Media Buying Briefing: How will programmatic investment ride out the recession?
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 pain along the way.”
It can also both help and hurt that programmatic buying of media also offers marketers flexibility with their budgets in a few ways. “You can be on today and off tomorrow,” said one head of programmatic and digital buying at a holding company, who declined to speak on the record in order to speak more freely. “A lot of other media channels aren’t as flexible. Typically when we see recessions, we see more programmatic because of the flexibility it does allow.”
That flexibility enables publicly traded marketers to slash marketing spend to return to the bottom line, since they have to answer to Wall Street lest their stocks get pummeled for poor results. But it also could lead to pullbacks for the same reason, noted Bounteous’ Tate, whose prior job was in programmatic investment at OMD.
“Many Omnicom clients chose to ask, ‘What can I pull back?’ And a lot of digital got cut because digital fell under that two week out clause,” she said. “Whereas an upfront TV buy, or especially a print buy, you can’t claw that cash back … [Brands will] pull back the dollars to make their quarterly returns look better, and are willing to take a temporary hit to have fewer expenses in that quarter. Especially in cases where there’s a sales slowdown in the consumer market.”
Whether or not programmatic rides out the recession as a necessary vehicle for investment, one vocal critic of programmatic— in part because he once worked in the field — thinks it will face negative scrutiny in the long run because of the current focus on the environmental impacts of media investment.
“I’m betting, and other people are betting, that at this time around [programmatic] doesn’t get the accelerant out of the [economic] trough,” said Tom Triscari, a programmatic consultant and author of newsletter Quo Vadis. “The trough offers a shift to strategies that are more and more prevalent through the likes of Brian O’Kelley and Scope 3 [a startup from the ad-tech veteran that helps advertisers find low-emissions ad investments] and other reporting on the carbon footprint. To me that is a very graceful exit from programmatic if you wanted to shift your budget to other areas.”
Color by numbers
A growing awareness among consumers of how their data is being used by companies is leading to changed behaviors and attitudes, acceding to privacy platform Ketch, which last week issued a report, “The Person Behind the Data,” conducted using Magna Media Trials research. Some highlights out of the 2,751-person study:
- Data collection practices impact purchase intent somewhat differently according to industry vertical: the amount of data collected concerns telecom users at 55%, while retail shoppers cited data sharing practices as their greatest concern at 44%
- While 82% were concerned how data was gathered and used, 83% of respondents said they could see value in sharing their data. Benefits include learning about new products (45%) having a personalized experience (45%) and receiving a benefit from the company (43%)
- The length of time companies store their data impacted trust (40%) and purchase intent (52%) more than the amount of data collected, level of transparency and data-sharing practices.
Takeoff & landing
- Havas Group took a big step to consolidate its holdings, by merging its global creative unit with its Havas Health network, under the leadership of Donna Murphy, who heads the health unit. Havas Creative CEO Chris Hirst is leaving the company. Meanwhile, Havas North America enhanced its consultative powers in the U.S. by importing Gate One, a London-based management consultancy it acquired back in 2019, which specializes in digital strategy and execution.
- Accenture Song boosted its commerce smarts by acquiring The Stable, a North American commerce agency with mostly consumer clients, led by Chad Hetherington. Though terms were not disclosed, The Stable’s 400 employees will be absorbed into Accenture Song.
- Personnel moves: GroupM tapped Dr. Brian Dashew as head of learning and development, charged with leading GroupM University, a hub for employee growth … Indie media agency/consultancy Exverus Media hired Sifat Ullah as its vp of performance media. Ullah most recently was senior director of marketing for Pharmapacks.
“Brand marketers are salivating over the potential audience reach of the upcoming Netflix ad-supported tier. The full reasons for them picking Microsoft (over the presumed favorites like Google and Comcast) as their ad tech and ad sales partner aren’t fully known, but it appears smart to bet on a player who doesn’t own directly competitive video assets. The big challenge for Netflix will be to ensure they’re tapping into brand budgets, not only direct-response budgets. That will require sophistication around measurement of various brand metrics. With their war chest, I’m sure they’re up for the test.”—Chris Kelly, CEO of analytics platform Upwave, on Netflix’s surprise choice of Microsoft as its ad-sales and ad-tech partner.
- The biggest news story — and surprise — of the week was Netflix selecting Microsoft as its ad-sales and ad-tech partner to launch an ad-supported service. Digiday’s Seb Joseph, Tim Peterson and Ronan Shields looked at the positives and drawbacks of the partnership.
- In the lead story of the latest Media Briefing, Digiday media reporter Sara Guaglione investigates whether Black-owned media will feel the sting of recession, after brands and agencies made commitments to spend on them.
- I wrote about an up-and-coming independent media agency, Mediastruction, that’s built its reputation on data science and attribution with mid-market clients.
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