Chris Hogg, Managing Director EMEA (left), and Adam Solomon, Chief Growth Officer (right) at unstacked data solutions company Lotame, explain why programmatic advertising is at a crossroads.
How well is programmatic being adopted globally and in the region?
Adam Solomon: One way to look at the success of programmatic globally is how it was first used in display advertising, then adopted into mobile app advertising, and then into video. Now, except for some new entrants maybe, most digital advertising has some programmatic component, whether it’s on open exchanges, private marketplaces, or Programmatic Guaranteed.
Chris Hogg: Different markets have moved at different speeds. For example, the UK adopted programmatic early and quickly, whereas Germany was a bit slower. In the Middle East, the UAE adopts technology a lot quicker. I think price points, as well as overlaying the prices of the different technologies and the additional people that need feeding in the value chain, have an impact on the adoption of programmatic.
So, is it fair to consider programmatic a success story?
A.S.: Programmatic was originally conceived and touted as a way to bring efficiency and automation to the buying and selling of media at scale. But today, that promise is facing some serious headwinds.
Programmatic was a direct descendant of ad networks and was meant to have a benevolent effect on the market by really maximizing yield for publishers and efficiency for marketeers, thanks to auction dynamics. However, what ended up happening was a shift in power. On the buy side of the equation, marketeers now have their own tools and bring their own data through a DSP; and on the sell side, all of a sudden, publishers are just slots to place ads. Because marketeers can now go find people anywhere, you had this downward pressure on CPMs, publishers got more desperate to get revenue and keep their business afloat, putting more and more intrusive ads on the page, loosening up what they were doing, which then led to privacy issues and so on. What’s more, all this innovation was fueled by venture capital. Everyone had their hands in the cookie jar. With the best of intentions, we ended up in this negative feedback loop instead of a virtuous circle.
C.H.: Programmatic also created the notion of arbitrage of impressions. A number of people sat in between the brand and the publisher, selling pieces of inventory to each other before they actually hit the publisher. That has been cleaned up recently.
How much of a concern is consumers’ growing distrust around data and privacy?
A.S.: It is not worrisome for good actors, but the unfortunate thing is that, in consumers’ minds, everyone’s being painted with a broad brush. When they see someone’s hacking into banking accounts and stealing passwords, and they hear that a company is following them around the web to show them shoe ads, in their minds, it’s all one and the same. Nuance gets completely lost. So, we have to be mindful of that and go above and beyond to explain, through our consumer touchpoints – which are publishers media companies – what’s going on, why we’re doing it, etc.
What main business challenges are you identifying today?
C.H.: Rebalancing the Internet and the revenue flow. Over the years, publishers have tried lots of things to diversify their revenue base, becoming sales houses or spinning off exchanges and marketplaces. But the industry needs to put more revenue back through to publishers, because if you don’t have premium content, you won’t have an Internet-only user-generated content inside the walled gardens.
What’s happening around cookies is going to help publishers sway back more control, and the next two to five years are potentially going to be better for premium publishers with a loyal following. But if you are a longer-tail publisher that doesn’t have the ability to gain consent or doesn’t have a loyal enough base to get authenticated users coming in through your properties, you are going to have a harder time.
How do you see this industry evolving in the near future?
A.S.: We’re moving away from just being infatuated with the technology and taking a step back to think about the fundamentals: people. I know it seems obvious, but for a while there, we got lost in clicks, conversions, AI… It’s not a new conversation but it has now become a critical conversation. We have the tools, including through programmatic, to just do good advertising; so, the future is going to be about marrying the fundamental marketing principles and the benefits of technology. Art can inform science; science can inform art. The balance is just going to get better.
C.H.: The market has matured a great deal in the past two years, but perhaps the local markets need to find their own rhythm, their own pace, and let the programmatic market take shape according to the region’s current requirements. We need to take a step back and see what’s right for this market, for these consumers, for these advertisers, and for these publishers, and let the market take its own flow, find its own price point. The adoption of programmatic trading, but more importantly the adoption of data to actually drive outcomes and performance for all parties involved, will just evolve naturally.
You both mention taking a step back. Wouldn’t that affect your business?
A.S.: In our position in the marketplace, the emphasis is on solutions. We want to work with marketeers, agencies, publishers, media companies and maybe some platforms as well, to help them drive their business forward. We’ve prided ourselves over 14 years in being a strong consultative partner that shoots straight, that’s honest, that’s helpful. If we can help clients, there’s an opportunity for us to make money and drive our business forward. That’s why we look at the world the way it really is. It’s not just about shoving some technology at marketeers because it helps us drive some near-term revenue; we want sustainable partnerships, and that only comes from giving good advice and coming up with workable solutions.
C.H.: Yes. You need your publishers and your brands to be successful, and that creates opportunities in the middle for people like us.