Programmatic Ad Buying Solves All Problems, Until It Creates New Ones

You weren’t the only one who was freaking out last week when Facebook’s servers were down; advertisers were also caught without access to their programmatic ad settings. For most advertisers, the servers being down for an extended period meant that there was dramatic decline in their daily spending. Other advertisers weren’t as lucky; as the servers came back online the programmatic bidding algorithms aggressively competed against each other for the scarce users as they attempted to hit their daily targets, paying up to 300x the normal price.

The problem was a result of an unusual supply shortage which caused the demand to skyrocket. Without access to disable the programmatic buying advertisers could only watch as ads were being served at a rate which was well beyond their ROI targets. This should be a cautionary tale to digital marketers as programmatic ad buying becomes more prevalent - in addition to setting a daily spend allowance it would also be wise to set a cap on how much can be spent on a single ad.

Ads that no one sees

AppNexus announced that it would allow advertisers to pay only for those digital ads that are actually seen by people. This is a very important innovation in the digital advertising industry, given that most studies estimate that only about half of digital ads are seen by real people.

However, many marketers might still pay for ads that no one sees. As programmatic advertising auctions became popular, they have put a downward pressure on ad rates as measured by CPMs  and advertisers have developed a taste for the cheapest option available. The problem is that the CPM metric measures page impressions but not always whether someone has actually scrolled down to where the ad is shown.

Ad agencies often have to promise advertisers lower ad rates as a way to land competitive deals. "One really interesting aspect of this is that procurement for marketers may effectively be forcing agencies to buy non viewable impressions." says Mr. O'Kelley, CEO of AppNexus.

http://adage.com/article/digital/a-market-online-ads-sees/301252/