The IAB always puts on a great conference. Their Annual Leadership Meeting is the best of the best. The caliber of the attendees, the timeliness of the topics, the quality and preparation of the speakers, and the flawless execution are unparalleled in our business. The session that stood out at this year’s ALM and still resonates two months later was the “Fireside Chat with Bob Pittman,” the Chairman and Chief Executive Officer of Clear Channel Communications.
One of the insights Mr. Pittman shared was his observation, “When given the choice between convenience and quality, convenience beats quality every time.” I winced when he said this. But the more I thought about it, the more I came to realize its wisdom. And I came to think of this choice between convenience and quality as “Pittman’s Dilemma.”
Evidence supporting the “convenience beats quality every time” observation can be found right here in advertising with the current state of Programmatic Advertising.
Inspired by the Honest University Commercial, here’s what an Honest Programmatic Advertising Commercial might sound like: “Give us a piece of your advertising budget and let our machines spend it for you. We’re not going to tell you how it works. You won’t know in advance where or when your advertisements will be shown. You’ll be buying remnant advertising inventory that nobody else wanted to buy. Your brand may be damaged when your advertisements show up in bad places, but you won’t ever know because it’s nearly impossible to track. Most of your ‘audience’ will not be the humans you expect to see your ads, but rather other machines fraudulently siphoning your advertising budget to organized criminals. Your ‘results’ will be artificially inflated because these machines appear to click and convert better than humans. And you’ll make us rich because we’ll be arbitraging this inventory buying it for pennies on the dollar and selling it back to you at a hefty margin. Advertise with us today. Everyone is doing it.”
Like the Honest University Commercial, the Honest Programmatic Advertising Commercial is collectively exaggerated but each statement is based on truth. Although the definition of Programmatic Advertising technically encompasses all forms of automated buying, in practice it’s limited to Real-time Bidding or RTB today.
With all the well-known problems with RTB, why are some advertisers calling Programmatic RTB the “future of advertising” and pouring money into this method at an increasing rate? The answer is simple: convenience. RTB isn’t the future of media buying; convenience is the future of media buying.
But does convenience have to come at the expense of quality? What’s the future of digital advertising if that’s the case?
The alternative to Programmatic RTB is buying media directly from the seller through an insertion order. This is the method of media buying that has been used in traditional media channels like print, radio, and television since the beginning and in digital advertising since the first banner ad was sold 20 years ago.
A key benefit of buying directly is you are guaranteed quality. You know exactly what you are buying in advance. You are guaranteed to receive it and it’s easy to verify you got what you bought.
The problem with buying directly is the inconvenience. You need a team of trained specialists to execute a direct buy. According to an activity-based costing study we recently conducted, creating and executing a digital advertising media plan using traditional direct buying methods requires people in 11 different roles, performing 30 different tasks, and taking an average of 482 hours of labor to complete.
The other branch of Programmatic Advertising – Programmatic Direct – aims to solve the inconvenience problem of direct buying with workflow automation. It promises to give you both the convenience of programmatic buying and the quality of direct buying. Unfortunately, it’s not yet a mainstream reality.
So, today in digital advertising you’re faced with Pittman’s Dilemma: you have to choose between convenience and quality. With Programmatic RTB, you get convenience. With traditional direct buying, you get quality. But you can’t get both.
That’s about to change. With Programmatic RTB moving towards quality and Programmatic Direct coming to fruition, it’s clear that one way or another you soon won’t have to make this unpleasant choice. When Programmatic buying delivers both convenience and quality, we’ll finally escape Pittman’s Dilemma.
Joe Pych is a contributor to The Makegood and is the Co-Founder and CEO of Bionic Advertising Systems, a company that provides tools for media planning and buying.