Programmatic this and programmatic that–the latest buzzword has chief marketing officers in the Asia-Pacific region scratching their heads. While programmatic merely means “automated,” complexity arises because it serves many purposes across an array of industries.
Programmatic advertising is essentially buying ads through technology. It is driven by real-time bidding, allowing advertisers to buy ads in much the same way a person might bid for an item on eBay or book a room on HotelsCombined.com. Well on its way to defining advertising in the digital age, this growing technology is replacing human methods, such as phone calls, email, and even long lunches.
This automation means transactions are more efficient, cutting out complex ad-operation tasks, and saving vendors both time and money. Programmatic ad buying is the catalyst for the fundamental shift in how companies are purchasing media, and, as such, advertisers are positioned to connect with consumers more effectively and cheaply.
This form of ad buying has quickly become an industry necessity in the marketing sector in regions such as the United States, where it accounts for half of the total digital display market, and is expected to hit $US20 billion ($A26.2 billion) by 2016. Brewing company Heineken said its 2015 digital ad spend will increase to 30% of its total budget this year, up from 20% in 2014. It plans to use programmatic advertising for 10% of its ad buys.
Asia Pac Gets With The Program
According to Phil Guest, senior vice president at U.K.-based programmatic marketplace Exchange Lab, interest and investment in programmatic is set to boom in the APAC region over the next 12 months.
“In the past 12 months, the fastest-growing programmatic region in the world is Asia Pacific,” Guest says. “The discussion at this year’s Festival of Media Asia (FOMA) has shifted to a deeper level of understanding and a greater focus on using data intelligently to improve marketing ROI.”
Technology vendors are paving the way for what is shaping up as a significant expansion into this space, investing in staff and infrastructure in the Asia-Pac region to meet growing demand.
Publishers are also climbing onto the programmatic bandwagon. Several of the biggest and most respected publishers in the world--The Guardian, Financial Times, Reuters, CNN International, and The Economist--have teamed to form a private programmatic market, the Pangaea Alliance, which will sell online ads in an attempt to compete with well-established platforms, such as Google and Facebook.
Gary Kibel, a lawyer with U.S. firm Davis & Gilbert, said he believes this newly created private marketplace represents an important development in the programmatic advertising trend.
“At first programmatic was used with the marketplaces of large ad networks,” said Kibel, a partner in the digital media, technology and privacy, intellectual property, advertising, marketing and promotions practice groups. “Then the talk was about bringing programmatic in-house at publishers and advertisers. Now this move is back toward a marketplace--but a limited, premium-inventory marketplace.”
According to Kibel, this trend endorses the value of programmatic, as it makes the transition from a tool that was initially used to revive remnant inventory to a premium inventory channel.
Exchange Lab’s Guest said he believes this shift is part of a broader move, which has seen marketing departments in the region increase their programmatic budgets and move into a new phase of programmatic adoption.
“Today we see brands realising the value of spending more to secure quality engagement that ultimately leads to a better return,” he said. “APAC is building on the U.S.’s and Europe’s experience of ad tech to adopt regional marketing strategies that deliver improved results.”