Programmatic advertising continues to rapidly gain adoption around the world as the industry seeks more efficient methods of buying and selling digital inventory. In the U.S., programmatic accounts for 67% of all spending on digital display ads, and worldwide, a total of [tweetable]$64.6 billion will be invested in programmatic display ads in 2017.[/tweetable]
However, while automation has helped reduce CPM costs, the marketer’s ultimate goal—connecting with and engaging consumers at the right moment—remains as challenging as ever. Hurdles such as ad quality, data quality, cross-device attribution and ad blocking have prevented programmatic from fully delivering on its promises.
Consumers are moving continuously throughout each day across digital devices, making them an elusive target for marketers. Programmatic may have succeeded in delivering lower costs per impression, but advertisers are demanding more: targeting efficiency, cross-channel identity resolution and the best quality impressions at the right CPM.
The result is a movement by marketers toward higher quality data that can reach known customers wherever and whenever they are. Such data can be used to create addressable advertising that is more relevant to consumers who want personalized brand experiences.
All of this has placed programmatic advertising at an important crossroads, one that is driving the following notable trends:
1. People-based marketing will gain greater share of programmatic spending.
People-based technologies enable advertisers to use their customer data to target people rather than cookies or devices. As marketers strive to reduce wasted spend, improve management of reach and frequency, close the loop on cross-channel attribution and measure ROI more accurately, they are realizing the power of addressable advertising.
Leveraging people-based technologies, marketers can extend the use of their first-party data assets to reach people who don’t just look like their customers but are their customers, and thus are the most likely to convert. As Signal noted earlier this year, “82% of marketers plan to increase use of the data generated from their customers and brand properties. They’re putting first-party data first, over the inferred, third-party data of the past.”
2. Advertisers will place more emphasis on quality inventory.
Along with rise of programmatic has come concerns about viewability and fraud. As a result, inventory quality is becoming a priority as brands strive to make sure their ads are placed only in safe environments. A variety of cross-industry efforts and new verification solutions have cropped up to address these issues.
Underscoring the shortcomings of an open marketplace is the growing popularity of programmatic direct buys, private marketplaces and header bidding. As direct channels become more automated, the platforms that will see the most success will be those that don’t require advertisers to trade off using their valuable audience data in order to buy the highest quality inventory.
3. Real-time data takes center stage.
Engaging today’s hyper-connected, multi-screening consumers requires the ability to recognize customers as they move across channels, and respond in the moment to live behavioral data signaling a customer’s intention to buy. This requires an up-to-the minute picture of the customer and her needs, which in turn is driving a new mindset about data collection and connectivity.
Cumbersome batch processing doesn’t cut it in today’s world. To be able to optimize campaigns with more accurate messaging and targeting, marketers need technology that enables them to collect streaming data from all digital touch points, and tie it back to the customer, while synchronizing it with offline data, such as CRM or point-of-sale information, all in real time.
4. Up close and personal – making ads relevant to consumers as individuals.
With ad blocking technology proliferating and consumers bouncing among platforms and devices, it’s not a matter of simply finding them with first-party data, but making ads relevant to them as individuals—a customization that speaks to their specific preferences and desires.
The industry is increasingly focused on becoming better at using data. While data-driven marketing, relevance and personalization are the future, the reliance on customer data should enhance the user experience rather than impede it. New technology is making is easier to collect customer data without slowing down the Internet, while connecting it across devices and channels for improved frequency management, and more personalized marketing across devices.
5. Programmatic is everywhere.
Thanks to its undeniable efficiencies and opportunities for rich, data-driven targeting, programmatic isn’t just having an impact on digital display. It is becoming a common way to procure mobile, video, TV ads and even native advertising, reaching across formats, screens and channels to help brands connect with people wherever they are.
For example, in 2016, programmatic spending on video ads will total $5.5 billion, accounting for 56% of all digital video ad spending. Investment in programmatic TV ads is expected to experience explosive growth in the next few years growing from 1% of total TV ad spend in 2016 to 6% (or $4.4 billion) in 2018.
Programmatic advertising continues to grow, with marketers searching for the most effective and efficient ways to reach their consumers. Its benefits have yet to be fully realized, but the marketplace is evolving rapidly, and offering new technologies for harnessing data and speed. Success often depends on being a first-mover, so stay abreast of these and other trends to maximize your opportunities for success.
Originally published August 10, 2016