The implications of American Express going 100% programmatic

Amex by Images Mony:FlickrRecent reports suggested American Express wanted all of their online display advertising in the future to be purchased through programmatic technologies. So what are the implications of this?

Firstly, it shows real time bidding technology is here to stay which is a tribute to the largely positive effect that programmatic media buying has had on the industry. Its mainstream adoption should be considered a victory, and brands like Amex aspiring to buy all display advertising programmatically should be admired for their desire to operate as efficiently and effectively as they can.

Unfortunately, for the rest of digital media currently bought through the traditional RFP model (60-80% depending which report you read), I think it’s fair to say we haven’t quite worked out what that’s going to look like in the long term or whether funnelling it through existing RTB channels would be beneficial.

 In-house programmatic vs third party

Programmatic RTB technology has been one the key triggers to executing media in-house, be it through an agency trading desk or a brand-operated trading desk. More control and often better cost efficiencies makes this an attractive proposition for the buy side and so, with mutual benefit, the affect has been to fuel the programmatic flame. Sometimes, however, a dearth in quality and specific expertise (that are overly costly to acquire) are negatives that need to be quantified to understand the full story. It goes without saying that programmatic need not be synonymous with actually executing media ‘in-house’ but the current trends suggest that this a certainly a focus.

Stunting innovation?

From a quality perspective, much time and investment been made – and subsequent innovation achieved – in creating an incredibly diverse (if fragmented) digital ecosystem.

Sexy ad formats, sponsorships, native executions and so many other imaginative applications of digital can’t and frankly won’t always fit into the RTB ecosystem. I think that’s ok, after all, the constant innovation that’s achieved relies on agencies and brands’ willingness to explore new exciting offerings. If RTB is to become the sole source of digital media across the board then there’s a very real prospect of stunting that innovation in the industry.

However, does our inability to actually execute certain kinds of media in-house mean we can’t reduce the friction that exists in the buying and reporting process for 3rd party solutions? Absolutely not, and that’s why programmatic direct is an equally important area of innovation that we’re only beginning to scratch the surface of now. Programmatic direct aims to connect publishers direct system with buyer’s tools to improve the process of buying reserved or packaged inventory.

Who benefits?

Efficiency should benefit everyone. Buyers spend less time consolidating, sellers spend less time administrating. Thus, the industry can continue to focus on building innovative products that allows brands to better engage and connect with their audiences. The key here is allowing programmatic innovation to run its course and resist trying to push square pegs into round holes. There’s really no need to push all media through the existing technology that we have, give it time and before too long we’ll see the right type of programmatic solution emerge.

Saul Stetson is product strategy and operations at Exponential