If digital advertising had a word of the year, 2014’s might well be ‘programmatic’. The industry is still talking about it well into 2015, and for good reason: research has shown that more than 80 per cent of buyers and sellers are transacting programmatically.
But underneath the buzz, what’s really going on?
Crazy for automation
Well, for starters, let’s clear up some terminology. There has been plenty of confusion around the technology’s definition. And that’s because it’s not strictly speaking a technology: programmatic simply means automated. In fact, during ABC's recent upfront presentation, Jimmy Kimmel teased, "Programmatic buying is the gluten of advertising.” Like a cult diet, programmatic has become a misunderstood buzzword to outsiders.
But programmatic isn’t just a fad. According to an IAB survey, nearly one in every three pounds spent on display advertising was bought using programmatic technologies in the UK in 2013. The research went on to reveal that just short of 30 per cent of the £1.86bn spent on display advertising was traded programmatically. And, not unexpectedly, adoption in 2013 was shown to be notably higher than previous estimates.
Longevity
Programmatic’s early success begs the question: will all ads eventually be automated? Although it’s unlikely that anyone would ever buy the entirety of their inventory programmatically, it does look as if the majority of buying will be automated within the next few years.
The conversations I have with advertisers consistently reveal that they use programmatic because it offers better targeting and efficient pricing, especially through their trading desks. However, as brand dollars flow into programmatic, agencies and marketers have prioritised brand safe environments and viewability when buying ad space. They want good environments for their ads but it’s equally important to them that their impressions aren’t wasted by never being seen. The time has come for automated guarantees to be combined with quality inventory and format choices.
Future formats
Programmatic’s roots lie in enhancing the efficiency and effectiveness of standard display ads, but there is also a growing demand for mobile, video, and creative high impact formats sold programmatically. Building a wider interest in programmatic will depend on offering increased format options and offering a better variety of ways for advertisers to transact them.
Luckily, programmatic has already moved beyond standard display. Marketers and agencies are going beyond the banner, buying a variety of ad products programmatically, and publishers are doing their best to supply all of them. There is definitely a strong market for mobile programmatic, pre-roll and high-impact, as well as a growing interest in native. As I’ve found myself saying lately: if an ad unit exists there is a programmatic demand for it.
An ad by any other name
Certainly this demand will continue, but as we move away from standard formats, ‘real time execution’ becomes more and more difficult. So, to speed it up, let’s be cognisant about how we use the word ‘programmatic’.
To become more programmatic, we have to move beyond “real time execution” and “real time bidding” and start focusing on how we deliver an automated campaign from start to finish. This includes creative build and management, publisher management, process management and, only after all of that is done, real time delivery.
By Cameron Hulett, Executive Director, EMEA of Undertone.
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