Programmatic advertising became an industry buzzword back in 2011, but it was no passing fad. Programmatic ad spending reached nearly $15 billion in 2015, and that number is expected to reach $20 billion by the end of this year.
Indeed, marketers are realizing the benefits and efficiencies that automation offers; publishers, too, are reaping the benefits of unwasted inventory. So what’s in store for programmatic in 2016? We posed that question to these industry leaders. Here is what they predict.
Joe Laszlo, VP of Industry Initiatives, IAB:
In talking with the chairs of IAB’s Programmatic Council, we’ve identified four key areas as likely to be the hottest topics of conversation in programmatic for 2016. First, header bidding, which emerged in late 2015, will continue to be big in 2016 as it changes monetization economics for both the buy and sell sides. We also expect to see continued movement away from monetization via open exchanges to more curated/controlled programmatic environments, so private marketplaces will grow in prominence.
Third, as programmatic adoption by brand advertisers continues, we expect the emergence of better tools to understand cross-device and cross-channel performance—that is, attribution—in the programmatic context. Finally we expect to see the programmatic conversation extend to address new supply sources—including “native”-style ads as well as programmatic linear TV, audio, and out of home. These may not all be fully baked realities in 2016, but we are sure to hear more and more about the confluence of data and automation in how those media are transacted.
Ted Dhanik, CEO, engage:BDR:
2016 is going to be a great year for programmatic. We are out of the adoption phase, and achievement of critical mass is allowing the ecosystem to step back and realign focus to improvements that can be made. This year will see the effects of a big cleanup and emphasis on high-quality inventory, which will be extremely positive. Companies who just resell placements and add no value to the ecosystem will be pushed out, leading to a better and smoother user experience for consumers as well as undiluted pricing for advertisers.
Erik Matlick, CEO, Bombora:
Programmatic will continue to be the trend as more and more large clients will be setting up their own DMPs and trading desks. What clients will find by bringing programmatic in house is that it’s a lot more expensive and more difficult to manage than previously thought. The sum of the parts will surprise them. I would expect there to be a slight rebound in premium and direct buys and private marketplaces.
Joe Apprendi, CEO, Collective:
The rise of the “empowered consumer” will lead to scarcer digital ad supply, due to issues such as quality inventory and ad blocking. Content marketing spend will win out over standard ad spend. With ad blocking and current display options’ ineffectiveness, the result will be more native ad supply that marketers will want to use to engage consumers.
The rise of the “enlightened enterprise”–more sophisticated with data and media attribution–will result in the digital ad spend forecast being revised downward. With unreachable audiences on the rise due to ad blocking, quality inventory scarce, ad CPMs increasing, and attribution better able to gauge digital’s effectiveness in the year ahead, digital will be more expensive than alternative channels–TV, outdoor, print, radio, direct mail, email, etc.
As consumers opt out of advertising and refuse to pay subscriptions or accept ads on most publisher sites, undifferentiated publishers will fail while large and brand publishers will control the vast majority of the ad spend. At the same time, Google and Facebook will be joined by new walled gardens, including Disney, Comcast, Verizon, AT&T, etc., in the effort to control access to audience and inventory.
Continued platform fragmentation will cause unified workflow to take precedence over new ad tech point solutions. The industry will need to solve the current lack of interoperability among ad technologies, and marketers will demand that the “ad technology” tax to process media be reduced. “Enterprise Advertising Hub” technology will emerge as the last phase of ad tech to streamline media investment across channels.
Blane Sims, SVP, Product, Signal
Programmatic advertising exploded as a result of the demand for a more efficient media sales process–one that was once manual, time consuming, and costly. And it’s certainly worked: Almost 70% of advertisers agree that a top benefit of programmatic ad buying is lower ad rates. But in 2016, as the gains from workflow efficiencies may be hitting a ceiling, advertisers will need to identify other ways to increase the value of their ad spend.
So where can this hidden value be found? Significant gains can be uncovered in increasing investment in known vs. unknown audiences. Call it improved targeting precision or targeting efficiency.
In previous years, the hype around programmatic was about buying large audiences for the lowest amount of money. This year and beyond, the industry will move to focus on the best possible target, which can be done by turning to the power of first-party data–that is, a brand’s own data about their customers.
But the key to targeting efficiency isn’t just the data alone: it’s in how marketers use it. This means shifting away from cookie-based tactics that don’t work in all channels and only reach devices and not actual customers. The new strategy for success is a people-based approach that identifies customers across devices and channels and then ties that data back to 360-degree user-level profiles. Seeing the whole customer journey, not just a few slices of it, is critical for not only targeting but also attribution and measurement.
Targeting efficiency also hinges on the capability to capitalize on live signals about what customers are looking for in the moment. Only then can marketers leverage programmatic ad buying to deliver the right message at the right time–not after a customer has already left the market or made a purchasing decision.
