2013 was a banner year (pun intended) for programmatic media. Both participants in the ecosystem and the systems/platforms they are leveraging are starting to evolve as mechanisms for efficient
deployment of performance-oriented ad dollars. eMarketer estimated nearly $3.4 billion in programmatic spend being delivered in 2013. RocketFuel's IPO, Criteo's IPO, Rubicon's announcement of a
pending S-1, mergers, acquisitions (SiteScout/Centro), and massive growth continues to demonstrate the power of programmatic media. But most of these firms are associated with DR advertising. Even
private exchanges these days aren't proliferating due to a lack of brand dollars in the RTB ecosystem.
This is the classic chicken and egg of media: inventory that brands want on a site and that
offer unique customization isn't readily available in programmatic channels, so brand dollars aren't moved quickly into programmatic channels, which in turn keeps out the very inventory that brands
want. CPMs stay depressed, inventory remains out of the channel, and so do branding campaigns. It's the media equivalent of the prisoner’s dilemma.
Scale was never a problem with
programmatic media; as FBX and Twitter add more inventory to ecosystem, they join the ranks of exchanges everywhere who pool together billions of impressions each day to give buyers flexibility in how
they reach the right user in the right place at the right time. But the available scale just doesn't seem to be the right mix for branding campaigns, and thus the argument of RFP vs. RTB
However, change is in the air. And that change will be the central theme of 2014: the year in which RTB comes to mean real-time branding. Market forces are aligning and
technology is evolving to allow for both sellers and buyers to create real-time marketplaces for branding campaigns. And these forces will create another year of hyper-growth in programmatic media.
Let's look at these forces and how they are converging/intersecting to allow for the coming wave of real-time branding innovation:
- Initiatives like Traffic Of Good Intent at the IAB and
a focus on transparency & quality over the last two years have created a "flight to quality" from aggregators committed to ensuring that marketplaces are clean and well-lit. Just because an
impression isn't from a comScore top 250 site doesn't mean it's unsafe for a brand. In fact, niche enthusiast sites are often more engaging for their audiences than large traffic sites with short site
- Agencies see margin growth & protection from the efficiency & precision of RTB. This will inevitably cause them to look for any opportunity to turn lower-margin
media dollars into higher-margin media dollars, and that means running them via RTB. But since the performance campaigns are already running through trading desks, the next kinds of campaigns to run
will be branding campaigns.
- Brands continue to build their own trading operations, if not as a traditional brand trading desk, then as specialized, in-house division of their own marketing
- The availability of branding campaigns will continue to draw more and more inventory into private exchanges. Old-guard publishers like the New York Times and Gannett are hiring
programmatic specialists (Matt Prohaska and Ross Geier, respectively) in order to help them understand how to package inventory and manage yield across direct and programmatic channels. But these
publishers are packaging up premium inventory & custom solutions at higher CPMs, not just RON impressions.
- Aggregators are looking to build custom solutions in RTB to allow for brands to
achieve scale efficiently.
- Brand dollars often seek users higher up in the funnel, which means they seek users before a cookie is set, increasing the scale of available inventory but also
reinforcing the importance of environmental data (context, category, page-level data).
- DSPs are building workflow tools and are increasingly using signals like DealID to facilitate direct
Real-time branding means the influx of ad dollars that will force publishers to place premium impressions in programmatic platforms -- large ad sizes,
customized units, higher CPMs -- and therefore the chicken/egg, prisoners' dilemma problem becomes a virtuous circle of programmatic growth and continued accelerated adoption.
CORRECTION: This post incorrectly states that Rubicon had announced a pending S-1. No such announcement has been made. MediaPost regrets the error.