Decades after the financial industry's wide-scale adoption of automated stock trading, we're still apt to treat automated media buying as an anomaly. Insider acronyms like RTB, DSP, DMP, and a host of others may make automated ad buying feel like a fad. Far from being an industry buzzword, however, "programmatic" is becoming an integral part of how marketers do business.
As ad campaigns move from manually negotiated media buys to programmatic marketplaces where smart machines make thousands of decisions every second on which impressions to buy, it's become more important than ever for marketers to understand the programmatic landscape. The reason for this shift is simple: we're in the age of Big Data. Marketers have a direct line to their customers in the form of first-party data gathered from website visitors, email lists, and contact databases. Programmatic ad buying is the cost-efficient, real-time application of all that data for strategic ad campaigns that can predictably transform data into customer revenue.
Although real-time bidding technology is still comparatively new, programmatic purchasing already accounts for 50 percent of all digital display spend. In addition, 85 percent of enterprise advertisers use programmatic buying and 72 percent of publishers support it. This trend will continue to grow -- in the US, Europe, Australia, and Japan, more than 90 percent of marketers consistently report that programmatic retargeting campaigns perform better than or as well as other display campaigns.
The success of digital media is also influencing other media channels. Even legacy media industries that have been traditionally slow to adopt new technology are open to the promise of programmatic. There are predictions that 2015 is the year programmatic comes to television, while Jelli and Cadreon are just two of the companies betting on the future of programmatic in radio.
As in any growing industry, success creates opportunity, and opportunity leads to options -- and competition. With well over a thousand ad tech partners to choose from, it's up to each company to find the unique blend of technologies that will work for their goals. Organizations that don't have experienced in-house tech resources and personnel, or who prioritize best-in-class reliability, may be better off outsourcing to a partner who specializes in tech. In limited situations, certain companies may find themselves unable to adopt an outside ad tech partner. Some industries -- healthcare, for example -- have to abide by strict legacy data security requirements. It can be challenging to find a tech partner who offers the right products and has all the right certifications and protocols, so it may be more practical for these industries to build an in-house solution with those data specifications in mind.
Some large companies view programmatic technology so core to their success that they are making huge investments to build the requisite in-house talent, to develop a home-grown custom ad solution. Organizations that elect to grow their internal talent to meet the market need for knowledgeable programmatic specialists include advertising giants such as Procter & Gamble, Netflix, and Kellogg's. They all have famously taken over management of their advertising, establishing in-house RTB trading desks. Meanwhile, General Motors has dropped from 70 agencies to three, demonstrating its interest in a more tightly managed approach.
As technologies evolve to give advertisers more control and let publishers offer more options, we'll continue to see new opportunities open up. Getting in on the ground floor will ensure that you're the first to adopt new innovations, that your campaigns stay on the cutting edge, and that you're always one step ahead of the competition with the best advertising techniques. We've already seen that programmatic ad buying helps acquire, engage, and retain customers, and gives marketers a powerful application for their first-party customer data. There's no telling what it will deliver in the future.
Neil Coleman is managing director at AdRoll New York.
On Twitter? Follow iMedia at @iMediaTweet.