Pros and Cons of Programmatic Advertising

Programmatic is fast gaining popularity in the world of digital advertising. In programmatic advertising, computers dictate the buying and selling of digital ads based on algorithms. It operates real-time transactions based on real-time data.

Over the past years, we’ve seen an increased interest in programmatic advertising. It is estimated that over $46 billion will be spent on programmatic advertising this year, posting a $10 billion increase from last year.

According to a digital marketing specialist from programmatic marketing agency War Room Inc, brands and advertisers are now recognizing the benefits of programmatic digital media buying. However, he explains that like other advertising platforms, programmatic also has some misses.

Here we take a look at some of the pros and cons of programmatic advertising.

Pros of Programmatic Advertising

Wider reach

Programmatic enables brands to reach different publishers across different platforms throughout the world. Programmatic has an endless spider web of connections that allows brands to reach users hooked on various publishers. Through this wide network of connections, the message gets a very wide viewership.

Saves resources on marketing manpower

Sans manual process of searching and buying digital media, the need for marketing manpower is also considerably reduced. It also enables marketing teams to focus more on producing effective marketing strategies.

Cost-efficient

To many brands, cost-efficiency is the biggest advantage of programmatic advertising. Through programmatic, the computer algorithm automatically finds and buys the least expensive ad space for the specific target audience, whether it’s a certain age-group, specific devices, geographic location, or other parameters. There’s no need to negotiate with middlemen for the lowest price thereby cutting on the costs significantly.

Uses real-time data

Ad placements are done automatically based on real-time data. By using real-time data, you can avoid spending your budget on the wrong traffic. You can advertise your brand to the target audience with the highest possible conversion.

Efficiency

Once you’ve set up the parameters of your target audience, the algorithms will display ads before them. You can also program the budget allowance to avoid overspending. It even allows you to set the algorithm to search for ad spaces that are within your budget. Since all transactions occur in the machine using various programming languages, there’s no need to worry about negotiating and missing the budget.

Cons of Programmatic Advertising

Low engagement rates

An analysis by Google has shown that standard display advertising ads purchased through programmatic method posted a dismal 0.18% CTR. This means that you are getting only what you’re willing to pay for.

Media lack context

The inherent goal of programmatic buying is to increase awareness by displaying ads to more viewers. As a result, the media is played over and over, even without relevance. Although recent upgrades have been done to address this disadvantage and help increase engagement rate.

Risk of fraud

There is a very high risk of fraud in programmatic advertising. With the very simplified process of programmatic buying, almost anyone can buy and sell ads. Ad fraud is reported as among the leading concerns on programmatic advertising. Bot traffic and non-viewable ads are two of the most common examples of fraud associated with programmatic. The Association of National Advertisers (ANA) found in 2017 that over $6.5 billion globally has been lost due to bots. Meanwhile, non-viewable ads can be a problem too. Even though ads have been reported as placed or displayed, they were never viewable and never reached the user.

Ad misplacement

In programmatic advertising, there is the possibility of your ads being misdirected or misplaced. This happens when a publisher sends your ad to an affiliate entity where the ad is displayed. As a result, your ads never reach their target audience. Misdirecting ads can even backfire to your brand. For instance, an adult-oriented ad can mistakenly find its way on children’s app. Such unintentional mishap can negatively impact your brand.

Narrowing target audience is costly

If you want to narrow down your target with pinpoint accuracy, then you’ll have to work with a powerful programmatic platform capable of this. But just like any other special offers, they come at a huge price.

Final Thoughts on Programmatic Advertising

Without a doubt, programmatic offers an efficient platform for buying and selling ads. However, just like any other marketing techniques, either online or offline, there are advantages and disadvantages to look into. Carefully consider the hits and misses of programmatic advertising and see if it can help you achieve your goal. But one thing’s for sure, sooner or later you’ll have to consider programmatic advertising.