Programmatic buying is only more efficient for agencies – not the clients

Online bots and poor viewability are making automated buying more costly for advertisers, rather than more efficient, writes Bob Hoffman

There is so much questionable ‘information’ floating around about online advertising that it is very hard to know what and whom to believe.

One of the things we take for granted is that programmatic (automated) buying is a money saver. It may have problems like a higher incidence of bots, or ‘unsafe’ environments, but we assume the cost savings of automated buying buoyed by the presumed economic advantages of tracking and retargeting make the downsides economically acceptable.

There is some new research that strongly refutes this.

I have mentioned Dr Augustine Fou before. He is an independent researcher. This week he released a study of 100 million online ad exposures and his conclusion was that buying online display ads directly from quality publishers is at least eight times as efficient as buying the same amount of advertising through a programmatic ad exchange.

Below is a table (mine) summarising Dr Fou’s findings. As you can see, Dr Fou found that both bots and viewability issues are far less pronounced when buying directly. Additionally, quality publishers do not charge for ad blocked ‘exposures’ because they don’t call the ad in the first place.

Without over-complicating the issue, Dr Fou also reminds us that just because a view can’t be definitively identified as a bot, doesn’t mean it is necessarily a human. When he counts only the views that can be confirmed as humans, the difference in efficiency grows enormously. While 61% of views on quality sites can be confirmed as human, on programmatically bought sites he could only confirm 16% of views as definitely human.

This takes the efficiency ratio from about 8:1 to about 27:1. Put another way, the odds of getting an absolutely, positively “human viewable” impression is somewhere between 8 and 27 times more unlikely when buying programmatically.

The questions for an advertiser are:

– Is the current caveman version of ad tech and programmatic buying (based on tracking and data leakage) saving me money, or costing me money?

– Is automated buying making my buys more efficient or just creating efficiencies for my agency?

– Can I believe any of the reports I get?

Bob Hoffman has been the CEO of two independent agencies and is the author of the Ad Contrarian blog


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