Why I Ultimately Soured on Programmatic

When I joined CoinDesk, I had no intention of being in the ad business. I was hired as the marketing director and was stepping away from overseeing an advertising business at my previous company. And yet, when I joined CoinDesk, we realized that, of the entire team, I was most qualified to build out the advertising business. Small companies tend to do that.

And so, I went off to figure out what to do to help the business diversify its revenue. CoinDesk was unique because it had a small sales team (our head of events was our sales team) and a lot of monetizable traffic. But, unfortunately, we had no data—this was back when DMPs were hot, and we were told we were too small. So, how were we going to monetize that?

Every operator has received emails from programmatic companies promising the world. And I was no different. Every day, I got a couple saying they would change the business. And I ignored nearly all of them except for one company. They made a pitch that resonated with me in such a unique way that I agreed to work with them.

We got rid of Adsense and Criteo from the site. In their place, we put this company’s pre-bid tags. And overnight, revenue nearly quintupled. I was hooked. Programmatic advertising was how CoinDesk was going to build a massive advertising business. And for a company of our size, it did work out nicely for us. There were months we were doing hundreds of thousands of dollars in revenue because of this company.

I got so close with their team that I was the only outsider who went on a company cruise around New York City. I gave testimonials to prospective clients.

So, why did I ultimately sour on programmatic? I can tell you it had absolutely nothing to do with this company. Of every company operating in the programmatic space, I felt our interests were mutually aligned in a way no other ad tech vendor could have been.

And yet, I soured. I thought about this today because I spoke with Adweek regarding programmatic ads in newsletters. My one quote sums up my entire thinking about this:

“Trusting somebody else to be responsible for the monetization of your business is insanity,” Donnelly said. “I’m glad to see publishers are beginning to move away from programmatic.”

So many publishers over the past decades have given up control of their businesses. We had allowed vendors to come in and tell us that we could focus on creating great content; they’d handle monetizing. And while, on the surface, that sounds great, it wasn’t very intelligent. Insanity, if you will.

But more than that, programmatic advertising allowed a disconnect between the content and the audience. It didn’t actually matter what you created. All that mattered was that you could get people to your website. And ironically, it didn’t matter who you could get to your website either because the ads would target specific to their tracking.

Is it any wonder that content on the internet got so derivative? The conversation ceased to be about how great a piece of content was; instead, it was about how much there was to get as many eyeballs as possible. As a result, you’d see publishers trying to pitch direct ad campaigns get shot down, only for that advertiser to turn around and buy the same ads, only through the open exchange.

So, not only were operators not valuing their content, but they were also not valuing their audiences. To get more programmatic revenue, publishers would put 10-15 partners in their header bidding stack—even though AdX was winning most of the bids. Then, of course, there would be partners who never won a bid, but boy were they acquiring a ton of audience data for free. The third-party cookie reigned supreme.

And so, after leaving CoinDesk and spending a lot of time thinking about the ad business, I soured to the entire programmatic model. Not only was I giving up control of my business to another entity, but I also was not valuing the essential part of my business: the audience. And that rubbed me the wrong way.

I compare it to the newspaper business in many respects. Before the internet, each newspaper was, effectively, a geographic monopoly. And it wasn’t a monopoly on content, but instead, it was one of manufacturing. As a result, it was unbelievably resource-intensive to print a newspaper. Could you imagine a newspaper not owning the entire process of audience acquisition, advertising sales, and printing of its newspaper?

And yet, when the internet began growing, the dream of scale took over, and we stopped trying as hard to acquire an actual audience. All that mattered was that we got enough traffic. We prioritized SEO and social traffic over developing an engaged, long-term audience. A race for scale was all that mattered. And to be clear, I’m not saying SEO, social, or any of that is inherently wrong; it’s a great way to acquire traffic. But media companies forgot they needed to turn said traffic into an audience.

We can control only a few things at a media company. The first is the quality of our content. The second is how we engage our audience. And the third is how we sell that audience. So with a scale media dream, I was giving up control of the second and third of those to other vendors. And that didn’t sit right with me.

But I am also a b2b media guy who deals with much smaller audiences, so programmatic just doesn’t work as a business model. I have friends that see pageviews in the tens and hundreds of millions. Trying to monetize that many ad impressions can be difficult. And so, programmatic is an excellent solution for them.

The problem is that so many publishers lose sight of what matters. The way to build a genuinely sustainable media company is to focus on the three things you control: create high quality content, build an audience, and monetize. So long as you don’t lose sight of that, programmatic is a tool to help, but not a replacement for your business model.

And so, while I have ultimately soured on programmatic, if I ever were put in charge of a media business where I would never be able to sell all those ad impressions, I’d have no choice but to run programmatic. But it’d have to be with strict rules. I’d prioritize collecting incredible data about my audience. I’d block strategic accounts from running their ads on the site through the open exchange. I’d remove partners from the stack who were stealing data without paying me. And if I found that the ad rates were so low, I’d prioritize promotion of other parts of the business: newsletter, subscription, event, or whatever else I’m doing to diversify my business.

And ultimately, I’d strive to get to the point where Bloomberg did where it blocked all open exchange advertising. It’s better to have no ad with some other product promotion than a cheap ad. If you wanted access to my audience, you’d have to work with us directly.

This is a hard stance to take. But if you are creating great content with a high-quality audience, it’s a stance you can take. The reality is, though, many publications are not significant. Their content is average. They don’t prioritize building a highly engaged audience. And so, they’re left with fewer options on the monetization side.

Programmatic advertising itself isn’t bad. But are you giving up control of your business to someone else? That’s insanity.

Thanks for reading. If you have thoughts, hit reply or join the AMO Slack. Have a great weekend!