology – in terms of the overall structure of ad buys, to how specific targeting can get, to minimizing cost, to finding a better way of doing this all – is still in an infant state might be positive. Programmatic ads are already delivering striking results. It seems that it can only get better from here.

Reach your goals (KPI) quicker- When everything is automated, the machine can keep chugging along until your goals are met or your budget runs out. The time and efforts saved by not needing a human to keep track of this is self-evident.

Cons of Programmatic Advertising

Lack of Human Control – One of the obvious concerns with everything being automated is where is the human part? Other than creating the algorithms, a company has little ways yet of controlling where the ads are going. In fact, they often don’t even know which site it’s going to until after the fact. As this industry grows more and more, there will certainly be additional ways of maintaining control. As for the near future though, advertisers have to put a little faith in the machines.

Online Traffic Fraud – When advertisers pay for views, the general consensus among the business parties is that these views are real views. However, one issue that has arose is views by bots. That is, companies are creating bots to watch videos over and over and over and over again. Then, the next day, they go “Hey! Your video got 3000 views. That’s $100 please.” The problem with this is that companies really have little ways of checking these views directly. Thankfully, most respectable companies that you work with would not do this.

Inappropriate Pages – A risk of placing ads in places independent of the place itself is that you sometimes get inappropriate ads on places. For example, airplane commercials on a news page about an airplane crash might be bad taste and unfortunate. Similarly to the online fraud situation, many companies also offer something called Brand Safety that help prevent things like this.

So where does this leave us? Well, towards an interesting future in video advertising and how media is bought.

As one person says,

“When a client buys programmatically, they don’t know precisely when or where they’re going to run. What we believe will happen is that ad buyers will truly start buying audiences.”

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