Why Expedia won't go 100% programmatic for digital ads—even though it wants to

Dive Brief:

Expedia spends 80% of marketing on TV and 20% on digital, with 20% of the digital spend going to programmatic, according to the company's Director of Brand Marketing Vic Walia.
Walia told AdNews that he would like to see the digital spend move to 100% programmatic and double in overall share of the marketing budget, but won’t take that step because of the inherent cost inefficiencies in programmatic.
Walia looked at industry data and analysis on Expedia campaigns and found that both indicate 60% of programmatic spending goes to ad tech firms and vendors, and only 40% makes it to the publisher actually serving the ad bought programmatically.

Dive Insight:

Even though some brands, such as Expedia, are wary of programmatic for reasons like transparency and ad fraud, many more are making use of automated ad buying. Recent research from the Association of National Advertisers found that the number of marketers buying programmatic ads has more than doubled over the last two years: 79% of advertisers in the ANA survey reported buying programmatic ads last year, up from 35% in 2014.

Walia said the publisher’s take of programmatic ads need to get closer to 60, or even 80, cents on the dollar before Expedia would find programmatic worth a larger budget line.

“I firmly believe there needs to be some consolidation, if there isn’t going to be, then players like Expedia and other tech leaders will have to go and build things in-house,” Walia told AdNews. “If you’re an aggregator like Expedia, who’s selling someone else products, you’re working off a different margin base. So for me, it’s the 40 cents on the dollar that is troubling, this change will come because of advertisers like Expedia who are dealing off thin margins and need the commercials to change.”

The inefficiencies of programmatic have led many companies to bring programmatic in-house, saving brands from agency fees and allwoing them to keep control over their first-party data. ANA research has found 31% of respondents increased in-house capabilities to oversee programmatic. The same study found 70% of those who bought programmatic ads last year reported they were concerned about higher levels of bot fraud.