Why Programmatic (Display) Is Problematic

September 13, 2017

We’ve been saying it for years – programmatic display is a flawed, under-performing system for direct response advertisers, and this year, advertisers have been ‘voting with their feet’ and their dollars.

As the Native advertising industry continues to grow at an impressive rate, research from Media Radar is showing the number of advertisers running programmatic ad campaigns has declined by 12% year-over-year in Q1 2017.

Here are the three big reasons programmatic is really problematic and why you should consider joining the growing number of digital advertisers that are re-routing their budgets:

1)      No accountability 

When you buy inventory direct from a publisher, you have a contact point that is invested in your campaign’s success, and is able to offer recourse should your buys under-perform.

Publishers dealing direct with advertisers can sometimes offer account credit, as well as make meaningful tweaks to future media spend to rectify any drop in performance. Programmatic exchanges? When your budget is spent, its spent – no matter how the inventory performed for you.

At Tapstone, we handle the buy for our clients, but do so direct with publishers. Through our unique and valued partnerships with publishers we are able to offer superior service and accountability.

2)      Lesser quality inventory

At Tapstone we regularly run tests of direct buys alongside programmatic exchange buys. The result? We consistently see at least a 50 percent performance drop when comparing between the results of the direct buy campaign, with those of its equivalent programmatic campaign buy. The numbers don’t lie – the programmatic exchange campaigns do not perform as well.

Publishers use programmatic exchanges to sell off a large amount of inventory but they don’t always offer their full range, particularly the most popular premium formats, or the wider variety of formats that would be available when making a direct purchase. That’s bad news for your campaign results and is clearly a point of frustration for advertisers that are now fleeing the programmatic ship.

3)      Lesser quality data

When you’re buying based on demographic data, one of the most common exchange offerings is third party data that is frequently inaccurate. Why? Programmatic exchanges have limited cookie-based information from which to draw their demographic conclusions, for example, a programmatic exchange might conclude a user’s gender to be male because that user spent time at ESPN.com recently.

Programmatic exchanges don’t mean to be reductionist, over-generalizing, sexists, they are doing the best they can with the information they have. But publishers have way more data that they can use to inform their demographic breakdowns. If you make a buy with Facebook for example, it uses the user created profile to determine a user’s gender – no, not a perfect system but a lot more reliable and accurate than that whole ‘only men like sports’ theory the programmatic exchanges are working from.

The difference this demographic accuracy ends up making for your campaign cannot be understated.

To prove our point – there’s another test we enjoy running at Tapstone. This test examines how Facebook and the exchanges match up when it comes to their ability to select your audience based on the simplest of criteria – gender.

To do this, we purchase an entirely male audience from Facebook (identified male by the user’s own gender selection when creating their profile) and route that audience through a data management platform’s demographic identification system to see how it would gender identify the users. The last time we ran this test, the exchange failed miserably…

…The programmatic exchange’s demographic analysis suggested that the audience was 40 percent female!

That’s a gigantic misread that could cost a fortune in wasted budget and poor results, targeting the wrong people. And if the exchanges can’t deal with a basic demographic detail like gender, imagine how inaccurate the more complicated details could be.

So there it is – some cold, hard truth about programmatic display campaigns. No accountability, lower quality inventory that underperforms compared to equivalent direct buys, and dangerously inaccurate targeting that compounds the problem even further. 

This latest research shows advertisers getting wise to the programmatic racket and here at Tapstone, we’d love to help even more to realize their true campaign potential, so if you’ve been burned by these exchange problems before, or just want to make sure you never have to experience them, let the Tapstone team help. We are pioneers of the now continually growing Native Advertising industry and focus on actual results for our advertising clients.