Recently on AdExchanger’s Talk podcast, Simpli.fi CEO Frost Prioleau shared his experience trying to crack the market for localized programmatic advertising. Below are some highlights of his discussion with editor Zach Rogers.
On the maturity of the localized programmatic market:
Localized programmatic has challenges, and one of the biggest is managing the churn among local advertisers. There’s a statistic that says local advertisers get 10 calls a week from vendors trying to sell ads– whether it’s a local publication, newspaper or platform advertiser.
Local advertisers tend to be behind the curve in terms of digital in a larger sense and in programmatic. We see a lot of pent-up demand, especially as programmatic takes over more forms of advertising, including display to mobile, native and video. Analysts still foresee growth in the localized programmatic space.
On Facebook’s domination of localized advertising:
Everyone uses Facebook for local. In fact, Google and Facebook may be the first two boxes advertisers check in the local column — but then they see beyond that. Advertisers begin to see the advantage of targeting users elsewhere, since only about 20 percent of their time is spent on Google and Facebook. Our challenge at Simpli.fi is to give advertisers a solution where they see ROI. They want to measure their advertising results in foot traffic, quality of visits on their websites, and other real metrics. So, while a portion of their localized advertising budget is definitely being spent on Facebook, it is co-existing nicely with other channels.
On the impact of GDPR:
As an industry, we have to be more diligent in informing consumers that their data is being collected and used – and that data is what’s powering a lot of the sites they like to use, whether that’s news, social networks or other publishers. We have to a better job — whether by regulation or by industry standards. We’ll see a lot more requests for users to opt-in on data or opt-out if they don’t want their data to be used.
What remains to be seen is how much users really care. There are definitely users who worry and don’t want their data used for anything, but there are also users who believe that sharing their data is a fair exchange for reading articles on a website or gaining access to an app.
My overall thinking is that data will become scarcer as a result of this industry shift. Through GDPR and better privacy opt-outs, data may become more expensive if the demand remains the same. Also, as data becomes scarcer, audiences will shrink; however, the overall growth curve will likely make up for that loss.
On the health of the ad tech space:
Ad tech has always had some existential crisis, it seems. It’s been “dead” many times as the result of issues including lack of transparency, fraud and ad blockers. Yet today, programmatic is still expected to grow at 20 percent per year. It’s maturing, but advertisers are getting smarter, and they care about quality more than ever.
We’re seeing a shift to better KPIs among advertisers. They’re starting to look beyond clickthrough rates to better measurement and real engagement metrics like foot traffic and on-page conversions. As advertiser’s get smarter, advertising is improving as a result.
The pull of programmatic is that it’s a more efficient way to transact. The ability to attract specific audiences will continue to attract funds as we move into OTT and other formats.
On the compression of fees:
The reason fees are compressing is that advertisers want to know if they’re getting their money’s worth. They want transparency. A few years ago, advertisers never knew what middlemen were charging.
With transparency, advertisers can make better, more informed decisions about whether costs for things like data are a tax, or if they’re getting ROI. Is viewability worth paying extra for, or not? Advertisers can spend their full budget on media or decide whether a DSP or viewability metrics drive a worthwhile ROI.
On balancing quality with CPM pricing:
Advertisers care about the quality of sites their ads for local businesses are running on. They also care about CPM. We are a CPM transparent platform. Direct advertisers or multi-location brands maybe care less about CPM, while media companies are more price-sensitive. We are in the mode of delivering the quality of inventory advertiser’s want while still affording the ability to fund all service offerings to local advertisers.
On paying more for quality placements:
This all gets solved if we can move to more CPA-based metrics. If you’re an e-commerce player, you are mapping your advertising budget back to Cost Per Sale, but one issue remains: what is the action that I’m willing to pay for and how do I drive that? Some will be willing to pay more; it will depend on the advertiser.
Localized advertisers are moving away from CTR. They’re starting to look at Google Analytics and metrics like time on-site, pages viewed, bounce rate and others. We’re pushing away from CTR, encouraging advertisers to optimize for engagement. Web-based advertisers are doing that. And Brick-and-mortars are looking at driving traffic to their physical locations. The ability to measure foot traffic in an accurate way and show lift from campaigns is huge.
To learn more, listen to the full interview from AdExchanger on iTunes.