5 Major Programmatic Advertising Trends
It's the industry "it word" of the moment: programmatic. In fact, some might say we've hit a "tipping point."
It’s the industry “it word” of the moment: programmatic. In fact, some might say we’ve hit a “tipping point.” According to a recent study by Magna Global, programmatic sales are expected to rise from $15 billion in 2015 to $32 billion by the end of 2017. On top of that, programmatic buying has gone up 20 percent in the first half of the year, making us pretty darn optimistic about the future.
But what exactly does that future look like? And what are the current trends in the industry?
PluggedIn BD brought together media buyers, advertisers, and publishers for a roundtable discussion on the topic of programmatic. It was moderated by Matt Prohaska, CEO & Founder of Prohaska Consulting. Here’s what our experts had to say.
1. Programmatic Direct Is Growing.
Perhaps the biggest trend at the moment is the programmatic direct space, which allows for guaranteed inventory. In this process, instead of an RFP, publishers can go into the software platform, put in inventory buyers are looking for, and interact directly. Our experts predict that there’s going to be even more growth in this space over the next four years, eventually becoming bigger than the private marketplace. There’s a bit of fragmentation on the buyer side, with various desires: some want the guarantee, while others just want the lowest rates possible. There’s a home for each type of buyer.
This is also good news for the world of RTB. As marketers dip their toes into the programmatic waters with direct, they’ll become more comfortable and make the shift toward bidding. It’s really going to open up the market a lot more.
2. There Is Such A Thing As Too Much Data.
From a publisher perspective, there’s a lot of audience data coming in that’s challenging to scale. There’s a running publisher joke that you set up seven private marketplaces, expecting only one of them to perform (and by “perform” we mean drive revenue), causing much frustration with sales teams.
In digital media, we almost “over data” ourselves. In the TV world, you’ll purchase against a particular show, assuming someone who doesn’t fit within your target demo is worth nothing. But if you buy contextually against a publisher, even if people don’t fit exactly within your demo, they could still be worth something to your advertiser.
3. There Are Problems (And Solutions) With Transparency.
There was some talk during our roundtable about what makes someone an ad network, and we landed on the definition: anyone who trades media and takes a percentage of it. But the biggest difference between an exchange and a network is really the transparency. (A big reason for this lack of transparency? Technology.) Our experts predict that in the coming year, we’ll see more transparency, more communication, and more accountability on both sides, driving spend and performance.
4. We’re Trying To Figure Out Mobile And Video.
Mobile programmatic ad spending in the U.S. is expected to hit $8.36 billion next year, surpassing desktop for the first time. But our experts have noticed that many advertisers buying mobile right now are buying blindly, without any data. There are a lot of probabilistic vendors running around, and what we need is the deterministic methodology. As always, there’s that challenge of scale versus accuracy.
There’s such different user behavior between desktop and mobile, particularly in terms of fragmentation. While someone uses 7-10 websites on a PC, on mobile (especially with the younger demographic) people use an average of 15 apps per day and 40 apps per week. Mobile is so much more about knowing what the user is doing right now and leveraging local data to make predictions. There are three layers to go about doing this: audience segments, location history patterns, and real-time data. This creates a mapping of the world.
Attribution is the largest challenge when it comes to mobile. While more time is spent on mobile devices, there’s a challenge of attributing offline or online sales on other channels. There’s also the issue of people not using phones for transactions. As we know, brands won’t budge if they can’t prove ROI. Payment solutions on mobile will be a game changer, causing a real shift.
Video is something else we’re still trying to figure out. This is one area where there’s more demand than supply. No one has really cracked the code on video in the programmatic space; whoever can is going to be a winner. We need a better (quality) supply that works for both the user experience (and publishers) and advertisers. As buyers and brands are able to have more direct relationships with publishers to help accomplish data goals, we’ll be able to have more money piping in across video.
5. We’re In Need Of More (Quality) Creative.
We also need better creative. There’s been an evolution wherein agencies are getting squeezed and questioned about what their purpose is in this space. What is the value of an agency when the media planning and buying is being replaced by automated systems? What they can provide is great creative. This is a giant void that needs to be filled. When we have 4,000 ways to target and only four creative pieces, that’s a problem.
If you can work with the right art department, one that allows programmatic to be part of the conversation from the beginning, creative can be really empowering to the process. We need to start testing 1,000 different creatives and turning off the 997 that don’t work. We’re going to see a continued trend of dynamic creative, which allows for customizing creative based on a particular user. There needs to be personalization at scale.
Honestly, there is no one single tipping point in this space. What we’re seeing is growth by a thousand tipping points.
ConvertMedia: Yoav Naveh, CEO
Ubimo: Gilad Amitai, COO & Co-founder
Huddled Masses: Charles Cantu, CEO
The Weather Company: Felix Zeng, Director Business Development & Programmatic Sales
Programmatic Mechanics: Keith Gooberman, CEO
Madison Alley Global Ventures: Michael C. Seidler, Founder + CEO
A Plus: Stephanie Layser, VP Ad Operations & Programmatic Strategy
inAppAd: Bhargav Patel, CEO
Rubicon Project: Adam Chandler, SVP Revenue, Buyer Cloud
Find out more on the future of Technology at our DLUK - Trends Briefing on the 24th September 2015