“The Sell-Sider” is a column written by the sell side of the digital media community.
Today’s column is written by Brian Mikalis, senior vice president of monetization at Pandora.
In general, I’m a huge fan of making the buying and selling of digital ads more efficient and effective. This desire to continually evolve and improve the buy and sell process is one of the many reasons why the promise of programmatic buying is so compelling. Through automation and machine-based decisioning, programmatic can create efficiencies for marketers not only in terms of operational overhead, but also improved performance and higher return on ad spending.
My excitement is tempered, however, when I talk to marketers about applying programmatic capabilities beyond the desktop and into the world of mobile. While the potential of cross-device programmatic is great, there are still many hurdles that need to be overcome before cross-platform programmatic can achieve its rightful share of the marketing mix.
These hurdles are especially high for advertisers that are racing to supplement programmatic Web buying with mobile programmatic. That’s because I see what many marketers haven’t realized yet when looking at these two types of exchanges: We’re essentially looking at an apple and an orange.
I’ve been talking to proponents of mobile programmatic for the past three years. I’ve listened intently as technology vendors expound on the future of advertising and how their ad exchange, mobile DSP or data solution is going to revolutionize the way media is bought and sold. I’ve also spent countless hours with agencies, brand advertisers and performance-focused advertisers, whose response is universal: Mobile programmatic still lags behind desktop in terms of liquidity, quality of inventory, performance, targeting access and attribution measurement.
There is clear interest from the demand side. Advertisers are earmarking budgets for testing, but we are a long way away from mass adoption where ad spending and time spent on mobile are proportional. The reason lies in a few important nuances that make programmatic buying on mobile different than on the desktop Web. As long as these differences are accounted for, publishers and advertisers can work together to realize the myriad benefits that both mobile advertising and programmatic can deliver for the entire ecosystem.
While it’s important to acknowledge and understand the differences, this shouldn’t encourage marketers to ignore mobile programmatic or wait for the perfect solution. It does mean that they need to look at mobile on its own, including its unique challenges and opportunities, to fully realize the benefits. It is only when marketers do this that they will begin to crack the code on how to integrate mobile into their cross-platform programmatic mix.
First, The Bad News: Mobile Programmatic’s Unique Challenges
Mobile exchange supply and demand imbalance: Advertisers want access to quality ad inventory from publishers they are familiar with against high-value audiences. Publishers want fair rates for their ad space and a relevant ad experience for their users. To date, mobile ad exchanges have offered lots of ad space from unrecognizable publishers (largely gaming and app developers) with little data available for targeting audiences. This has driven down rates, making top publishers hesitant to bring their audience data and high-quality inventory supply into the mobile exchanges.
Subpar ad standards: The standard ad size across iOS and Android has been the 300×50 or 320×50 pixels. These ad units traditionally fit on the bottom of the mobile app and work across platform. We need standardization to make programmatic work, but this ad unit, with its limited real estate, has done little to excite advertisers and has failed to drive significant results for brand and performance advertisers alike.
The cookie has crumbled and mobile IDs present challenges: Consumers spend nearly five times more time with mobile apps than on mobile websites. While mobile browser-based cookies are prevalent in mobile Web, they are unusable in a world where the vast majority of time spent on mobile is jumping from app to app. This has pushed the industry to use mobile advertising IDs for targeting, retargeting, antitargeting and attribution. These mobile advertising IDs are not easily matched to Web cookies – the glue of Web-based programmatic – so translating budgets and bid logic from one platform to another is a challenge.
To add even further complexity, the IDs used to identify individual users on mobile have undergone quite an evolution. In just a few short years, the industry has moved from UDID and Mac address to IDFA on iOS, and from Android ID to the Google advertising ID. When these changes occur, everyone in the ecosystem needs to try to translate these IDs, or start from scratch. With no governing body to establish neutral standards of how these IDs are managed and refreshed, the mobile programmatic ecosystem is at the mercy of the major OS platforms – Google and Apple.
Advertisers and most publishers (app developers) have no data: Brand advertisers have yet to amass the sizable audiences on mobile, which means they don’t have large pools of advertising IDs to retarget like they have Web cookies collected from their ecommerce or brand sites. On the publisher side, there are only a few publishers that require users to log-in within a mobile app, and therefore have registration or behavioral data on their users they can make available for targeting. This means that ad exchanges do not have enough data available for advertisers to leverage in a programmatic environment.
Too many intermediaries erode programmatic’s efficiency, effectiveness and value: Mobile programmatic is in its infancy, so it makes sense that specialists are required to help move the industry forward. That said, the fragmented nature of the space often means multiple conversations to complete simple tasks and set up deals, limiting the potential operational efficiencies that programmatic should enable. It is not uncommon, for example, for five or six intermediaries to be involved in setting up a mobile programmatic campaign, including advertiser, agency, agency trading desk, DSP, data-management platform, exchange/SSP and publisher. With so many companies involved and each taking a cut of the pie, it diminishes the spending power of the advertiser, and the net yield to the publisher.
Now, The Good News: Mobile Programmatics’s Unique Opportunities
Private exchanges will offer higher-quality inventory and more data targeting: Private exchanges provide comfort to publishers who are getting started in programmatic. Advertisers will be able to access the ad space they want, and leverage more data than if they just try to buy in an open exchange. It takes some more work to transact through private exchanges than through a single exchange, but the extra work will be worth the effort.
Publishers will create more engaging ads: Native ads look great, improve the user experience, are more exciting to advertisers and have better performance. While it’s a challenge to transact on multiple ad sizes and formats in a programmatic environment, it is also an opportunity to move beyond the original standards created for mobile.
Marketers need to focus on efficiency: Without all of the components that have made web programmatic successful, the focus should be on the benefits of efficiency at this stage. There will be incremental gains as time passes, but everyone on the buy and sell sides need to take this one step at a time and believe in the long-term benefits and integration of mobile programmatic.
By acknowledging the great opportunities for mobile programmatic to work well alongside the challenges of present day, marketers should focus on launching their individual mobile programmatic programs separate from the web.
The time to start experimenting is now, but the focus shouldn’t be on a seamless cross-platform integration.
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