The head of a US-based digital media company said programmatic advertising has failed to deliver “on many of its promises”, including lower staff headcount, transactional efficiency and higher CPMs.
Evolve Media co-founder and president Brian Fitzgerald told AdNews he stands by his position set forth in 2013 that programmatic exchanges are not the way of the future for digital ad sales, despite the industry's shift in this direction.
“I'm more bullish than ever on direct sales,” he told AdNews, saying adblocking has only increased the need for a direct sales team, who can sell the benefits of alternative, content-led programs to clients.
A privately-owned US-based digital media company, Evolve Media owns popular “enthusiast” sites including Crave Onlne, Gorilla Nation, TotallyHer, and Music Feeds. It represents Rotten Tomatoes, Daily Motion, Funny or Die, College Humor, and Wikia, and employs 400 people in 22 offices across seven countries.
Last week Evolve announced the acquisition of two Australian digital media companies, Urban Geek, an online publisher, and Volt, a video and technology company. It also went live with a local edit version of its Webby Award winning Momtastic site – appropriately renamed Mumtastic in this market.
Fitzgerald said: “Programmatic has not delivered on many of its promises. We were promised a ubiquitous marketplace for supply and demand, an increase in CPMs and sell through, transactional efficiencies that allow everyone to do more with less headcount.
“That hasn't happened. Most publishers have had to aggressively staff to manage programmatic campaigns, hire programmatic specific sales executives and spend an inordinate amount of time and resource to manage a relatively small revenue stream that doesn't seem to be scaling as promised.”
The media boss told AdNews that just 18% of the company's revenue currently comes from programmatic and staff headcount per million dollars of revenue gained is higher than for brand direct revenue.
Overall, instead of valuing “content, context and environment”, the focus on programmatic is leading brands and agencies to lose sight of the ultimate goal of advertising, suggested Fitzgerald.
“Brands and agencies are leveraging programmatic and data to find needles in haystacks. They want to find the most valued consumer cookies and pay nothing for them. This very performance oriented approach to buying doesn't value content, context, environment. It doesn't value or provide credit for brand awareness that ultimately drives purchase intent, just as it always has in traditional media channels,” he said.
Fitzgerald said Evolve will continue to “lean into” content marketing, particularly given the rise of adblocking. “Native, content-led programs are ever more important as they are CMS served and not reliant on an ad server.”
In 2013, Fitzgerald projected programmatic would not scale with the same historic returns, clients would become increasingly more concerned about transparency and quality of environments they advertise in, and advertisers are better off looking toward native and contextual ads to drive higher revenues.
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