Programmatic's Evolution: Where Are We Now, Where Are We Going?

• by Tobi Elkin@tobielkin, Yesterday, 4:14 PM

At a panel on the evolution of programmatic media, industry heavyweights shared their vision on whether programmatic has delivered on its promise and potential. The consensus? There’s way more to come, with targeting, attribution, and creative key focuses in the near term.

“We’re in the third inning,” said Mark Zagorski, CEO, Exelate. “The first inning was a about reducing friction between buyers and sellers, and the second was about inventory and price optimization. Now, we’re in the era of audience verification and targeting. The system is more efficient and we’re more accurately reaching audiences,” he said.

However, the industry is coming into a time when it needs to think as much as it does about technology about creative, according to Gregory Raifman, president, Rubicon Project. Raifman said he recalls a time when there were poorly targeted ads. “Now people are frustrated that targeting is too good. We’re overtargeting, and now there’s ad blocking. We must figure out how to create a better environment to engage consumers in a more relevant way.”

Tim Cadogan, CEO, OpenX, was circumspect: “We have to help publishers, marketers, and the consumers reconstruct their relationships. Ad blocking is a fraying of the relationship."

Cadogan maintained that using technology from companies like his can help. “We’ve been focusing on price optimization, but we haven’t focused enough on quality optimization yet. We need to focus on the creative and ad relevance,” he said. He predicted in five years that the industry will focus more on tying targeting to relevance. Zagorski said that programmatic, at its best, delivers relevance, real-time optimization, efficiency, and targeting. Even so, he said, people will still want to block ads.

Cadogan cited Pepsi’s six-second ads, which he finds interesting: “But will this work for consumers? And will it work well enough for the marketer to get their message across?”

Eric Franchi, cofounder, Undertone, is focused on bringing new creative ad formats to programmatic. “We think that will bring a lot more interest from brands into the space,” he said. With respect to measurement, “we  [as an industry]need to go beyond impressions and clicks toward the attention metric such as engagement. We need to first understand if we’ve captured consumer attention -- and from there, focus on metrics such as engagement which are appropriate for digital brand advertising.”

Cadogan called on ad quality and inventory quality themes his company is focused on. “People put malware in the creative and turn your computer into a farm that perpetuates more fraud. OpenX tries to make sure there’s no malware in the creative.”  

Attribution is also top-of-mind for these programmatic executives. “If you’re an advertiser and you’re allowing publishers to keep score for you, you’re not layering on individual recognition, and you don’t know who’s watching which ads in which sequence. You’re making poor decisions," said Scott Howe, president and CEO, Acxiom. "In five to 10 years we’ll say it’s fraud because of last click attribution.”

Zagorski took the opportunity to emphasize that ad fraud underscores the importance of independent measurement: “There is a need for independent measurement companies—those that are not beholden to those they measure,” he said. He noted that Facebook is opening its system to Acxiom, Datalogix and others for independent measurement.

Howe also emphasized that advertisers know their audiences better than many third parties and shouldn’t “fall victim to using someone else’s [audience] segments.”

Cadogan asserted that scale and standardization matter in programmatic, and that custom ad units are tough to trade in an automated system. However, he said if they’re digitally addressable and standardized, they can be traded.

Howe said that his clients will do some $300 million in targeted TV this year. With advertisers like Procter & Gamble pulling back on targeting, what does that mean for the rest of the business? “Some companies are outliers. P&G is one of them. The targeting needs of CPG [consumer package goods] companies are light, but for considered purchases such as auto, they’re heavy,” Howe explained.  

Franchi sees progress: “We’re coming out of the impressions and clicks era. Viewability is getting there. We’re fans of engagement—what did people do after seeing an ad?  We like the idea of moving to the idea of attention as a metric,” he said.

Cadogan telescoped five years into the future, with self-driving cars as an example: “If they’re a real thing, what will you have in front of you in that car? A really big screen.” He predicts advertising and media on that screen, plus more augmented reality and virtual reality.