The Pros and Cons of Programmatic Buying for Regional Companies

The good, the bad and the unknown that mid-market companies need to consider when investing in programmatic ads.

Programmatic and Real Time Bidding (RTB) are often touted as the most efficient buys since the inception of media. The digital media outlets say it’s more efficient, highly targeted and less expensive. Keep in mind when it sounds too good to be true, it probably is or at minimum has its flaws. There are benefits to this type of buying but regional companies need to have a full understanding of what those benefits are and where the land minds lie.

When buying this way, it is important to understand whether the buy is happening through an Ad Network or an Ad Exchange. Ad Networks were developed for publishers to offer larger amounts of inventory to be sold and bought more simply. Publishers would group their sites together and offer the opportunity to have ads run on a network of their sites.

But this still left a lot of unused ad inventory available and thus created the Ad Exchange. The Exchange is an open marketplace for buying and selling unused ad impressions online. There are vendors that service this type of buying like a virtual auction-based marketplace, allowing for instantaneous ad bidding, it’s called RTB, real time bidding.

RTB buying automatically searches for the right placements with the least expensive ad space to a targeted audience and ultimately can save some trouble on negotiating for the lowest price and can cut costs tremendously. So, what sounds wrong with that?

Well, when negotiations are removed and replaced with an automated system, these “cheaper ads” can show very little return in terms of their effectiveness for several reasons and based on fraud can cost much more than anticipated.

There is greater chance of fraud with a programmatic RTB ad buy through automated engagement. Bot traffic and non-seen ads count as “delivered” but may not be physically seen by anyone. Ads so far down on a web or mobile page or bots that accept ads for sites that don’t exist can cost a company big bucks for very small returns. Since regional advertisers rarely have enormous budgets they need to be as assured as possible that their digital budget is being accurately delivered.

The other issue that a programmatic buy can lead to is appearing on sites where the advertiser would rather not be seen. Remember everyone has their opinions and depending on whether an audience agrees or disagrees with a certain point of view can affect your sales. When you go RTB, you are allowing an algorithm to determine where to find your audience.

There is no common sense or emotion introduced into the equation. So, your ad may appear on a religious or political site, or an inappropriate site based on ethnicity, age or sex. While your company may not agree with the stance of these sites the general-public will assume you do since you advertise on this site. This could impact your sales.

For mid-market companies that need to invest advertising dollars as wisely as possible, the best option is to still allow your agency to handle site direct negotiations. While this may take more time and isn’t simple, an advertiser will actually get better results for their marketing dollars.

Author: Frank Gussoni

President & Founder of A3 media. We're Type A. We transform media from an expense into a smart investment.