Programmatic efficiency will be redefined in 2016. The focus for advertisers is no longer just about driving cost savings through automated purchasing. Instead, it’s about fueling better customer experiences, precise targeting, and, ultimately, greater ROI and decreased wasted spend. With the abundance of data and technology available to the industry, marketers are now able to better evaluate the impact of their investment in people, rather than channels or devices.
Zohar Dayan, CEO, Wibbitz
Last year was deemed “The Year of Video,” and 2016 may turn out to be “The Year of Programmatic Video.” The percentage of budgets spent programmatically on video ads has trailed behind the amount of display ads purchased programmatically, at 39% and 59%, respectively. This year we can expect to see an increase in programmatic spending on video ads.
There’s been a recent reemphasis and focus on user experience, primarily due to the increase in ad blocker technology, which has made publishers and advertisers more mindful of programmatic ad delivery. Pre-roll video ads can offer a less intrusive user experience in comparison to a page oversaturated with display ads. Video ads also generate five to 10 times more revenue than display ads, making them a safer and more reliable option for advertisers and publishers.
We’ve also seen two major changes in the market that will help overcome previous challenges to programmatic’s growth in video. First, there had been a lack of premium video inventory available. Now publishers and media providers are ramping up their video strategies in full force to meet market demands. Second, problems with accurate measurement had deterred programmatic video spending in the past. Measurements such as viewability or view count are now better understood, and advertisers, publishers, and technology providers are committed to resolving discrepancies. As we establish clearer guidelines and more transparency, budgets will open more freely to programmatic video.
Victor Wong, CEO, PaperG:
The explosive growth of programmatic over the past year is creating demand for a new role in the space: that of the creative planner. Before programmatic, creatives built one ad for one screen and one audience, but demand is increasing for creative to match increasingly granular audiences and myriad screen sizes. This year we will see a rising need for a new kind of professional solely responsible for ensuring that the right creative ad is reaching the right audience segments.
Tim Koschella, CEO And Co-Founder, AppLift:
Fraud free will be the default requirement. With fraud representing an estimated 34% of inventory, advertisers will demand a fraud-free platform as the minimal requirement.
Header bidding is on the rise in 2016 as well, as more and more publishers turn to building mechanisms to create an auction of all auctions, SSPs and exchanges will all offer a header bidding solution to help publishers maximize their yield, whilst keeping an eye on what demand the competition is bringing.
Alison Watson, Media Director, nFusion:
In 2016 we will continue to see big brands put significant effort behind figuring out where programmatic fits for their branding objectives. Programmatic won’t just be about direct response as the technology continues to quickly evolve to include traditional buying options–primarily TV at the moment.
Andy Monfried, CEO, Lotame:
Programmatic went from zero about six years ago to around $14 billion in 2015, according to most estimates that I have seen. This year, it’s expected to eclipse $20 billion–quite the impressive amount of growth when you do the math.
The lion’s share of that increase is going to come from two channels, in particular: video and mobile programmatic. However, there’s a third that we need to pay attention to as I suspect it will start taking off: content programmatic. It will involve the optimization of pricing around quality content, which will be part of a whole new industry based on content creation and curation. TV programmatic, which is being talked about a lot right now, will not be a major part as it isn’t being adopted quickly and that content programmatics reflected in the dollars spent on it to date.
The political advertising industry is going to lead the programmatic buying over the next eight months, but the selling of programmatic will lag given that not all inventory they want is yet available for purchase in that fashion.
Yariv Drori, VP of Programmatic Advertising Operations, MultiView:
Increasingly, marketers will subscribe to the mantra “know your audience.” Programmatic advertising is a data-driven automated process that aims to create efficiencies in media buying by focusing on specific audiences. As such, the success of programmatic campaigns can only be as good as the definitions we, as marketers, put into it. Marketers will need to be able to define their target audiences by data-backed parameters. For many businesses, simple demographics parameters, such as age, gender, and location, may not be enough, and additional specifications may be necessary to pinpoint your potential customer from the crowd. Marketers will realize it is better to run multiple campaigns against highly targeted audiences than to run a single campaign against one broad audience.
Tom Koletas, SVP Global Media, Madison Logic:
Programmatic enables marketers to target prospects at scale with display advertising. This tactic is so effective that we see it becoming the new normal within B2B marketing organizations by year’s end. Data gives B2B marketers the fuel to grow their account-based campaigns exponentially, but more importantly, it gives them the power to accurately target those key prospects at every stage of the buying cycle. In 2016, B2B marketers of all sizes will introduce some version of account-based marketing into their marketing plans.
Phil Barrett, Senior VP, Purch
Over the past couple of years, we saw publishers begin to delve into header bidding. Even though the new technology allows exchanges to bring in demand before the ad server call, it kills the waterfall approach, where direct buys occur first. In 2016, ad tech companies will invent their own offerings that deliver and create premium, custom advertising opportunities for publishers and brands across the media industry. First thing’s first: These offerings must manage header-bidder partners and ensure they know if the deal is worth their time. Ad tech companies will realize if they control the header-bidding process in-house, they’ll be able to garner better results and keep advertisers content.
See what the Twitterverse is saying about programmatic advertising: