Programmatic advertising and its threat to brand image


Programmatic advertising is one of the kinds of advertising that have adverse effect on brands according to a recent report released by WARC, the international authority on advertising and media effectiveness.

Programmatic media buying, marketing and advertising is the algorithmic purchase and sale of advertising space in real time. During this process, software is used to automate the buying, placement and optimization of media inventory via a bidding system.

The report tagged: “Threats to the digital advertising ecosystem” estimated that $63.4 billion was spent on programmatic advertising worldwide in 2017, but only $17.8 billion (28%) actually made it to the ‘working media’ level.

It stressed that the role of programmatic advertising is increasing rapidly as two out of every five dollars spent on advertising in the US last year – across all media and formats – were traded by machines. This rate has doubled over the last five years.

The report which contained findings made by senior marketers who were surveyed by CMO Council cited social media risks and reputation management as a major issue, stressing that one in three highlighted ad fraud, ad misplacement, view ability, transparency and accountability as concerns.

According to the report, programmatic advertising is capable of changing consumers’ perception of the brand negatively and one in five consumers will take direct action; thus posing a challenge to the reputation of the brand.

“One in five (19.5%) consumers state that they would take some form of direct action against a brand if its advertising appeared alongside objectionable content, either by boycotting the brand (10.5%) or being vocal/raising issue (9.0%).

43% of senior marketers claim that they have already had reputation problems after ads had appeared next to objectionable content. Almost two in five (37%) have pulled or intend to pull ads as a result.” the report reads.

The report added that programmatic videos advertising pose the greatest risk to brands as a result of ad misplacement.

It pointed out that a legitimate ad appearing on an undesirable site or next to objectionable content – varies significantly by market, format, and by type, noting that the average risk for desktop display ads across 11 key markets was 6.9%.

According to the report “The issue is particularly prevalent in America. One in ten (10.2%) desktop impressions in Brazil was flagged on moderate to very high-risk inventory, followed by the US (9.4%) and Canada (8.4%). The risk was lowest in Singapore (3.4%). Data for the second half of 2017 show that brand risk is routinely higher when the ad is bought programmatically. This is particularly true for video ads.”

In terms of ad fraud, the report affirmed that most ads are not optimized; adding that one in three clicks on programmatic ads is fraudulent.

The Association of National Advertisers (ANA) estimates that around $6.5bn was lost to ad fraud worldwide last year. Total losses could have been cut to $700m if the entire industry had adhered to safety guidelines.”

“Non-optimized ads remain vulnerable. Fraud rates for desktop display ads vary by key market: Italy (16.1%), Germany (15.9%), France (14.6%), US (11.3%), Japan (8.4%), UK (8.3%), Australia (7.7%), Spain (3.0%).”

“Aside from fraudulent impressions, click fraud is also prevalent online. Data show that as many as three in four clicks on programmatically purchased 300 x 600 ‘half page’ ads (a unit Google describes as one the fastest growing sizes) are fraudulent. On average, one in three clicks on programmatic ads across all sizes and platforms is fraudulent.” the report reads.


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