Media Buying Briefing: How will programmatic investment ride out the recession?

By Michael Bürgi

By all accounts, the programmatic form of buying media has benefited from recessions in the past — the 2008 recession pretty much jumpstarted the industry, and the 2020 COVID-induced recession led to another surge in programmatic buying. Will the recession we are slowly but inevitably sliding into bring another surge? Or are cost-conscious marketers turning away from a form of investment that comes with all manner of fees attached, frustrating procurement departments?

“There is a pushback against opaque fees, or opacity in pricing in programmatic,” said Jillian Tate, senior vp and head of programmatic and paid media at Bounteous, an independent agency/consultancy. “And that is something where we see more procurement [people], especially from Fortune 500 companies, are more engaged in the media agency process and contracts, and there’s more pressure on agencies now to be completely transparent.”

Privacy concerns also will exert pressure on parts of the programmatic industry, particularly open-real-time bidding (RTB) forms, said Joanna O’Connell, vp and principal analyst at Forrester. “Those forces are bearing down from many angles, and that has a material impact on one’s ability to do audience-based, data-driven, digital advertising,” she said. “Programmatic was already sort of under the microscope, around concerns of data leakage, for example, because it’s such a complicated digital supply chain, and ecosystem and there are so many players. I have this general feeling that open RTB just generally becomes less popular in favor of other forms of programmatic.”

But the general consensus among sources reached for this story is that programmatic buying, particularly the growing element of private marketplaces or direct-programmatic buying, will not feel the pinch of procurement, for reasons of performance, affordability and flexibility.

“As recessions hit, advertisers tend to cut more from least performant channels,” said Ryan Eusanio, managing director of digital activation for Omnicom Media Group. “Programmatic performs very well for advertisers, both in upper and lower funnel. We’re much more likely to see pull back on harder to quantify media such as traditional channels, or even direct media before we see reduction in programmatic.”

“Expect a sharp initial decline in programmatic spending followed by an even sharper rebound once the economic situation improves,” said Eric Haggstrom, director of forecasting at Advertiser Perceptions. “The ability to reach relevant audiences at scale and efficiently more than make up for fees associated with ad tech. Brands will still need to reach audiences in a tighter economy, but nice-to-have media investments and other fat will be cut in favor of media that can prove its value.”

Oddly enough, recessions also tend to root out waste, which Jared Belsky, CEO and co-founder of mid-market agency Acadia, doesn’t believe programmatic is. “When times are good, people don’t look between the couch cushions,” said Belsky. “What this means for programmatic is that clients will ask far more questions about the media supply chain. These questions will root out wasted dollars around data, visibility, brand safety and viewability. This will help the industry, not hurt it, even if there is a bit of …read more

Source:: Digiday