Leaving Money on the Table (Again)

The programmatic ad market is slowly coming in for its close-up. And it looks as though that scrutiny may start to show some familiar cracks in the facade. Familiar, especially, to publishers worried about exactly what kind of political ads are running on their pages.

The University of North Carolina's Center on Technology Policy has just published a look at the marketplace for political and, well, it's not pretty. After reading the report, "Programmed Political Speech: How Programmatic Political Advertising Policies Shape Online Speech" which got a nice inside-the-beltway write-up, it's easy to conclude that the programmatic ad market rife with opportunities to avoid compliance with state and federal laws.

For most political ad buyers, that's not news. Programmatic is easy. Full-stop.

For some political ad sellers - local news publishers - the sheer amount of money spent on programmatic instead of direct buying may shocking. That figure - around $800 million - is not a crack in the facade, it's a break in the dam.

With more than $1billion on the table for all digital buying this election year (according to UNC and others) for digital ad placements not on Facebook or Google/YouTube, that break is starting to cost real money.

For you, dear regular reader, this is not news. We've written before about how big-dollar campaign efforts use programmatic ad buying to the detriment of local outlets. And while we are loathe to admit that we have seen business slip away, Spot-On has seen two long-time regular customers move their business away from direct buying to full on programmatic this year.

Why? It's easier and it's more profitable. An ad buyer can pay pennies for a political ad placement, charge dollars and pocket the difference. That difference is about three times the normal media commission of 15% and the client is none the wiser. So what once cost this buyer $15/1000 ads, now costs $3/1000. And that $12 difference doesn't go to the publisher it's pocketed by the media buy and consultant.

Programmatic ad buying is also just easier. For the most part, as the UNC study notes, it's without creative review; it offers one-stop shopping and any young employee can be trained to run a buying dashboard in a few hours. Want to run something a little dicey? Not crazy about disclaimers? Want your ads up this afternoon, not a day from now? Still interested in matching voters lists to brand and behavioral targeting?

So programmatic is the place to put your ads. Ignorance of the law is high in those markets and while compliance is improving it's still low. Demand side platforms (DSPs) don't have the review process that local news outlets have because they don't have the editorial experience to guide them. They are traders, dealing in commodities (space, time and user behavior), not in anything resembling community service.

Which is why Spot-On has been advocating for a segregation between political and brand ad sales on programmatic channels - just like we have for TV and mail.

The UNC report points to tightening restrictions by known platforms (Google, Facebook, Hulu) as a reason for the migration to programmatic. But that's only part of the problem. The ways in which local news outlets fail to appreciate the demands and quirks of political ad buying also comes into play.

Many publishers, long steeped in the print tradition, still believe that most political dollars come from local sources. They do not. PAC and other third party spending - which is where the real money is - is disbursed by national, mostly TV-focused ad buyers. Those folks are accustom to special treatment and rates because that's what they get with TV. They don't get that with digital outlets.

The creative review process that publishers have is often time-consuming and cumbersome because it's based on what they'd do for print. Many publishers, worried that they may expose their readers to bad actors, set demands that are above what's required by law which has led to frustration and confusion.

And in a digital environment, local news is just one of of the hundreds, if not millions of sites a reader might access. So while concerns about readers may be heartfelt, they're not realistic. If requirements are too rigid, buyers walk. And they don't come back. So publishers aren't just leaving money on the table - some are encouraging buyers to pay less.

And while no one suggests that publishers band together (anti-trust laws, you know) it might not be a bad idea for local news publishers to think - as a group - about how they'd like to manage political ad sales. A set of guidelines for standards-and-practice reviews would help. Best practices for setting rates would be helpful, too. And a new look at the costs - not the benefits of political programmatic is long overdue.

Spot-On is doing it's part. Our Pinpoint Persuasion automated direct buying service is slowing coming to market. We're engaging with all sizes and kinds of publishers to help them reach political ad buyers - safely and securely. This week, we'll be at the ONA conference in Los Angles. Next month, we'll be at LION publshers summit in Austin.

Want to meet up and learn more? Drop us a note. We'll have more Pinpoint Persuasion news soon!