Programmatic Hasn’t Been Able to Live Up to Its Potential

There needs to be another option to the walled gardens

walled green garden made of hedges; the green hedges are cut to depict a dollar sign in the middle
Programmatic's failure to adjust to marketers' needs has caused a shift in ad spend.
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Programmatic advertising today is at a crossroads, and if advertising on the open web is ever going to catch up with the walled gardens, there needs to be a fundamental reset in terms of approach.

We have seen massive growth and adoption in programmatic marketing spend over the years, but at the same time, programmatic has struggled to give brands and agencies what they really want: the ability to engage people, not broad audiences, in a 1-to-1, permission-based way across the open web. The technology has not kept pace with market demands.

This is a result of the way the programmatic ecosystem was built from the ground up. Programmatic was built to gather the world’s content and sell ad space around it to pay for all that content instead of providing great 1-to-1 experiences for consumers. Even against shifting demand and expanding technical and data capabilities, the industry has remained stubbornly focused on this foundation.

This failure of the programmatic industry to recognize and adjust around the needs of marketers has caused ad spend to shift toward the walled gardens, like Facebook, that can provide them what they are looking for. However, the time is ripe for that paradigm to shift back in favor of the open web, and there are a few key things that advertisers, publishers and technology companies can all do to make this shift happen.

For programmatic to reach its full potential, the industry has to recognize what the walled gardens are doing well and provide a viable alternative.

The changing role of the advertiser

When looking at the changing marketing landscape, the most significant change has occurred around consumer expectations and how people actually want to consume media and brand experiences. Brand advertising used to be predicated on the fact that people trust companies they have heard of, and in many ways, a brand name mattered more than a product or a feature. That is no longer the case.

Direct-to-consumer businesses are proliferating because consumers expect a different experience today. They’re not buying a portfolio name but are instead buying the perfect sneaker from Allbirds or a smarter suitcase from Away. For marketers, a great brand is a reflection of getting the product exactly right for a person and then finding that person to tell them it’s ready to try. In this new approach, the individual matters more than ever before.

Companies like Facebook and Amazon built their advertising platforms for this new era of marketing where matching an individual with a product was paramount. This approach has fueled unprecedented growth for these companies, even though the technology itself is still imperfect. According to most estimates, more than half of all spend in Facebook is actually based on look-alike (LAL) modeling rather than truly direct, 1-to-1 engagement. For brands today, it’s time to demand more—meaning more direct 1-to-1 engagement—and the ability to take their marketing tactics that work so well on channels like Facebook and Instagram and find ways to dramatically scale these efforts by tapping into the power of the open web.

Climbing over the walled gardens

For programmatic to reach its full potential, the industry has to recognize what the walled gardens are doing well and provide a viable alternative. Programmatic must move quickly from primarily being cookie-based or looking at groups of audiences implied by an identifier like a device ID or census behavior and instead engineer solutions that resolve for reaching the individual that sits behind an impression.

As an industry, we must reimagine the systems that leverage programmatic to give marketers the 1-to-1 conversation with a consumer they want. And, importantly, brand advertisers need to demand more from their technology partners. There are a litany of dumb pipe providers proliferating across the digital advertising market. Marketers need to see these pipes for what they are: more of the same that has not worked and continues to diminish return on advertiser spend. Collectively, we need to expect—and, in fact, demand—more innovation from marketing technology. As an industry, we need to worry less about the specific device, format or screen they are looking at. Even the content becomes a secondary consideration to the actual person. When marketing addresses individuals based on their likes, behaviors and actual consumption history, it’s not just more efficient for advertisers but truly provides a better experience for the consumer and ultimately provides greater revenue for publishers and content creators.

Identity solutions can match consumers’ exact behaviors and attributes anonymously and immediately provide that information to both a publisher, enabling them to fully understand the true value of the audience they have cultivated in a way never before possible, as well as to the advertiser, enabling them to directly reach the right consumer at the right time with the right message in ways never before possible on the open web.

Programmatic advertising can no longer just be about gathering content and finding a way to monetize it. Programmatic needs to be about identifying and understanding the true value of audiences. If we can rethink how we look at, package and analyze behaviors and attributes and provide better tech to leverage this data to enable 1-to-1 engagements, we’ll be able to blend the best parts of the walled garden advertising experience with the massive scale of the open web.

Thinking about the user behind the screen and truly bringing the power of people-based marketing to the open web is the unfulfilled promise programmatic. It represents the biggest opportunity awaiting our industry in 2019.

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