Global Brands and advertising agencies who have dramatically decreased programmatic ad spend are seeing little to no negative effects, according to reports which have emerged throughout the year. So what is going on?
The bottom line is that their success suggests that more forensic ad buying strategies can be spectacularly effective.
According to a recent Gotham City Research report, “Several large advertisers recently reduced digital ad spending by 40 to 90 per cent or more without negatively impacting sales.”
The report was actually focused on the extent of ad fraud on the Criteo network however as part of the exercise CGR provides a good summary of global brands who have cut their digital ad spends with little impact on sales.
The trick is a more precise approach to distribution and a less gimlet-eyed belief in programmatic advertising.
For instance, the report highlighted how the world’s biggest advertiser, Proctor and Gamble, was able to reduce its digital ad spend by US$140 million or 41 per cent while at the same time actually increasing sales by 2 per cent.
P&G’s global head of brands, Marc Pritchard, has been vocal about the need for more transparency and scrutiny in digital advertising. “The days of giving digital a pass are over,” Pritchard said at the Interactive Advertising Bureau’s Annual Leadership Meeting in January.
“It’s time to grow up. It’s time for action.”
Pritchard and P&G have been blunt, some would say even brutal in their approach – and it has worked. According to the GCR report, P&G reduced the number of sites they run ads on by 33 per cent over the last year, and significantly reduced spending on the sites that remain, without negatively impacting sales.
Another advertising giant, Unilever, has also reduced their ad spend dramatically after echoing P&G’s call for more transparency.
“We need to make sure the digital supply chain is less murky,” said Unilever CMO Keith Weed, who also called for advertisers to pay more attention to what digital media they were buying.
According to Weed, advertising is much more effective when it runs alongside high-quality content, a claim the company appears to be testing.
“Unilever digital ad spend dropped 59 per cent year-over-year between January and May of 2017 compared with the same period a year ago,” the Gotham City report said.
Likewise, the experience of Chase Bank is instructive. According to the GCR and various media reports, the bank has reduced the number of sites it advertises on from 400,000 to just 5,000 after discovering the ineffectiveness of a broad programmatic strategy.
“Only 3 per cent of the 400,000 sites led to activity beyond an impression. Of the 3 per cent, more than 50 per cent were sites that Chase did not want to advertise on,” the report said.
The impact of that massive reduction in websites? Nothing, according to the report.
Programmatic advertising’s great appeal is the ability to cheaply target consumers based on their browsing habits and serve ads in breathtaking numbers. However, recent brand safety incidents, questions over verification and the success of more traditional strategies involving premium content suggest more trouble ahead for the ad tech sector.