Not All that—Programmatic Still Disappoints - eMarketer

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Not All that—Programmatic Still Disappoints

Inexperienced sales teams and low-quality inventory depress prices

January 30, 2017

Programmatic advertising is increasing in popularity with US advertisers. eMarketer predicts that investment in programmatic display will grow by more than 26% in 2017, reaching almost $31 billion. But even as demand for programmatic grows with brands and media buyers, many publishers still struggle with how to manage, price and sell such inventory, leading to lower-than-expected revenues.

Percent of Digital Ad Revenues Derived from Programmatic According to US Publishers, Oct 2016 (% of respondents)

An October 2016 survey of US publishers by Operative highlights the difficulties many face as they incorporate programmatic inventory into their ad offerings. According to Operative's review of the percent of publishers' digital ad revenues derived from programmatic, half of respondents earned less than 5% from programmatic ad inventory, while three-quarters said 25% or less of their revenues came from the format.

Factors that Contribute to the Price Difference Between Direct and Programmatic Inventory According to US Publishers, Oct 2016 (% of respondents)

When asked about the challenges contributing to this lower-than-expected revenue, many publishers mentioned that price was a key factor, with some suggesting their "direct" inventory often sells for much higher rates than similar programmatic units. There were a number of reasons for the lower prices, including a lack of sales expertise (24.6%) as well as lower-quality programmatic inventory (21.1%)

In fact, this concern about the quality of programmatic inventory is not limited to publishers. It often bleeds over to media buyers as well. A November 2016 eMarketer article noted that more than half of US ad agency professionals were concerned about the quality and transparency of programmatic inventory. As better industry-wide standards for programmatic are put in place, and publishers gain more confidence in how to sell such inventory, expect to see prices and revenues increase as well.

—Jeremy Kressmann

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