“Programmatic advertising is the automated buying and selling of online advertising. Targeting tactics are used to segment audiences using data so that advertisers only pay for ads delivered to the right people at the right time…”
The method of programmatic advertising is an auction system that puts advertisers together with online and/or mobile properties with available ad space. The method allows the highest bidder to A) target their ad to be viewed by different demographic & psychographic potential customers on websites and applications those consumers visit. B) It also allows the ad to go out in real time and limit the cost of the ad placement to just a fractional amount greater than the second-place bidder, the purpose of which is intended to minimize the cost per ad placed.
This method of buying and selling ads has worked out for some and probably not as well for others. On average, click-through-rates for Facebook ads across all industries is 0.90% and runs about 0.46% for Google display ads. Facebook and Google are making money selling ad space with the programmatic platform. Sadly, for many advertisers, just because an ad ran, and they paid for it, does not necessarily mean it was viewed.
Many folks saw the profitability and ease of buying and selling ads in the digital world and decided… “Hey, if it works for them, why not for us!”. So, they got cozy with people in the OOH industry who on average have as much as 30+% of the 340,817 billboards and posters in the U.S. unsold during any given month. That’s 102,245 potential units that could be sold, but often end up becoming added value or public service announcements, neither of which are generating revenue.
Those folks and a few of the top executes at the big billboard companies said, “well you can’t skip a billboard like you can a digital ad, maybe we should try selling this unsold inventory as the digital ads do, programmatically!” Lightbulb!
So, in 2012 Broadsign established the first programmatic OOH exchange and called it Vistar, based out of Canada, which had access to about 90% of the United States digital OOH inventory. Today there are all kinds of companies offering programmatic buying of OOH and digital location-based advertising inventory through self-serve platforms.
So, here’s the rub… This method seems to be a logical way to sell unsold inventory for OOH companies. Digital boards that have an open week here or there can be sold at the last minute instead of being left unsold, so the OOH companies are able to get something for the space. As they say, something is better than nothing.
There are three inherent problems associated with programmatic buying of OOH, and they are related to TIME, QUALITY, & MONEY:
- TIME – One key benefit to using a programmatic platform is supposed to be the time the buyer will save in having to source RFP’s, dig through options and select and negotiate the best group of locations. Now a buyer must learn a new ordering platform, but once learned, the process might be faster by as much as 2-3 days. That could be significant savings depending on the size of the agency. The agency might save a few dollars in labor, but will this savings be passed onto the client? The price determined through the bidding must still be agreed to by the OOH company, which means they still set the price at a level they are comfortable accepting. It’s possible the price might have been lower had the agency just bought the property through the OOH company directly bypassing the programmatic method and costs. The agency must still pay the price the OOH company will charge for the units, but now the agency must figure out how to offset the additional expense of the programmatic platform’s commission or decide to just add it to the client’s final cost. I suggest the cost savings to the agency will ultimately end up in the pocket of the agency and result in the client paying the same or higher pricing for less than prime OOH inventory. In this case programmatic buying won’t benefit the client.
- QUALITY – There is a reason that some billboards and transit locations are sold all the time and a reason the bottom 30% remain unsold. Its because the advertiser, either through an agency or through an in-house buyer has sourced the best options that fit its targeted demos for OOH & transit options and has bought those locations and units first. Typically, the first sold are the best options and selections. That means the rest of the inventory available to be sold programmatically are likely not the highest quality options to select from. If a buy is made through the programmatic exchange, the units must be available, and if available it’s unlikely that the same units would not be available to be purchased directly through that OOH company in the first place.
- MONEY – As mentioned above in the TIME section, most programmatic buying exchanges, need to make a living too. They must either get those revenue dollars from the agency/via the client or kick back from the OOH companies as a percentage of the sales made through the platform OR BOTH. I do not begrudge any company providing a service or a product the right to make a living. What I believe and what our company does is always look out for the best interest of the client. That means we rarely would use a 3rd party company for any buying activity, unless that cost associated with the 3rd party could be justified and not increase the cost to our client’s bottom line. So far, we have not seen a platform yet in this country or in others, that allows for programmatic buying of OOH and does not also carry the baggage of one or more of the three inherent problems of Programmatic OOH buying.
Let me be clear, programmatic OOH buying still has value in some cases. For example. If a client is seeking a GRP buy, or if it is trying to blanket cover an area in a short period of time or at the last minute, then this can be achieved with programmatic OOH campaigns. If an agency is short on actual human buyers and have been tasked with a large amount of buying in a short turnaround time, again this might be a good option. It is certainly a viable option for a very small product or service company that does not have a huge media budget but wants to make buys themselves.
It is certainly a smart move by OOH companies as its gives them another chance to make money on boards that are unsold or are typically hard to sell.
Not all methods of media buying are transferable to all other channels. In the case of programmatic buying of OOH, its important from an ethical perspective that clients are informed before any campaigns are purchased, meaning disclosing the advantages and disadvantages as well as the costs associated with the buying method.