Programmatic ad impressions are lower quality than direct-sold

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Overall, programmatic display and video ads – ads that are sold through automated channels – garnered lower quality ads impressions than ads bought and sold through a direct relationship with a publisher, according to a new Q1 2016 study by Integral Ad Science.

As a note, the study measures the quality of an ad impression based on several factors: viewability, ad fraud, and brand risk (the probability of an ad being placed on a webpage that is misaligned and/or damaging to the image of the brand being advertised).

Here are some highlights from the Integral Ad Study Q1 2016 Media Quality Report:

• Direct-sold display ads boast viewability rates that are nearly 10% higher than programmatic display ads. Programmatic display ads posted a viewability rate of 50.1%, compared to publisher direct with 59%, in Q1 2016. This is largely unsurprising because brands, agencies, and publishers retain greater control over where and when their ads are placed when they sell these ads directly. In contrast, programmatic ads are executed in an automated fashion, and are therefore vulnerable to being haphazardly placed in lower quality inventory, or being inaccurately targeted to disinterested consumers. 
• Video ads sold programmatically perform far worse than direct-sold video ads. Programmatic video ads posted a 35.5% viewability rate in Q1 2016, compared to publisher direct ads which had a 59.3% viewability rate. Meanwhile, 9.3% of programmatic video ads were deemed to be fraudulent, compared to 5.6% of publisher direct video ads. 

Programmatic advertising is set to surge in the coming years, and digital ad stakeholders will have to work hard to moderate the negatives side effects that come with an increased number of automated ad placements.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report on programmatic advertising that sizes up this market.

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Here are some of the key takeaways from the report:

• Advertisers and publishers are rapidly adopting programmatic ad-buying and selling tools. More than four-fifths of agencies and brands already purchase display ads programmatically, while an even greater proportion of publishers are pursuing programmatic channels as part of their sales strategies, according to surveys and our own conversations with industry participants.
• Spending on programmatic advertising is growing quickly, at ~20% annually.
• Real-time bidding is growing even faster than programmatic overall, at a five-year CAGR of 24%. RTB revenue will top over $26 billion by year-end 2020, up from $8.7 billion this year. Mobile RTB and video RTB are growing even faster, at roughly 2X the rate of programmatic overall. (The report has the full growth breakdowns.)
• Media-agency programmatic "trading desks" are being decentralized as programmatic expertise begins to permeate the agency and brand ecosystem. This may speed growth in programmatic spending among agency clients.
• The ballyhooed fusion of native and programmatic advertising may be one step closer, thanks in part to OpenRTB 2.3, a new specification from the IAB that makes automated trading of native advertisements technically feasible. Such efforts could bring scale to native advertising and help unlock brand spend.
• Pricing is following two divergent trends: for premium- and guaranteed placements they are on the upswing, while prices continue to plummet for miscellaneous inventory.

In full, the report:

• Forecasts programmatic and RTB spending by format through 2020.
• Looks at the latest programmatic adoption trends among both publishers and advertisers.
• Explores the emerging trend of "decentralizing" agency-trading desks and native programmatic.
• Outlines the latest news and trends affecting top programmatic-focused companies.
• Analyzes how programmatic and programmatic-premium is impacting digital ad prices.

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