Just two years ago, programmatic advertising sales and placements accounted for a mere 20% of ad spend, according to the IAB. The industry has changed fairly dramatically and programmatic now accounts for roughly 67% of ad spend in the USA, alone. That represents a 39.7% increase from 2015, according to an eMarketer report.
Programmatic is no longer an afterthought
According to Lauren Fisher, speaking to Digiday:
““Programmatic is no longer a sidebar in the digital advertising conversation. It is a must for any digital display advertiser who is serious about bringing greater accuracy and insight to their digital ad buys,” she said.”
According to a report by eMarketer, more than two-thirds of US digital display ad spending is currently programmatic. eMarketer also predicts that digital display ad spending will pass $22 billion in 2016.
Challenges facing programmatic
Certainly, programmatic advertising faces challenges. According to Digiday, there are three major challenges: viewability, ad fraud and transparency. These challenges are, well, challenging but certainly not insurmountable. The industry has gained deeper insight into the underlying dynamics and the solutions required in order to create a more robust programmatic advertising ecosystem.
Despite the challenges, programmatic is fast becoming the dominant means of trading in ads and ad inventory. It is moving beyond its origins in display and video advertising and expanding in innovative and unexpected directions.
- Premium programmatic takes advantage of private marketplaces to facilitate the sale of premium ad inventories at higher CPMs.
- Programmatic creative uses Big Data to enable advertisers to deliver highly personalized ads to specific consumers or, at the very least, specific consumer segments. Programmatic creative can be optimized for audiences’ specific contexts which could include locations, weather conditions and more.
- Programmatic native is still in its infancy. It enables publishers to automate the delivery of native content to audiences that remain receptive to native advertising. The one key requirement for programmatic native to succeed is access to large native inventories to fill with that content.
- Programmatic video takes advantage of the tremendous growth of digital video and the corresponding shift by publishers to embrace video as a primary medium. The increase of video inventory has meant a corresponding move to use programmatic to automate ad placements.
Programmatic TV and radio
These very linear and traditional media are starting to see the benefits of programmatic integration. Digital TV and audio streaming services are blending detailed consumer data profiles with programmatic ad placement technologies to deliver personalized ads in their content streams. Both offer advertisers media that are less vulnerable to ad blockers and introduce the very appealing possibility of near 100% “viewability”.
This emerging technology offers publishers an opportunity to offer their premium inventory to select ad exchanges before making that inventory available on ad servers. Header bidding pre-empts the usual waterfall process and has the potential to help publishers earn higher revenue from their inventory. It also gives publishers more certainty about fill rates.
Waterfalling, Header Bidding and Publishers’ Revenue Streams
The challenge is that current header bidding technology increases latency and puts user experience at risk. This is problematic because it could exacerbate ad blocker usage which is typically triggered by poor user experiences.
At the same time it is an exciting challenge to meet, certainly for the imonomy team. Success means we can better connect premium ad inventory with premium ads and deliver truly compelling offers to more engaged consumers.
Automated guaranteed is similar to header bidding in some respects. Like header bidding, automated guaranteed bypasses the usual waterfall sales channel. It introduces elements of direct media buys to programmatic automation by, essentially, facilitating automated ad insertion into reserved, premium ad inventory.
It is a return to a more direct relationship between publishers and advertisers. Automated guaranteed also helps restore much of the trust lost due to ad fraud on more distributed networks due to poor transparency and less control over ad buys and placements that is common in conventional waterfall ad placements.
The future of programmatic is bright
Programmatic technologies are evolving and adoption is increasing dramatically. Programmatic now extends to digital incarnations of traditional media in ways previously not thought possible. Prime examples of this are programmatic radio and TV.
More importantly, programmatic is attracting an ever-increasing share of the global digital advertising spend and, with it, growing confidence in programmatic solutions. One of the reasons imonomy is implementing header bidding solutions is to bring premium advertisers and premium publishers closer for a superior user’s ad experience and optimal results.
There are still many challenges that the industry is yet to overcome but, as spend on programmatic reflects, the future of programmatic is bright.
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