For all its recent strides -- on Madison Avenue, and especially on Wall Street -- the programmatic marketplace still has a big image problem. Part of it stems from the notion that it’s all RTB, which itself has an image problem (you know, that it stands for race-to-the-bottom). I’m not going to beat on that drum again -- at least not today. Instead, I want to focus on a far less apparent one, that it simply scares people. It scares people for the obvious reason that people get scared about machines that can do some things better than they can. So it’s not surprising that lots of people either don’t know what to do with the programmatic marketplace or don’t even know how to classify it. I’m seeing a lot of that lately, and I’m trying to work with some of them to bring more structure around it so that, at the very least, we can report on it more accurately. (Stay tuned for more on that front.) But the biggest problem is that some people may actually be trying to obfuscate it. And I can’t say that with 100% certainty, but I find it troubling that one of the industry’s best sources for the Internet advertising marketplace -- the IAB’s and PriceWaterhouseCoopers’ Internet Advertising Revenue Report -- doesn’t even classify it. I mean, c’mon.
In fact, you won’t find the word “programmatic” referenced once in the just-released 25-page first half report. And don’t even think of searching for terms like RTB, or DSP, or any of the things that are driving significant growth in the Internet ad marketplace.
I’m sure there are a lot of good reasons for that, including the fact that it’s a legacy report whose value has been in comparing apples-to-apples for a long time now, so why muddy the waters by trying to breakout subclassifications of what’s driving the underlying marketplace. I suspect there might be another agenda at work here, and the fact that a lot of the IAB’s most influential members are, like I said, human beings, who would just as soon sweep the whole programmatic thing under the rug. I get that. But I’d also think they’d at least like to have some mechanism for pacing the market, if only to know when it’s time for them to retire.
That’s why I was especially pleased to see an analysis this morning from Brian Wieser, who at least made the effort to “deconstruct” the IAB’s numbers to figure out what’s really driving the industry’s growth. The good news, says Wieser, the chief research analyst at Pivotal Research Group, is that the industry is growing at a decent pace -- +18% in the second quarter. But he’s not so sanguine about the IAB’s explanation for that growth, that it’s coming primarily from a surge in mobile ad spending.
So Wieser did what he does best -- he dug beneath the IAB’s toplines and applied his own models to find out what’s really going on here. By his estimates, when you factor out search, “non-search digital media” actually expanded 24%, year-over-year, in the second quarter. But here’s the really smart part of Wieser’s analysis -- his drilling into what’s driving all that growth. Yep, you guessed it, programmatic.
“In our model, it appears that the industry has accelerated significantly over the past four quarters, and on that basis we could conclude that the rise of a new crop of digital media players - perhaps those in the broadly defined programmatic space beyond Google and Facebook - may be the driving force, suggesting much of the growth is generated by agency trading desk spending that goes beyond Google and Facebook-sold inventory,” Wieser writes, adding, “Increasingly large participants in the programmatic world such as Mediamath, Turn, Rubicon, Pubmatic and AppNexus - and perhaps even next-generation ad networks such as Criteo and the newly public Rocket Fuel - may be capturing the bulk of new money advertisers are spending with digital media.”Wieser humbly calls the analysis “guesswork.” I call it “enterprising.” At least he’s trying to understand what’s really going on.