For this reason, a slew of companies have entered the market, offering automation technology capable of informing decisions and expediting previously arduous processes. And as the programmatic market continues to grow (it is still just a sliver of the total online ad spend, here and around the world, but it accounted for nine percent or $3 million of the total $31.4 million spent on online display in the third quarter of 2014 and, according to SMI data, in 2014 in Australia it accounted for just shy of 14 percent of all digital dollars), it’s creating a technology arms race. In the last two years, Twitter has acquired MoPub for $350 million, Facebook has picked up LiveRail for $500 million, Yahoo forked out $640 million for BrightRoll and Google bought Adometry for an undisclosed sum. And all of them indicate that the quality of the ad tech will play a major role in the future.
At its simplest, programmatic ad technology gives the user a central control system through which online campaigns can be bought, sold, monitored, modified and measured, instantly and remotely.
As explained by AdRoll’s managing director for New Zealand and Australia Ben Sharp: “Brands can access inventory from over 200 different exchanges and supply sources, including on mobile and tablet, as well as Facebook and Twitter all through the single AdRoll interface. They can see exactly where their ads were shown, how much they paid for them and what the ROI for that campaign is. Our customers also have complete control to edit their campaigns and to pull reports at a moment’s notice.”
In most industries—and life in general—the promise of automation is treated with at least some level of mistrust. And this is also the case with programmatic ad buying.
The Magazine Publishers Association chair and Bauer chief executive Paul Dykzeul has previously criticised programmatic, saying it puts advertisers everywhere and nowhere at the same time, in reference to the fact that ad buying decisions are often made in terms of audiences no matter what sites they might be visiting.
“This can be true if the approach of the trading desk is to simply optimise spend to the cheapest inventory while ignoring the environment that the ads are running in,” says Andy Wylie, the group general manager of advertising operations at NZME. “However, local media owners are increasingly making quality inventory available via programmatic channels, which allows marketers to influence the percentage of their budget that is delivered on quality local sites.”
Internationally, the Guardian, CNN, the Financial Times, Reuters and The Economist are attempting to circumvent the problem of low-quality inventory—and compete against the networks—by forming the Pangea Alliance, which allows clients to purchase ads programmatically that run across these major publishing brands.
“The Pangea alliance offers marketers an efficient way to reach high quality audience in trusted environments at scale,” says Wylie. “These factors may result in media buyers carving out spend from their programmatic budgets for the consolidated buy, in which case the media owners stand to benefit more than going it alone in the open market, so it is an approach worth considering [in
However, Smith sees it differently, pointing out that the move is a reaction to the perception that programmatic devalues ad space.
“The motivation for this is that they want to control high-quality, premium price points. And so, that then tells me that they’re afraid that they’re going to lose that price position if they go programmatic. But we’re saying that that’s not the case. Since programmatic trading arrived in Australia, the only thing that has happened is that the price has increased.”
This is because demand for the ad inventory dictates price. And as more premium publishers have made their inventory available, clients have competed for these slots on the open market, pushing prices up.
“Think about the current housing market,” says Wylie. “When demand exceeds supply there’s a reason why vendors use auctions as their preferred trading method.”
Although, unlike the housing market, most would agree there’s an oversupply of online ad inventory. And publishers generally don’t get as much revenue from programmatic buys as they do from