As the word suggests, "Programmatic" buying and selling of ad inventory typically has little or no human involvement. Programmatic emphasizes buying the right inventory with algorithmic optimization.
eMarketer recently disclosed that US programmatic ad spend will top $10 billion in 2014 (about half of all digital display) advertising compared to a projected $20 billion by 2016. In addition to display ads programmatic buying can also be utilized for digital video and mobile buys.
Like many new developments, programmatic buying has advantages and problems.
1. Highly Targeted Audiences - Audiences may be for more targeted than is possible with most traditional advertising media buying techniques. For example, with programmatic buying you could target people who visited your website in the past three months or purchased a particular product.
2. Efficient Buying Platform - Programmatic saves agencies and media organizations money by cutting out the "middlemen" from the buying process. You no longer have to deal with publishers, salespeople, or ad networks to negotiate the pricing or inventory or placement. The lack of humans involved assumes that there is little or no value in human involvement, marketing, creativity or buying/seling strategies.
3. Better ROI - Advocates of programmatic cite better ROI as an advantage. Buying the cheapest and often low quality ad space from auctions with little creative thinking is not necessarily the route to improved ROI.
1. Fraud - Digiday identified fraud as the biggest challenges for users of programmatic-- including agencies, clients, and buyers. Programmatic advertising fraud is generated primarily by "... non human traffic, botnets, and traffic exchanges which allow impressions to be stolen from innocent computers while you sleep or they set up a black market system where fraudulent impressions are generated by a network of willing conspirators."
2. Paying for Unviewable Ads - Vindico, an ad management platform company estimated that 57% of two billion video ads surveyed over a two month period were unviewablle. That is, half of all these ads were never seed by a human being. Also, display ads which load below the viewable area of the screen are often counted without ever being seen. And this doesn't include the estimated 86% of consumers who have banner ad blindness.
3. Brand Safety - When you buy ad inventory directly from publishers you can require that your ad be positioned next to content that supports the brand image and association you are trying to reinforce. Or you can be placed next to terrible content, e.g., the case of a video link for a "mom product" on a porn site despite specific instructions from the agency to place the video "above the fold.". Programmatic buying is not transparent and does not guarantee placement.
4. Lack of Human Involvement - The downside of having a more efficient buying platform is that humans are mostly not involved. This limits creativity and negotiating strategizing.