Since the first programmatic display ads appeared almost 30 years ago, programmatic advertising has gone from strength to strength. Its popularity has particularly soared in recent years. This year, it’s expected that advertisers will spend over $123 billion on programmatic digital display ads, and over 90% of all digital display advertising transactions will occur programmatically. Along with its expansion into areas such as over-the-top (OTT) streaming, connected TV (CTV) and digital out-of-home (DOOH), programmatic growth is further illustrated by The Trade Desk’s generally strong performance on the stock market.
The popularity of programmatic can be attributed to increased control over ad placements and inventory for buyers and sellers, respectively, making ads more efficient and scalable. Programmatic tends to be better targeted than traditional advertising campaigns, improving audience segmentation and addressability, too—a key factor in the post-cookie world.
However, as the industry prepares for Chrome’s cookie death, what considerations are needed for programmatic advertising, and what issues lie ahead?
Combatting Programmatic’s Fraud Problem
A major problem within the programmatic ecosystem is fraud, commonly in the form of stealing ad money through false clicks and impressions. Last year, a report found that over a third (39%) of internet traffic comes from bad bots, with the highest portion occurring in North America. Issues of fake website domains and publishers’ inventory being sold by bad actors have also been noted. Authorized Digital Sellers (ads.txt) was introduced to try to tackle these issues, allowing publishers to identify reputable partners who have permission to sell their ad space. Sellers.json works in partnership with ads.txt, informing advertisers of trustworthy sellers.
Despite the best intentions, these initiatives have their drawbacks in isolation. For one thing, fraudsters are able to use loopholes to pose as reputable buyers and sellers. However, this isn’t to say they’re not useful at all; publishers and agencies should proceed with caution when using such tools and implement extra solutions alongside them for maximum success.
As retargeting and campaign optimization becomes more difficult when the cookie finally crumbles, new industry standards such as ads.txt and sellers.json will play a critical role. They will form part of a wider mission to enable smoother, better-optimized transactions for both sides, helping advertisers buy quality inventory and audiences.
Building A Path To Optimization
Another way for both the buy and sell sides to reduce fraud and streamline the programmatic exchange is to ensure their respective trading platforms are fully optimized.
Advertisers and agencies use demand-side platforms (DSPs) to buy ad inventory across various exchanges, allowing for greater speed and efficiency. They’re extremely valuable because they consolidate multiple potential ad spaces for brands and simplify the buying process. Inversely, supply-side platforms (SSPs) allow publishers to sell their inventory across multiple trading platforms, helping them improve monetization and ensuring they’re getting a good price for their offerings. While programmatic advertising can be a notoriously complicated process with multiple buyers bidding on various inventory, optimizing the exchanges can lead to greater transparency between buyers and sellers, promoting long-term financial stability.
For example, supply path optimization (SPO) is a key way of streamlining the buying process, cutting out the intermediary based on strict suitability protocols and the transparency of ad placements. This allows advertisers to identify and work with trusted partners. Similarly, demand path optimization (DPO) enables publishers to understand how impressions are bought; it can be difficult to keep track of who is buying what and for what price, as they usually sell their inventory through various ad tech operators.
DPO helps publishers see who their best buyers are based on data from ad tech vendors, such as the win rate of a buyer, payment terms, the response times of bids and the quality of the ad. Even the credit rating of a buyer can be checked, enabling publishers to maximize their revenue by reducing the likelihood of working with fraudsters or not getting paid for their inventory. They can also protect their reputation as they get more insight into ad quality, so there’s less chance of being associated with low-quality creative.
Embracing Life Beyond The Cookie
To truly future-proof programmatic campaigns, advertisers should work with a selection of premium publishers that can collect and distribute their first-party data. The latest IAB initiative regarding seller-defined audiences shows that the market is preparing for the post-cookie world, and both SSPs and DSPs are actively implementing new standards. Publishers are working hard to encourage users to register on their sites in order to gather valuable first-party data that will allow them to curate standardized demographic, interest or behavioral audience profiles based on real-time interactions and preferences.
Advertisers are also encouraging users to authorize the collection of their data in creative ways, as they understand how important this is for successful addressable advertising campaigns. Brands are increasingly offering free products and other eye-catching incentives in a bid to make one-to-one connections with consumers. For example, Budweiser recently offered a free beer to every person in the U.S. of legal drinking age in exchange for their email address and other personal data. The value of first-party data is continuing to increase, and the long-term benefits of earning this remain front of mind.
Along with user first-party data, context is also a strong signal for addressable advertising, and it remains the main targeting option without third-party cookies. Advertisers can reinforce ad quality using contextual intelligence, which doesn’t rely on keyword blocklists that can often eliminate harmless sites along with malicious webpages. Instead, natural language processing (NLP) and AI analyze grammar and sentence structure, deciphering sentiment to ensure ads appear alongside appropriate content. With so many difficulties in the privacy-first world, this solution enables consumers to receive relevant ads based on contextual analysis and not personal information.
While programmatic advertising shows no signs of slowing down, publishers and agencies must maximize supply and demand path optimization as the cookie’s death draws closer. Continuing to deliver engaging, privacy-safe ad experiences, expand contextual intelligence capabilities and experiment with other programmatic options not reliant on cookies is key.