The rise of programmatic media buying and its enthusiasts and detractors

The automation of digital media buying certainly has its enthusiasts. Marketers love that you can serve up a personalised ad to someone based on what they’ve been up to online and where they are. Media buyers love anything that makes their day simpler and more accountable in a marketing landscape growing in complexity.

In the US, such programmatic media buying now accounts for close to $US15 billion of spend a year, up 50 per cent on the previous year, and 25 per cent of all digital advertising bought. That’s a lot of enthusiasts.

Yet it also has its detractors. They don’t argue with the principles of automated media buying, but they do have a problem with how automated media buying is happening. They point to some issues that haven’t gone away — transparency, conflicts of interest and accountability.

The best parallel to the automated media buying and selling market is the stock exchange. Twenty years ago, someone wanting to buy some shares had to ring the exchange floor to have their order placed. The broker would find a seller at the ideal price and the trade would happen. The stock exchange was the independent place for it to happen, and the authority that recorded the trade. Nowadays while there are more stock exchanges, and the system is automated, the principle remains the same. It’s a marketplace for buyers and sellers.

One of the main areas of programmatic media buying is real-time bidding for available advertising space. For example, an advertiser such as Bunnings might want to send a tailored ad to a specific group of customers who have shown an interest in lawnmowers to be viewed when those customers are next on their computer. But Masters and Mitre 10 might also want to reach those same customers, as might a home insurance company.

They are all in a battle for the advertising inventory on those people’s computers — those ads that appear on popular websites such as

Now each of those popular sites has built ad exchanges — a marketplace to bid for, and buy, their advertising inventory. The would-be buyers of this ad space — mostly media agencies representing brands such as Bunnings — have built complex demand-side platforms (DSPs) to aggregate the available advertising inventory out there, and determine which of them will reach the most people showing an interest in lawnmowers, at the most efficient price. As this happens in real time, the price of these ad spaces can go up and down based on supply and demand. Again, it is a classic marketplace for buyers and sellers.

The final piece of the puzzle in this example of programmatic buying, is sending the actual ad to that just purchased advertising space. Again in real time, ad serving companies such as Doubleclick send the Bunnings lawnmower ad, it pops up on the website on the potential customer’s computer, and the marketers have succeeded in promoting a product to a person predisposed and interested in it.

The enthusiasts marvel at the technology, the automation, and the real time analytics of knowing exactly what the potential customer did after seeing the ad.

The detractors worry about the grey areas. What proof is there that the ad popped up on that computer on that website? Because when they buy an ad in a News Corp newspaper, they can physically see that it appeared. Not here. They also worry about the cost of the ad. Did the media agency have to bid high, or did they get it cheaply? Did they charge me what they estimated the cost to be upfront, or what it cost in the end? They also worry that it’s a trade between two computer systems, the media buyer’s DSP, and the website’s ad exchange. And as such, what’s stopping our lawnmower ad appearing on a kids’ website, which would be a waste of money?

The good news is that the major media buying agencies, and the major sites with advertising space to sell, are already a step ahead. Their DSPs have filtering software to ensure brand safety and to verify that sites are what they purport to be. Ads are sent out with tags to enable them to be tracked and to verify that they ran and were seen by someone. Dashboards in the systems showcase how the return on investment is being maximised in real time. Billing systems have more rigour.

As with many industries, sometimes a few players give the rest a bad name. Ensuring the ads are tagged, that they are bought through reputable ad exchanges, and the inventory has been checked and verified by a trusted DSP, will provide the best chance of the ad reaching the right person, at the right time, on the right site, with the right message. And keep the enthusiasts winning over the detractors.