Phablet & Programmatic Will Win In 2014

by , Dec 31, 2013, 10:09 AM
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2014 will be a big and exciting year for marketers and there will be winners and losers across the board. The winners will be engaged in programmatic advertising, native advertsing (content marketing), and mobile and will understand the benefits of forming technology partnerships. The losers will be those companies that focus on legacy ad networks and standard media.

Biggest trend: native advertising and content marketing will be the leading driver and the largest spending category for the year. This growth will mean a lot more work for the industry to scale native and to bring content marketing to programmatic buying. The big losers in this arena will be the more standard paid media companies, who think simple advertorial is all native advertising is.

The second trend we predict is that 2014 will be the year of ad agencies as tech companies. This will be established through growing partnerships among agencies and technology partners. This trend is being driven entirely by the rise of programmatic. Even premium publishers will begin to see more than 20%-25% of their revenues from programmatic. The catalyst of this transformation: more attention paid to the programmatic upfront than to the digital NewFronts. Programmatic is usually driven by differentiation and price, not by scheduled content or scarce inventory. The driver in this programmatic upfront will be video, mobile and rich media. 

Also, premium publishers will see more than half of their traffic coming from tablets and mobile devices (Phablet). This will cause the disparity between spending on advertising for the tablet and mobile to shrink. These premium publishers will have more than 40% of their revenue matching more than 60% of the engagement. That trend itself will be biggest for the big four — AOL, Yahoo, Google and Microsoft. Their preferential relationships to inventory from their ad networks won’t matter as much, as marketers will want to buy Yahoo for Yahoo’s content, not for Yahoo’s ad networks

In this new model, there will be one ad per page versus seven to eight ads per page. The user experience drives everything, and mobile-first consumers will not put up with a cluttered screen to get their content, especially on a tablet. If done well, the engagement or click-per-view rates on phablets will be higher than they have ever been on TV. The big losers for the tablet and mobile space will be those publisher sites with low engagement. If engagement is low online, it will be hard to get consumers to visit these sites on the tablet. Niche sites will be the winners, as well as specialists like Flipboard, while short tail and portal aggregators will lose out.

In 2014, we’ll also hear less discussion about data. Instead, it will be the year of insights. These insights will be presented in the form of easily understood information, particularly for the CMO and for programmatic. Think infographics. If you can’t describe your insights in a postcard-sized infographic, it just won’t work. It won’t work for a 23-year-old marketer, a fast-moving CEO – or a trading system where you have to evaluate the inventory right away.

In this respect, next year will mark a shift from direct response to brand marketing. It’s not that direct response will go away, it will just move to the fringes next year, because their spend is flattening. Similar to what happened with search, direct response will no longer be a thought leadership category, as third-party data companies will push them out of the spotlight. The CTR is dead and measurement will help make money for publishers, agencies and advertisers in the brand environment.

We expect an exciting and profitable year for publishers and advertisers poised for this exciting new landscape in a phablet world.

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