In their first ever published estimates, eMarketer disclosed that US programmatic ad spend topped $10 billion in 2014 and is projected to double to more than $20 billion by 2016. This represents 63% of total digital display advertising. Lauren Fisher, analyst for eMarketer says, "2014 has proven a pivotal year, and with the majority of infrastructure now laid and testing well in progress, we'll see programmatic ad spending explode from 2015 into 2016." With this kind of dominance, there's little question that programmatic advertising is here to stay.

As of 2014, automated ads already accounted for nearly half of all US digital display advertising. And since you can buy mobile advertising as well as video ads programmatically, it is likely to continue to represent the future of digital advertising. But there are some serious problems with programmatic media buying.

  1. Fraud: In a recap article on their Programmatic Summit, Digiday identified fraud as one of programmatic's biggest challenges for brands, agencies, and publishers alike. As Zachary Weiner, CEO of Emerging Insider Communications noted, programmatic advertising fraud is generated primarily " non-human traffic, botnets and traffic exchanges ... [which]... allow impressions to be "stolen" from innocent computers while you sleep, or they set up a kind of black market [peer to peer] system where fraudulent impressions are generated in a network of willing conspirators." Without transparency, it is becoming increasingly difficult to weed out fraudulent impressions and clicks from legitimate ones, which means companies are paying for digital media fraught with fraud.
  2. Paying for Unviewable Ads: A New York Times article from May 3, 2014 states, "Vindico, an ad management platform company, deemed 57 percent of two billion video ads surveyed over two months to be 'unviewable.' The advertiser sees a report on an Excel spreadsheet that says, 'Yeah, these ads ran,' says Matt Timothy, Vindico's president. 'But more than half of them ran without being seen by a human being." And this isn't just limited to video ads. Display ads that load below the viewable area of the screen are often counted even without ever being seen. And this doesn't even include the estimated 86% of consumers who have banner ad blindness.
  3. Brand Safety: When you're buying media directly from publishers, you can require that your ads be displayed only in proximity to content that supports and compliments the brand image and association you're trying to establish or reinforce. When there isn't transparency with the sites that are included in the ad exchange, combined with machines (instead of humans) optimizing for results, brand safety is no longer guaranteed. Until more transparency is brought into programmatic buying, companies must weigh the benefits of cost efficiency and machine learning with brand safety.

Despite these issues, programmatic media buying continues to grow at a rapid clip. The Interactive Advertising Bureau has attempted to combat some of these issues by issuing an anti-fraud working group as well as guidelines and best practices. But unfortunately, there is too much money and a lack of penalties/enforcement for fraudsters to pay much attention. As the industry comes together in an attempt to stamp out fraud, it becomes clear just how difficult eliminating fraud will be for the foreseeable future--at least as it pertains to programmatic ad buys. So, for now anyway, it's (media) buyer beware.