The Industrialization of Advertising

Container pallets aerial view 
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Advertising networks are being automated at a rapid pace
Photo by chuttersnap on Unsplash

While you were watching, media buying in advertising changed completely. Zenith Optomedia estimates that $84 billion will be spent in 2019 with a minimal amount of human intervention. We’ve all heard the words programmatic but what it means in essence, is that advertisers sign up with an ad exchange, set the audience they want to reach, the budget and the period the ads should run for. Then the bots take over. Bidding at ad exchanges is close to real-time in placing ad inventory available on the network. 

$84 billion in ad spends equals nearly $1 million spent every hour. The ads need to be created and approved. And then the systems take over. How pervasive it has become is explained in this excerpt: The US is also the market that has most embraced programmatic advertising, trading 83% of all digital media programmatically this year. Canada is in second place, trading 82% of digital media programmatically, followed by the UK, with 76%, and Denmark, with 75%. By 2020, programmatic advertising will account for more than 80% of digital media in all four markets. Canada will have almost completed the transition to pure programmatic trading, spending 99% of digital media programmatically that year.

Why did this happen?

Visualization of a stream of information being transmitted
 Photo by Joshua Sortino on Unsplash
Visualization of a stream of information being transmitted
Photo by Joshua Sortino on Unsplash

It’s a lot like what happened to the stock market. To buy stock in the 70s and 80s, you first had to talk to brokers, who in turn would execute trades for you. All that is history now. Ad Exchanges function exactly like the stock market, but for advertisers and agencies. Popular sites with high traffic charge more for every ‘impression’ – the ad being shown on the site. Websites on specific topics are sliced, dissected, put into several containers for advertisers to bid on. Advertising spaces open up and close. Ads are directed to channels across devices and pop up or are ‘served’ to prospects defined by the client. Even though the ‘click-through rate’, is less than 1% on average, it still makes tidy profits and money. A market that was conceived less than 25 years ago.

Looking at the speed at which ads are created, bought, sold and junked makes the ‘old’ way of purchasing and publishing ads almost quaint in comparison. Both these markets run alongside each other. Television programs – from sports to serials, radio programs, outdoor billboards are still negotiated and sealed in person. The systems still work but it will be a matter of time before the digital tsunami of programmatic extends its reach to traditional channels.

In how many ways do you have to be creative?

person looking at a mobile screen with an open laptop on the table
Ads on a laptop and mobile screen

Consider a sample set of size options. Welcome to medium rectangles, large rectangles, and leaderboards from Google, Facebook Feed (Image and Video), Facebook Right Column, Facebook Instant Articles, Facebook Marketplace, Facebook Audience Network Native, Banner, Interstitial Messenger Inbox, and of course, Carousels. On Twitter, Plain text Tweet, Image Website Card, Image app card, Promoted Video, Single image Tweets & GIFs, Multi-image Tweets, Video app card, Video Website Card, Conversational ads Direct Message Card

I could go on but you do get the point. The jargon has developed faster than the market. It was much easier for clients earlier. Time was spent on crafting ads and determining where they would run. Physical proof that the ad had appeared was sent to agency offices (and is probably still being sent) but how do you prove an ‘impression’ was served on a ‘page’? The web page is being assembled from various content clusters sourced from various points and the ads are another ‘component’ Or, as the ad exchanges would call it, ‘Inventory’ That term was used to describe machine parts in warehouses, not pixels suspended in virtual containers.

Living with the bots

Abstract graphic of light to denote information transmission
Graphic depiction of a data stream
Photo by Maxime VALCARCE on Unsplash

So once an ad is created, it has to be adapted into several sizes, stretched, layered, reduced and squeezed based on where it will be displayed – a mobile phone screen, a tablet, a laptop with all the permutations and combinations of screen sizes of the devices. We’ve all seen web pages that don’t exactly ‘fit’ within the screen. That’s because making every ad fit perfectly into every size on every platform is still work in progress. An exchange can specify, for example, that the ad file size should not be above 20 KB. Now, try reducing that gorgeous food shot into an itsy-bitsy file and you’ll have pandemonium in art departments. But the bots don’t care. If the size limit is breached, it won’t be approved or become part of ‘inventory’

Like groups of accountants who converge around tax laws and its interpretation, companies have sprung up to provide specific or the whole gamut of services. Need a background banished from a photograph? Done. One obscure file format to be converted to another. Done. Adaptations for Facebook and Twitter of a single piece of creative? Done. Then the ads are uploaded, approved and ‘served’. The age of ad industrialization is truly here. And things are never going to go back to where they were. Too much work.

Clicks rule the roost

A 'Click & Collect' sign lit up
Photo by Henrik D√łnnestad on Unsplash
Monetizing clicks is the primary objective
Photo by Henrik D√łnnestad on Unsplash

It is the currency of the web. Generating billions of dollars for companies channeling clickstreams to profits. And that cannot be argued or reasoned with. Ads that are clicked survive. It is a binary world – no human shades of gray are allowed. The ad either works or it doesn’t. It doesn’t matter if it brought a smile to a prospect’s face. It wasn’t clicked and so, it will not be allowed to exist. goes back to TV advertising

And yet…some brands are swimming upstream. Not against the clicks but going back to that old chestnut – TV commercials. Monster has found that telling stories works better on TV. And it has committed as much as 20% of spends to TV advertising. In India, Google and Amazon are spending big bucks on television all through the year. Ads that are not clicked, not measurable and don’t immediately provide returns on investments. A deeper equation is at work. Clicks build market share, for sure. But they don’t do a thing for building trust. That still has to be done the old-fashioned way. Telling people about why the brand should exist in their life. And make room for a little magic.

Update: The trends in programmatic advertising in 2020 and beyond show how the industry is evolving to handle several aspects of the media universe

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