Programmatic advertising can be beneficial to agencies and brands, automating the process with the proper targeted inventory. But for publishers, who are able to better predict the size of their audiences and manage a suite of verticals or properties, more value is created by premium direct sales in order to reach high-quality audiences.
Currently, programmatic display ads are underperforming compared to higher-CPM formats such as native and video. Large publishers and niche sites with highly coveted audiences have been able to sustain their CPM values via programmatic display for the time being. But some have diversified their ad buying strategy causing a 12-percent decline in programmatic ad buying between Q1 2016 and Q1 2017.
Despite that 12-percent year-over-year decline in programmatic buying, eMarketer predicts nearly 80 percent of U.S. digital ad dollars will transacted programmatically in 2017, totalling $32.56 billion. And that share is expected to increase to 84 percent by 2019.
This expected increase in programmatic buying leaves little doubt that buyers and sellers are continuing to invest in automated ad buying. But it’s not just about continuing to automate where publishers had done so before. According to CNBC, desktop display ad revenues are down 17 percent in the last two years. The status quo of managing arbitrage of users on web pages would be dangerous for every publisher.
Publishers and marketers today face an issue with programmatic that can create large inefficiencies despite the promise of increased efficiency.
Large platforms like Facebook, Google, and YouTube enable marketers to bypass some complexity, but have ineffective solutions for brand safety.
Publishers that continue to rely on programmatic buying through Google search, Adwords, and Facebook’s marketplace will inevitably face lower margin opportunities over time. And diminishing margins from acquisition efforts means that publishers will no longer be able to reinvest into producing more content.
Therefore, without building highly engaging experiences that keep audiences coming back and finding ways to engage users with your more profitable advertising inventory, there will be an erosion of margin, and Facebook and Google will remain the big winners.
To combat the changes, publishers have to break out of routine methods for operating — like strict adherence to old web page reliance — and rethink how to build large loyal audiences online. Simply measuring page views is no way to understand your audience. Premium, tailored video experiences can result in substantially higher time on site, increased views and revenues per users, and increased total baseline audience over time.
This isn’t a call for publishers to simply pivot to video in order to cure all ills, however. Customized and optimized video pages can cut bounce rates by up to 20 percent. Leveraging data to inform audience acquisition into video experiences ensures that publishers can build retention into their user experience — something programmatic buying can’t say.
In a treacherous environment for publishers today, the simplicity of automation shouldn’t obscure the end goal of producing and placing content. Reader and viewer loyalty is hard to come by, but personalized, premium solutions create a far better chance to create repeat visits than simply serving up everything programmatically.