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Why Has Programmatic Advertising Not Achieved Its Potential?

Most of the time, when I talk about display ads, the response I get is that “banners suck”. This is despite the fact that a few years ago, when we first learned about the rapid growth of programmatic advertising, many of us thought it would finally allow advertisers and marketers to reach consumers in a hyper-personalized way.

Programmatic advertising came on the scene by empowering brands and agencies to buy ads without human mediation. Buying advertising on a programmatic basis meant that there could be more customization for the advertiser in who was targeted with what content. Instead of engaging in the manual tasks of buying and implementing ads, humans could now focus on creative, strategy and granularity in approach. Clearly, it hasn’t worked out this way.

Programmatic itself is challenged by issues within its ecosystem, based on “walled gardens” that rose up organically as the industry grew. While getting programmatic solutions to work together is one side of the story of programmatic’s lost potential, it’s also lost its sense of messaging mattering more than the channels and bids themselves. The advertising industry does sometimes get short sight, but in all this, it has missed out on the goal many have sought after all along: true one-to-one personalization.

Programmatic display is still growing, but that growth is slowing as advertisers realize they may have to look at the format in a different way. Source: eMarketer.

 

The Dream of One-to-One Personalization

The moment we wake up, we may put on our makeup, but we don’t say a little prayer for ads. The fact is, we don’t often care one bit about the ads we get. Marketing isn’t just about channel, placement and bids. It’s also about the message you communicate, the things that matter to them, and engaging with them in a way that provides value all its own.

That’s where the real dream of one-to-one personalization comes in. The most relevant message you can offer a consumer is something personal, and that requires having responsive interactions with them – not just sending them passive messages at the lowest possible price. Marketing fundamentally grapples with a challenge of relevance. 

The saddest thing in life is wasted potential, but it doesn’t mean that time is up for programmatic advertising.

When was the last time you woke up and said “I hope I see a great ad today?” Other than for loyal AdAge or Adweek subscriber, it’s not likely to make it to the top of your list. Consumers might hope to see fewer ads rather than more of them, but if they’re going to see ads no matter what, those ads might as well be relevant, personalized and interactive. This doesn’t mean going “full Minority Report” – it can be done in a fun, friendly and informative way that actually enhances our experience of a brand while making it easier for us to choose the products that are right for us. Ultimately, things can be improved without veering into being dystopian.

 

Is Programmatic Advertising Suffering from a Streetlight Effect?

Before digital marketing, it was difficult for brands to get granular insight on the performance and relevance of their ads. With digital, behavioural data became a new element that could drive personalization and profit. By driving more data about more customers, advertising could be better targeted to individual consumers. By driving every traditional publisher, media buyer and advertising outlet into the programmatic space, everybody could finally benefit from the same delicious data that advertisers using platforms like Google and Facebook could always feast on.

Though data may be the new oil, we are still limited by the degree to which we can use it to fuel our campaigns. This is where the “drunkard’s search principle” or “streetlight effect”. The story goes that a policeman runs across a drunk late at night and finds him fumbling under a streetlight, when he asks him what he’s looking for, the drunk says he’s lost his house keys. After a few minutes spent dutifully assisting him, the policeman finally asks the drunk where he dropped his keys. “In the park”, he says, to which the police officer asks why he’s looking under this faraway streetlight. “It’s the only place with light,” the drunk responds.

The streetlight effect is a common logical fallacy, but on a massive scale, it can mislead whole markets and communities, as it has with programmatic advertising.

This is what every digital advertiser is ultimately doing. The reach of the streetlight may be broader, but there is never the equivalent of sunshine on every inch of the landscape. Looking only in the places where you have data is the equivalent of looking under a streetlamp for keys that you dropped in a park.

Declarative, first-party data is one of the few ways that brands can reach beyond these limitations to own and generate their own insights on customers and drive real one-to-one personalization. Up until recently, programmatic advertising didn’t offer it natively. Marketers had to create landing pages to host forms, inducing friction to the experience. But with the advances of Conversational AI, they can now create conversational banners in Google DV360  along with new conversational ad formats, emerging for Facebook, Instagram and YouTube.

 

A 300×600 Image Can Only Be So Personal

Fundamentally, programmatic advertising tried to solve a new problem with an old method. One-to-one personalization has long been a dream for marketers, but it hasn’t necessarily been a “problem” to solve until recently. Relative personalization has increased to such a point that 91% of consumers now expect to be recognized, remembered and offered personalization by brands, and this means that one-to-one isn’t a dream but a necessity for any brand that wants to compete.

So why isn’t programmatic able to provide this? Segmentation-based targeting dominates programmatic methodology, but that isn’t the only way to personalize an advertisement. Interactivity and directness are crucial to actively personalized experiences because you can’t be in a consumer’s head 24/7, so you need to allow them to condition their own personalization. True, continuous one-to-one can be realized when their ads, brand websites, messaging channels, social media, and virtual assistants are all connected and able to pick up where the previous channel left off. For programmatic advertising to play nice in this domain, it needs to change ad format altogether.

Ads are getting blocked for a variety of reasons. By making consumers feel safer and enhancing the experience, the potential of programmatic can finally be realized. Source: IAB.

Fortunately for programmatic, almost every other form of advertising is having this problem, and some simple change is the only thing that’s needed for programmatic to finally reach its full, glorious potential.

 

Where Can Programmatic Advertising Find Redemption?

Conversational Advertising is one of the kinds of experiences that programmatic can use to overcome the barriers to growth it faces. By offering consumers conversational experiences, brands are seeing increased engagement and other improved outcomes.

An example conversational display ad experience, featuring a simple image with a prompt to chat that ultimately better engages and converts consumers.

An example of a conversational display ad experience, featuring a simple image with a prompt to chat that ultimately better engages and converts consumers.

 

Another example of conversational advertising on Instagram. User swipes up on a story or clicks on a CTA in an ad to open a fully branded conversational experience in a webview (without leaving Instagram app).

With Conversational Advertising deployed across formats like display, social feeds, stories, or even as calls to action in television ads and other formats going forward, brands are going to have more opportunities to overcome the challenges that programmatic advertising has given them and finally realize their one-to-one dreams.

 

Contact Automat to learn more about Conversational Advertising and how to overcome the challenges of programmatic