Programmatic has been causing quite a stir in marketing circles, and for good reason. By harnessing the power of Big Data and applying it to digital advertising, it has the potential to change the way we buy and sell advertising forever. In fact, some analysts predict that programmatic will constitute 100% of ad trading by 2020 – and no, that’s not a typo.
That said, programmatic still hasn’t brought about the sea of change that many in the industry thought it would. With that in mind, we’ll take a look at what the future holds in store for programmatic advertising — but first, let’s get back to basics and consider what programmatic actually does.
How it works
Programmatic advertising is a great example of MarTech: the collision of marketing and cutting-edge technology. In Ye Olden Dayes (i.e. before the internet), advertisers would buy advertising inventory — for instance, in newspapers or on billboards — manually. Fast forward a few years, and platforms like Google AdWords allowed advertisers to purchase digital ad inventory on search engine results pages and the like.
Programmatic takes this one step further by automating the entire process, cutting out the human element almost entirely. Advertisers use a Demand Side Platform to choose what sort of audiences they want to target and how much they wish to pay, while publishers use a Supply Side Platform to set out their inventory — and programmatic algorithms take on the rest, in real time. Instead of humans deciding which ad should go where and how much it should cost, computers use data to figure it out with superior speed and accuracy.
Now that we’ve nailed down what programmatic does, let’s look at what a programmatic future looks like.
One thing’s for sure, pretty soon, programmatic advertising is going to be everywhere. The boffins at eMarketer predict that programmatic will make up an astonishing three quarters of UK digital display advertising this year, representing a spend of around $3.38 billion. Programmatic is shaking off its esoteric reputation and becoming the status quo, and businesses and marketers who don’t keep up are liable to get left behind.
Programmatic is helping advertisers leverage their data to make ads more tailored to individual users. For instance, in this trailblazing example by John Lewis and programmatic specialists Infectious Media, users who visited either the Beauty, Home or Electrical section on the John Lewis site would be served a full page “takeover” style ad for that range when they visited the Radio Times website in the run up to Christmas.
This is a rudimentary example, but as more advertisers start to make use of user data, ads will become increasingly tailored, potentially even down to the individual level.
Programmatic on the small screen
Programmatic isn’t just limited to advertising on the web, it could soon be making its way onto our TV screens, too. Programmatic TV advertising is set to be a real game changer because it combines the ubiquity of traditional TV advertising with the personalization of digital advertising.
A programmatic future in which highly personalized ads are delivered via TV might look something like this: a fast food app — let’s call it “Eat Now” — knows from your app usage that you order takeaways about once a month, normally on the Tuesday after pay day. When the fated day rolls around, you’re streaming the new episode of “Game of Thrones”. During the ad break, instead of random ads for self-wringing mops and furniture sales (Must-End Sunday!), you see an ad for delicious pizza, prompting you to reach for your phone and order one of your own.
In this way, programmatic advertising benefits both the user and the advertiser — users get a more personally relevant experience, meaning that advertisers can be more certain that their ad spend are more likely to result in sales. Everybody wins!
Bring it on home
Since programmatic takes most of the legwork out of media buying via automation, it stands to reason that brands will no longer need to rely on exclusively on agencies. In fact, many leading brands, including Lastminute.com, have already brought their programmatic endeavors in-house.
If you work in a digital advertising agency, this makes you nervous, but you shouldn’t run for the hills just yet. In fact, this trend could make your life easier, letting you focus on fun stuff such as strategy and creative. Although you may want to start brushing up on your Demand Side Platforms…
Of course, for all its perks, programmatic advertising isn’t an unmitigated Good Thing. One major drawback is that, in the absence of a human keeping a watchful eye, ads can end up in some pretty unsavory places. The Times recently reported that programmatic ads from major brands were inadvertently appearing on white supremacist websites, and next to YouTube videos created by the Islamic State sympathizers.
There’s also a transparency issue: since impressions are the main metric within programmatic, brands can never really be sure that their ads have been seen by human eyes, rather than languishing beneath the fold. Indeed, some 75% of marketers say they’re concerned by the lack of transparency within programmatic advertising.
Similarly, the fact that all the buying and selling is taking place between computers, overseen by other computers, and on an inconceivably vast scale, means that the system is open to ad fraud, where ads are ‘seen’ by bots rather than genuine humans.
Of course, all new technology experiences teething trouble, and once programmatic has overcome these obstacles, it has the potential to disrupt digital ad buying in the same way that Uber has disrupted the transportation industry.
Ross Howard is programmatic specialist at Insights For Professionals. Follow @IFP_Marketing on Twitter for more thought leadership on programmatic advertising and digital marketing.