Programmatic is a game-changing technology in the advertising industry. According to ZenithOptimedia programmatic marketing forecasts, it will grow by an astounding 31% in 2017- and that’s faster than social media (25%) and online video (20%).
At the same time, marketers using automation is on the rise: Dun & Bradstreet Report predicts almost 70% of B2B marketers plan to increase spending on programmatic advertising in 2017.
So what can we expect from the year ahead and how should advertisers be prepared to take advantage of programmatic?
1 - Cross-device campaigns will get in power
According to Global Mobile Consumer Trends Research, we check our phones around 40 times per day. With more than 78% of the global consumers owning smartphones (76% in developed countries and 81% in emerging markets), mobile programmatic ads are on the upswing.
Rising device penetration and increased mobile usage is a huge advertising opportunity which marketers simply can’t ignore. 2017 will be the year of mobile programmatic not only in the US, where eMarketer predicts that mobile will represent nearly 75% of all programmatic ad spending, but also in other markets across the globe. Programmatic video is also on the rise. It will amount to about 60% of all digital video ad spending in the US according to eMarketer, and accounts for almost a quarter of video ad spend in Europe.
The UK will remain the market leader in programmatic digital display ad spending, expected to account for more than three-quarters of all buys in 2017, so by 2018 programmatic direct will account for 52% of the programmatic total and £2.03 billion. By 2020 desktop spend is projected to be £3.17bn, compared with mobile's £8.99bn.
The programmatic mobile and video market has been shaky in the past, but device saturation and market maturity seems to put publishers and advertisers in a comfortable place with buying and selling mobile and video ad inventory. In 2017, brands will be even more eager to run activities that reach consumers on every one of those screens and planning a cross-device campaign will be a common and effective strategy.
2 - Header bidding will revolutionise buy/sell auctions
Header bidding (or pre-bidding) helps publishers better decide which partners they choose to work with.
Unlike waterfall auctions, which have long been the standard of buying and selling ads, header bidding means all bids are made at once. This allows for a more democratic access path to the publisher's ad inventory, which creates a win-win for both publishers and advertisers. The price usually goes up, awarding publishers more money. At the same time, it gives advertisers a more even shot at the inventory they most want.
In traditional waterfall methods, publishers are not able to choose their partners – they are placed into tiers based on how much money they have spent historically. The more they've spent, the higher tier they occupy. When an impression goes up for auction, it is first offered to the highest tier; if that tier doesn't bite, the same impression is pushed down to the next tier. This repeats until someone makes a bid. But this process doesn't always get the publisher the true value for their impression. Nor does it give advertisers equal footing to bid on the impression they want. And here is where header bidding concept steps into the game.
In 2017, header bidding will be more accessible than ever, thanks to rapid developments in the technology that allows them. Buyers will be highly incentivized by the lower costs of impressions technology fees, while publishers enjoy higher profit margins from their inventory.
3 - Deep learning will boost retargeting quality to new heights
According to Juniper Research, machine learning algorithms which are employed in programmatic advertising to enable more efficient bids in RTB networks are expected to generate around $42bn in annual advertising revenue by 2021, up from around $3.5bn this year.
Deep learning (a branch of machine learning based on algorithms that attempt to model high-level abstractions in data) has made significant strides in 2016 and will be on the radar of many forward-thinking advertisers in 2017. It’s now being used in many industries beyond software. These algorithms are the backbone of image or speech recognition, and in 2017 their application will have a great influence on programmatic advertising campaigns.
Thanks to deep learning methods which are employed by innovative retargeting technology providers, advertisers will be able to predict user behaviour, calculate the probability of purchasing, and measure value more accurately. Programmatic buying and selling powered by deep learning will yield a higher value of conversions and enable advertisers to run advertising campaigns that are extremely effective without larger budgeting.
By Daniel Surmacz, COO at RTB House
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