Programmatic has topped the buzzword lists in marketing for the past few years now. (I know because I've written a few of those lists myself. And as with any emerging trend, it's ridden the standard waves -- from the "new hotness" to the "enough already, we get it." And while programmatic has certainly hit its stride as a new accepted reality and necessity of media buying, it's far from a stagnant space. We're still very much in the "keep up or get left behind" stage.
So let's keep up.
How big are we talking?
Well, big obviously. Programmatic is now the mode of choice in the U.S. when it comes to ad buys. According to eMarketer, that translated into $25.23 billion in 2016, representing 73 percent of U.S. advertisers' total digital display ad budgets. Those figures are expected to climb to $37.88 billion, representing 82 percent of U.S. digital display ad spending, by 2018.
A few other eMarketer fun facts:
- More than half of U.S. digital video advertising was bought and sold programmatically in 2016 -- 60 percent, in fact. And that's expected to top 80 percent by 2018.
- U.S. marketers are spending more on programmatic direct than they are on real-time bidding. In 2016, programmatic direct pulled in $13.37 billion, representing 53 percent of U.S. programmatic spend.
- Like everything else, programmatic is going increasingly mobile. In fact, seven out of 10 U.S. programmatic dollars went to mobile in 2016.
What about globally?
Global programmatic figures are a bit hard to pin down. The U.S. by far represents the largest programmatic spend worldwide, accounting for more than half of global programmatic ad dollars. Magna Global, whose estimates of the overall programmatic market size are a bit more modest than eMarketer's, gave one of the more comprehensive global breakdowns I've seen in a June 2016 report.
Magna Global predicts that the global programmatic market will grow from $14.2 billion in 2015 to $36.8 billion in 2019. (Note that eMarketer puts U.S. spend alone at more than that.) Dollar amounts aside, it reports that in terms of national programmatic spending, the U.S. is trailed most closely by the U.K., Japan, China, and Germany. Together, the five markets represent more than three-quarters of global programmatic spend. That said, the U.K. -- the second top spender on programmatic in the world -- is still expected to be investing only about one-ninth as much in programmatic as the U.S. by 2019.
And what about TV?
Programmatic has come into its own on the digital display and digital video fronts. But it's only just now starting to garner the attention of TV broadcasters. Programmatic TV is very much in its infancy, and it's still a bit hard to say where this market will go in the coming years.
According to eMarketer's first forecast on the topic, spending on programmatic TV is expected to more than double to $2.16 billion in 2017 and continue increasing to $4.4 billion by 2018. That's still only 6 percent of overall TV spending.
"There are several things driving the growth of programmatic TV, including ease of transactions and the ability to target ads," said eMarketer's Martín Utreras in regard to the forecast. "We expect national and local players to take a conservative approach at releasing inventories programmatically, amid fears they could cannibalize their inventory. At the same time, they're working to become more adept at leveraging data for both ROI measurement and targeting."
Of course, as a recent AdExchanger article points out, the markets for programmatic TV and addressable TV -- which eMarketer is currently treating as separate entities, along with digital video -- are hard to quantify because they are so novel and rapidly evolving. Buyers and media companies each classify these buys quite differently, often depending on how teams are structured.
So, is this all a good thing?
So, programmatic is vastly simplifying media buying. But are the efficiencies coming at the expense of effectiveness?
It would seem not. Industry veteran Sarah Fey recently noted in a MediaPost column that "even the most rudimentary of programmatic buying platforms typically produce around a 20 percent improvement on measured returns such as online sales or leads."
And yet, the programmatic world still harbors much discontent on all sides. According to recent ExchangeWire research, confidence that programmatic advertising delivers value for money has fallen from 95 percent to 86 percent globally; however, that reduction in confidence has not translated to a reduction in spend.
ExchangeWire found that, between 2015 and 2016, marketers' perception of the level of viewability in programmatic has not changed much, dropping from 45 percent to 43 percent. However, only 18 percent of marketers say this is an acceptable level. More than 70 percent of marketers say they will tolerate fraud as long as it does not rise above 5 percent. In the U.S., 87 percent of marketers consider marketplace quality to be a serious or very serious issue. And believe it or not, U.S. marketers were the least concerned group when it came to quality, compared to their APAC and EMEA counterparts.
Not surprisingly, publishers seem more concerned about the problems with programmatic compared to media buyers. After all, publishers need to monetize their content, and programmatic shortfalls threaten to hit them where it counts the most. Media buyers, on the other hand, can shift their budgets as needed to improve ROI.
Publishers with viewability and fraud concerns are hoping that a set of standards could improve the state of affairs, but as of yet, the protocols and expectations in this every-growing space are as varied as the players themselves.