Today’s online ads are not about getting in front of as many people as you can, they are about getting relevant ads in front of highly targeted people. Programmatic buying usually produces pretty low engagement rates. Standard display advertising ads bought programmatically have very low CTR’s, about 0.18% of standard media, according to Google’s analysis. In other words, you get what you pay for. If you want cheap ads, you can expect very little in terms of effectiveness.
Programmatic buying is geared toward high volume , “awareness” campaigns, that are proven to be less effective than strategic relevant placements.
In addition programmatic buying comes with an exceptional risk of fraud. The ease of programmatic buying means that, essentially, anyone can buy and anyone can sell. This leaves an open playing field for bad actors. The most common examples of ad fraud are: Bot traffic(i.e. non-human automated plays, clicks, etc.) and non-viewable ads (ex. An interstitial or video is buried in a feed somewhere and the user never actually even sees it). In 2014, boat traffic accounted for 56% of all website traffic and cost the industry about $6.3 billion. One of the biggest reasons ad fraud is rampant is because it’s not exactly illegal, which means low-risk and high-potential for scammers.
Finally, ads bought programmatically can end up in the wrong place. Any marketer will tell you that your brand ending up in the wrong place can go bad quickly. A good example of this is the all-too-common practice of re-brokering. For instance, a publisher or ad network could give a programmatic tag to an affiliate of some kind, meaning that advertisers might be tricked into thinking they’re serving content on one publisher, but really it’s being shown on a different one entirely. Having your brand appear on the wrong website or in the wrong app can be extremely harmful to your brand. That’s one of the significant risks of buying through a programmatic platform.
While advertisers are spending more than ever on programmatic, they also report having less confidence in the tactic than they did last year, and believe fraud rates are 5X what they deem acceptable. This kind of volatility is common across most digital tactics—and makes sense, given the newness of the category, its relatively low cost (compared to TV, radio, and high-end print), and complexity. Even when it’s working, it’s still going to cause a bit of angst.
The programmatic silver bullet train is nearing the end of the line . Just as is the case with any hot, new tactic or channel, there are lots of easy wins to be had in the early days. But as programmatic becomes increasingly popular and pervasive, it will become more difficult—not less—to implement successful programs. Vendors are rushing to invest in their programmatic offerings, making it more difficult for advertisers to determine the best fit for their organizations (RTB? PMP?), and publishers—the providers of inventory—are scrambling to find their way in this new world, too. Not to mention the onslaught of mobile into the mix, which will account for about 70% of U.S. activity this year and which one expert describes as “just a messy consumer experience”.