Programmatic display advertising currently makes up the majority of digital ad spend, but it still has a long way to go.
The State of Programmatic Display Today
According to Magna Global, programmatic spend reached $21 billion last year. And by 2018, programmatic ad spend is expected to increase to $53 billion. In 2014, programmatic transactions made up 62% of “display-related digital dollars,” but by 2018 Magna Global expects that number to grow to 82%.
Included in the company’s inventory are all display-related ad formats, such as banner ads and video ads, on both desktop and mobile.
It’s no surprise that the United States leads the way in terms of programmatic display spend, dominating more than half of the global programmatic and RTB markets at 53% and 58% respectively.
The staggering growth curve of the programmatic display advertising industry is being fed by new verticals that are adopting programmatic and RTB, such as real estate, automotive, pharmaceuticals, dating, gaming, and education.
Though mobile programmatic display is growing rapidly, it still only consumes around 20% of the RTB spend. Magna Global expects that to increase to 55% by 2019.
What Programmatic Display Offers Advertisers
The underlying theme behind programmatic display advertising is efficiency.
And data is what powers the programmatic and RTB systems. Data allows:
- Automated multi-channel buying
- Audience-based buying
- Objective-focused optimization
- Dynamic content optimizations
- And so on
Programmatic is still evolving, but its efficiencies give display advertisers a serious edge in the marketplace. Demand-side platforms allow advertisers to analyze inventory, refine optimization models, place real-time bids, and optimize across a multi-channel, multi-device campaign strategy.
And as programmatic evolves, so too do its capabilities. Advertisers can impose frequency caps, optimize budgets across their campaigns, and so on. The increasing transparency of media buying also means that advertisers can buy confidently.
In the past, opaque buying practices made many advertisers hesitant. And this hesitancy has hindered the speedy adoption of programmatic advertising. But with more transparent media costs and analytics, advertisers are able to track their ROI efficiently and confidently.
The Top Advantages of Programmatic Display
According to Joanna O’Connell of AdExchanger, “Programmatic has evolved far beyond real-time bidding.” In AdExchanger’s comprehensive survey, marketers, advertisers, publishers, and vendors, revealed the top advantages of programmatic display advertising.
The top two, according to the report, were improved audience targeting and increased ROI. Thanks to consumer data, programmatic gives the following benefits:
- Marketers can improve conversions – and thus ROI – by targeting the right customers at the right time in the right context
- Programmatic ads can precisely target segments across multiple channels, devices, and inventory sources
- Multi-dimensional portfolio modeling, predictive modeling, and simulations further refine results and increase ROI
- Programmatic buying allows marketers to deliver structured creative content optimized for each display and device type – at scale
As mentioned, though, what really makes all of this possible is the data that drives programmatic buying.
The true art, science, and craft of programmatic advertising comes down to data: how the data is used to analyze customer interactions, develop profiles, and deliver dynamic creatives.
Customers are spread across an ecosystem of devices and channels, which has presented many challenges to the evolution of programmatic buying. Attribution, audience management, analytics, targeting, ROI calculation, and fragmentation are all major hurdles that the industry has faced.
But the advertising industry is advancing rapidly. To overcome these problems – which are inherent in such a complex marketing environment – many companies are developing tools that tackle all these problems at once.
Consolidation tools, such as GrowMobile’s self-serve platform, solve these problems. These types of tools make it possible for advertisers to engage in programmatic buying from a variety of sources, analyze those results under one hood, accurately calculate the ROI of their campaigns, and target their audiences efficiently and effectively.
As programmatic continues to evolve, these types of platforms will become the standard toolboxes for marketers. A number of other companies are hopping on the bandwagon. And as we move further into 2015, we’ll see more and more tools of this type.
They will also grow in sophistication. Currently, these tools incorporate the cutting edge of data analytics and targeting capabilities.
Over the next several years, expect to see programmatic evolve considerably:
- Multi-device apps will give marketers more accurate attribution, tracking, and targeting data
- As display evolves toward video, programmatic will evolve with it – until we eventually have programmatic TV
- Dimensions will become the norm in analytics
- Data science will become much, much more sophisticated, incorporating behavioral profiling and physiological profiling, once wearable technology becomes the norm
As mentioned, Magna expects more than 80% of the advertising industry to become programmatic by 2019. So don’t be surprised if the entire industry is overtaken by programmatic in the next 10 years.
While programmatic still has some growing to do, it’s clear that programmatic buying and RTB are becoming the new standard for advertising. Any marketer that wishes to keep up with the curve will need to get on board with programmatic.