When low cost means high loss in programmatic ad buying | M&M Global

When low cost means high loss in programmatic ad buying

Cost has always been a main driver in the adoption of programmatic, with research from IAB Europe revealing 70% of advertisers in new markets enter programmatic to lower the cost of media, says Jeff Melio, VP, agency partnerships at Sovrn.

For years open exchanges gave media buyers access to a glut of online inventory at rock bottom CPMs. Buyers were always aware there was an element of waste in the supply; a few impressions that perhaps didn’t quite hit the target, but with access to such cheap media who was really worried about a few wasted ad dollars?

Well now it seems media buyers are starting to add up their losses and realise they might not be onto such as good thing after all. As TrustX’s David Kohl recently explained: “There is deeper and more complex maths emerging around the real and hidden costs of buying into a bottomless market of cheap programmatic inventory.”

Waste in programmatic is a complex and multi-layered issue. First there are the impressions lost to fraud, which are served on spoof websites and viewed only by bots who clearly have no intention of buying. By turning a blind eye and prioritising cost media buyers are funding the criminals they’re supposed to be fighting.

Next there are the non-viewable impressions, those served below-the-fold, out-of-view, or in a tab running in the background. Then we come to the impressions served to random targets, who have zero interest in the products or services advertised, or the impressions served in irrelevant contexts where users aren’t in the right mindset to engage with them. Finally, we come to the serious ad misplacements, the impressions that damage brand reputation through association with inappropriate or socially destructive media, which bring immeasurable costs to brand equity.

This waste is increased by an overly complex programmatic ecosystem – Marc Pritchard’s famous ‘murky’ supply chain – where endless tech providers take their bite of the apple. Media buyers may only be spending a pittance on each ad impression but around half of this is thought to disappear as a tech tax before any revenue is seen by publishers, limiting reinvestment in quality content.

As buyers start to refocus their efforts on value rather than aiming for the lowest possible CPMs, there are various ways to achieve this:

Foster relationships with quality publishers

By working with programmatic exchanges that have direct relationships with publishers, media buyers cut out many of the middle men and gain far more transparency into where their ads are placed. As a starting point buyers can buy inventory only from sources identified as authorised sellers in a publisher’s ads.txt file. This action limits fraud and ensures there is a relationship between publishers and seller.

Taking this further buyers can choose to work with quality publishers with relevant, brand safe content and highly engaged audiences. They can avoid publishers that cram every inch of their sites with ads, or use intrusive, irritating formats that lead users to install ad blockers and instead work with those that understand effective ad placement and provide a positive user experience.

Demand engagement as well as viewability

Media buyers are already calling for viewable impressions and global viewability rates are showing a gradual improvement. But, while it is a useful baseline metric, viewability alone is not enough to determine the value of an impression. With technology now available to only load ads when they come into view, viewability is becoming immaterial, and buyers should instead be looking at metrics which show how long users are actively engaged with content while an ad is in view. By recording engagement events including clicks, scrolls, and keyboard movements, metrics such as Viewable Engagement Time (VET) give a far better indication of how much time users actively spend with an ad, and therefore what it is worth.

Find the right audiences at the right time

Rather than taking a scattergun approach with cheap impressions and hoping some of them get in front of the right eyeballs buyers can look for partners that allow precise targeting, finding the best audiences for their message, at the right time, using real-time data. User needs change constantly and consumers are continually shifting in and out of audience segments, but whether buyers are trying to reach car lovers, sports enthusiasts, or fashionistas, smart targeting means they can get ads in front of the right users at the opportune moment.

Building more direct relationships with quality publishers buying impressions that aren’t just viewed but also engaged with and employing smart data-driven targeting to find the right audiences will naturally mean higher CPMs for media buyers. But once the waste currently incurred through bargain basement programmatic impressions is added up buyers may find these higher CPMs still equate to significantly less than they are currently paying out.

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