Marketers Flock to Programmatic Ads Despite Concerns About Fraud and Transparency

wsj.com

Advertisers’ desire for better targeting outweighs the concerns they have about automated ad buying

The number of marketers using automated ad buying systems to purchase advertising has more than doubled over the past two years, fueled in part by marketers’ desire to better target their customers, according to a new survey from the Association of National Advertisers.

The study, which polled 128 marketers and was conducted by research firm Forrester, found that 79% of advertisers have made programmatic ad buys over the past year. That is up significantly from a similar study that was done in 2014, which found only 35% of the advertisers had used programmatic buying.

ANA represents many of the country’s largest advertisers such as Procter & Gamble, General Motors and AT&T.

Research firm eMarketer estimates programmatic ad spending in the U.S. will grow 39.7% this year to $21.55 billion.

Advertisers are increasing their use of automated buying even though 70% of respondents that did programmatic ads last year were concerned about higher levels of bot fraud in programmatic buys. Bots are computer programs that mimic human web-surfing and artificially boost site traffic.

Their worries aren’t unfounded. In January, the ANA estimated that marketers wasted about $7 billion last year on online ads that people did not see.

Fake Web traffic isn’t the only thing marketers are anxious about, the study showed.

The majority of advertisers polled also expressed concerns about the lack of transparency in how much an ad actually costs when buying via an automated system and the “dearth of information about whether an agency reaps financial gains from the media seller by using the client’s funds,” the ANA said.

The ANA is currently trying to bring more visibility to the market and is investigating agency transparency. Marketers worry that some agencies have agreements in place with media sellers that reward them for directing more of their clients’ budgets to specific vendors.

The new survey does reveal that marketers are taking steps to better protect themselves from some of the issues, such as having a more hands-on approach to programmatic. About 31% of the companies polled said they have expanded their in-house capabilities to manage and oversee the function.

Other steps they are taking include asking for more detailed campaign reporting from their agency partners and also keeping “black lists” of sites they try to avoid because they have high levels of ad fraud.

Advertisers “need to be asking more questions about programmatic,” said Bill Duggan,group executive vice president at ANA. “It is still a very opaque” business and within that ecosystem there are place where advertisers lose money, he added.