In 2013, programmatic ad spend reached $12 billion globally and is projected to reach $33 billion globally by 2017. Programmatic has seemingly evolved into the standard for digital media buying very quickly, but it didn't just magically appear and shoot straight to the top of the digital marketing mix. Programmatic, as we know it today, is the inevitable evolution of media buying technology over the course of several years.
Digital buying in the last two decades has been largely driven by audience data: demographics crossed with search and behavioral data to generate ultra-targeted marketing programs. As an industry, we spent an enormous amount of time, money, and operating expenses on crunching our data in an attempt to create new and highly accurate audience segments for targeting purposes. A lot worked and was worth the effort; our industry was able to increase relevance and engagement with highly specific segmenting. The problem was the more narrowly targeted the segments became, the worse the scalability problem became.
Automation emerged in the last several years as a technological godsend to both advertisers and media buyers who craved a less manual means of translating billions of data points into meaningful insights -- making timely, relevant inventory purchases on a large scale as a result. Its roots stem from the emergence of technology that automated search keyword bidding. From there, the ad exchanges offered the same capability for display buying. Demand-side platforms (DSPs) enabled automatic bidding on several exchanges, which broadened advertisers' reach across the publisher landscape. Then real-time bidding (RTB) arose to improve the timeliness of the data used to build audience segments.
Programmatic became the umbrella term to describe the automatic buying and selling of ad inventory based on real-time data and sophisticated algorithms that turn that data into meaningful insight. It includes RTB as well as a multitude of display media buying platforms like DSPs, exchanges, and agency trading desks. The positives are many (streamlined technological communications, trial and error without all the paperwork, interfaces to measure success in close to real-time). But one of the main drawbacks to these platforms has been that advertisers are not always aware or in control of which publishers comprise the networks. As a result, very often their ads can be placed on lower-tier sites whose audiences might not be qualified. In sum, full transparency is still an issue. In a world of algorithms, speed, automation, attributes like trust, customer service, and human communication will always allow for greater results. We need both the humans and the machines.
Programmatic today is still very much in a state of evolution. New innovations have emerged to answer some of the issues that remain, such as questionable inventory quality and the inability of creative departments to keep up with the pace of programmatic. Programmatic creative offers advertisers the ability to automate digital asset creation, as well as buying and serving so that ads themselves can be uniquely targeted to smaller and smaller audience segments at scale.
Premium programmatic has been the latest innovation to emerge; it offers the same real-time targeting capabilities, but also allows advertisers to guarantee that their ads are only placed on premium publisher sites and ensures publishers receive the optimum return on inventory. Top-tier advertisers want their ads to appear alongside top quality, contextually relevant content, and premium programmatic that accomplishes at scale.
These innovations have already shaken up the media buying space, and programmatic is likely to continue to evolve. But one thing is certain: Programmatic has taken its position as a critical part of the marketing mix, and it isn't going anywhere.
This is the first in a series of articles designed to offer guidance to the industry on how to fully take advantage of the new ecosystem and develop a more preferred way of doing business: preferred programmatic.
Stay tuned for more. We've only just begun.
Jonathan Slavin is CRO of CPXi.
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