Programmatic needs to deliver on its relevance promise

Relevance is everything in advertising. If I’m interested in golf but not in tennis, then it doesn’t take a rocket scientist to work out that I’m more likely to click on an advertisement for a golf holiday than I am for a tennis holiday.

In essence, this is where the real appeal of programmatic advertising lies. In the programmatic world – or at least the real-time bidding, auction part of it – it matters not where the ad appears, only that it’s the place your target consumer happens to be at the precise moment it’s served, whether that’s the Daily Telegraph Web site or an ad-funded game on his smartphone. 

(The other strain of programmatic, private marketplaces, which is growing in popularity, is more akin to traditional advertising in that the advertiser can choose where its ad will appear, even though the inventory is traded programmatically.)

In theory, then, given publisher concerns about the growing number of consumers opting to deploy ad-blocking software, programmatic looks like the answer to their prayers because of its promise of serving up ads that are more relevant to the people who see them.

And if they’re more relevant, of course, there’s more chance those people will click on them, so everyone’s happy – advertiser, publisher, and most importantly, of course, the consumer.

And yet, maybe I’m in the minority. I can’t honestly recall the last time I saw a relevant ad on my phone or, indeed, my laptop. I exclude retargeting ads from this analysis.

Clearly, if I’ve looked at a set of golf clubs online, I would expect to be retargeted with ads for those same clubs. Indeed, in my experience of retargeting, I’d expect to see the ads for the golf clubs for many weeks, or even months, after I’ve bought them.

I put this point to Andy Chandler, UK managing director for programmatic video advertising firm Virool a few days ago. He was speaking in a panel debate on programmatic, and in one of his answers, he had said he was fed up with seeing ads for on his phone, so I brought this topic to light.

“Programmatic has been around long enough now, surely,” I said. “Why can’t I remember seeing a single relevant ad on my phone?”

His answer was that I only remember the irrelevant ads, and no doubt I had seen some relevant, well-targeted ads on my phone. The fact they were so relevant made them at the same time un-noteworthy. As for the irrelevant ones, he said, it’s just a question of time. We are just at the start of brands beginning to exploit the power of programmatic, so things will improve.

I follow his logic, though I still maintain I am not routinely hit with relevant ads on mobile or on desktop, and I doubt I am alone in this respect.

A few days ago, a release dropped in my inbox from mobile advertising firm Celtra, which confirmed my suspicions. Celtra is a good, solid company, whose tech is used by a lot of big agencies to produce rich media ads that should be much more engaging than the standard, static banner.

The report showed higher ad engagement rates in Q3 2015 across all standard formats. Banners saw a 14% increase in engagement rates, while interstitials were up 8%. So far, so good. When you get to the actual numbers, however, things don’t look quite so healthy.

The engagement rate for expandable banners was 0.87%. For the standard banner, it was 1.14%. And for Celtra’s “Reveal Banner” ad unit, the engagement rate was 1.75%.

It takes me back to the days when I used to report on the direct mail industry, where a response rate of 1% was considered a success. So 99 out of every 100 people who receive your expensively created direct mail pack throw it in the bin (recycling hopefully), and that’s a success.

This is where we are at right now with mobile advertising. If a 1% response rate is the industry standard, then the standard, in my mind, is way too low.

If the answer to ad blocking really is more engaging, more relevant, better targeted ads, then the ad industry had better start creating them. Because based on these figures, we’re a long way off it.

About David Murphy

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