By: Peter Wagner

Originally the word programmatic simply described a technology for buying, selling or fulfilling advertising. Today, it has evolved into a way of doing business that has attracted immense investment in media spend and development from a vast array of players in the digital advertising ecosystem.

In the recent past, programmatic advertising was heavily stigmatized. The early years saw sparse, low quality inventory; rudimentary toolsets with little to no optimization; and failure to address user overlap with largely untargeted buying. Fast forward to today and programmatic has shifted to characterize the achievement of scale and inventory centralization. Automation and optimization and intelligent, data-fuelled targeting methods are ever-improving the way we buy and analyze digital media. With better client education of the processes involved in programmatic advertising, KPIs are being standardized and ROAS is becoming increasingly tangible for advertisers.

There are still concerns that persist on both the advertiser (demand) and publisher (supply) sides of the ecosystem. Some of the most common on the demand side are around inventory quality, fraud, viewability and brand safety.

The industry is doing some excellent work addressing these concerns, primarily through the use of better data, technology, and inventory. Data gathered at an individual user level is allowing us to reach a level of informed media buying never before achieved to target consumers based on demographics, online behavior and purchasing and brand affinity. Meanwhile, this same method of collecting and decoding data is being applied to analyzing ad traffic and inventory to weed out bots and other methods of ad fraud and ensure greater brand safety.

This is being powered by the continual development of robust controls available in industry leading ad tech stacks, resulting in improved buying and measurement processes for unique and advantageous strategic insight for advertisers. And lastly, the adoption of the programmatic model by publishers has improved buying efficiency and access to higher-quality inventory through programmatic direct and private exchange models.

Similarly, there are some negative perceptions of programmatic advertising that persist on the supply-side. The most common among them include the erosion of premium price floors, association with dubious advertisers and loss of direct sales. These misgivings come from the early days of programmatic when the word was typically associated with a remnant inventory solution. The predominant economic model had the publishers’ direct sales teams at the top of the food chain with many suppliers then releasing the unsold inventory to the open exchanges. Remnant impressions sent to open RTB platforms would largely run performance campaigns for advertisers with ads that promised the chance to win an iPod, eliminate belly fat, or worse.

Today we are seeing this model reverse. Publishers have started going programmatic first, making all or much of their inventory available to programmatic buying before direct sales. In this model, the advertiser buying direct is now buying remnant; the idea being that direct buys don’t apply data, so any inventory will do. There seems to be a present push for a hybrid model that incorporates both programmatic and direct sales. This model would likely involve prioritization of direct and programmatic sales unilaterally. Comprised within this hybrid model would be decisioning logic that effectively arranged pacing, frequency, viewability, and override capabilities for auctions.

Years ago I remember programmatic being likened to “a race to the bottom.” I never hear that comparison any more. We’ve definitely come a long way in just a short time. So far in fact that programmatic can no longer be considered a remnant solution. Looking ahead, all I can see on the horizon is more and more benefit for the advertising industry as it continues to embrace Programmatic First thinking and increasingly utilizes automation throughout all forms of media.

Peter Wagner is director of client engagement at Xaxis