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6 Business questions to consider before investing in programmatic advertising

July 17, 2018 | By Margaret Farmakis. VP—Sovrn Services @sovrnholdings

Having worked for an email data company in a previous life, I’m used to the predictions that people love to make about the death of a specific marketing channel. Remember when Slack was going to kill email or Google+ was going to kill Facebook? We all know how those worked out.

With GDPR now in effect, I’ve been hearing a lot of predictions about the impending demise of programmatic advertising. What’s ironic is that greater transparency and protection of consumer privacy rights are very positive steps forward for the industry. So, for publishers who’ve never invested in programmatic, now is actually a great time to do so.

That being said, as with any investment of time, money and resources, companies should arm themselves with as much information as possible; consider what’s best for their business (instead of focusing on what everyone else is doing); and make sure that they understand the potential benefits and drawbacks of making such an investment.

Here are six business questions for publishers to consider before investing in programmatic:

1. What are your goals?

This may seem obvious, but beyond making money, it’s important for publishers to clarify exactly what success looks like and define their desired outcomes. In addition to a new revenue stream, do your programmatic goals include: gaining insights into your audience data and behaviors? Exposing your inventory to a new set of buyers? Expanding brand recognition? Gathering data to build a business case for a larger investment? Or perhaps you are considering using programmatic to drive ecommerce activity? Each of those goals requires a different approach, so it’s important to define the “why” before focusing on the “how.”

2. How much does the user experience matter?

Too often we see publishers making trade-offs with the quality of their user experience in favor of displaying more ads or using ad formats that aren’t in-line with IAB or Coalition for Better Ads standards. It can be tempting to forgo best practices when revenue is the only metric that matters (which it shouldn’t be).

Your users—and their willingness to visit and spend time on your site on a consistent basis—are even more valuable. That’s why it’s important to ensure you have a responsive site with load times of three seconds or less (Google shows quicker-loading mobile pages higher up in its search results) and a design that is uncluttered and easy to scroll and click-through. Don’t let first-order thinking trump what’s best for your users.

3. What is your biggest fear?

Before investing in anything new, it’s a good idea to go through a fear-setting exercise. Tim Ferris has a great template that he designed to be used for working through personal and life decisions, and it can also be applied to business decisions. This includes:

  • Defining your fear (what is the worst thing that could happen);
  • Outlining what steps you could take to prevent the worst possible outcome;
  • If the worst outcome happens, defining the steps you would take to repair the damage; and
  • Determining the short- and long-term costs of taking no action at all and sticking with the status quo.

For most publishers, this exercise would likely involve fears related to ad quality or fraud issues. If that’s the case, consider using anti-malware software (like Confiant), which can help prevent malvertising. It’s not foolproof, so to repair the damage, publishers should have a plan for investigating and taking down these ads. For example, have a segment of super users you can rely on to report issues and test fixes. And work with reputable partners who have rigorous approval standards in place and will be responsive to your support requests.

4. Are you taking a collaborative or siloed approach?

If you’re a larger publisher, you may have the budget to invest in creating fully-staffed teams to focus on sales, ad ops, and editorial. If so, don’t make the mistake of running those teams in silos with little to no opportunity for cross-functional collaboration.

When it comes to programmatic advertising, everything is connected, and shared goals are critical for successful outcomes. Decisions involving how your inventory is sold and trafficked and the page(s) it’s displayed on require ongoing and frequent communication between the sales, ad ops and editorial teams to ensure the best possible results. For successful collaboration to take place, it’s important to define the dependencies between teams and how each individual team contributes to the bigger picture of increasing user engagement through producing original content that also displays relevant advertising.

5. How important is testing and optimization?

I don’t know of a single marketing channel where the marketer doesn’t gain performance improvements by adopting a learning cycle of testing, adjusting, and optimizing. Often, the whole point of investing in a new channel is to gather data you didn’t have before. Then you can use the data to test a variety of hypotheses that result in varying degrees of ROI. This means it’s important to consider if you have the tools, resources and tolerance for continually tweaking what’s working (and what isn’t) to produce the best possible results and get the highest return possible on your investment. It’s an art and a science and it takes time to perfect, but it’s worth it.

6. What type of company do you want to work with?

The ad tech space is full of companies providing a wide variety of products and services for publishers. Not all of them will suit your needs or align with your business practices, so it’s important to do your research. Pay particular attention to claims that seem too good to be true (for example, promises of 100% fill rates). Ask questions about a company’s support model (for example, what are the average response times, how are requests prioritized, and what is the coverage model on weekends and holidays).

It’s also important to understand how each company is (or isn’t) compliant with the various US and international data collection and privacy laws governing digital advertising (i.e., GDPR, COPPA, PIPEDA, CAN-SPAM, etc.) and whether they’ve implemented the bare minimum for compliance or adhere to both “the spirit and the letter” of the law. For example, Sovrn is the only exchange offering a free Consent Management Platform (CMP) to help publishers with GDPR compliance, instead of putting the burden on the publisher to figure out how to be compliant on their own.

According to eMarketer’s “US Programmatic Ad Spending Forecast 2018,” almost $47 billion will go to programmatic advertising this year. And, by 2020 programmatic will account for 86.2% of digital display spend. Now is a great time to explore if programmatic is worth investing in for your business. Start by focusing on what makes your content and audience unique, your tolerance for risk, your desired outcomes and what you want to learn.

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