What Factors Are Influencing Programmatic's Growth?

Initially, marketers turned to programmatic to take advantage of audience buying and dynamic pricing models that were made possible through real-time bidding. We saw this trend within open auction marketplaces and again with the advent of private exchanges, but today, there is another key factor driving programmatic adoption, and it is most commonly referred to as “programmatic direct” or “programmatic premium.”

MAGNA GLOBAL recently shared forecasts indicating massive investments in both RTB and programmatic premium in the coming years. Estimates forecastthat by 2017, RTB and non-RTB based programmatic channels will account for 83% of US digital display ad spending, and programmatic sales will surpass traditional direct-to-publisher sales.

So what is driving this growth?

Brand Dollars

RTB’s promise has always been the ability to buy media based on audience vs. content, and reach consumers in real time. While brands have valued this audience-based approach and welcomed additional data elements as a way to inform their buying strategy, RTB was largely adopted for performance campaigns. Today, we see many more premium inventory outlets, and even more sophisticated ad creative funneling through programmatic and RTB channels. The combination of high quality inventory and the ability to leverage multiple data-driven elements to target audiences is encouraging brands to re-evaluate their position on programmatic buying. Kellogg’s, Kimberly-Clark and StubHub are just a few notable brands already getting on board.

A recent eMarketer report highlighted the benefit of programmatic, with an example from Gatorade. The brand was looking to reach 18-to-35-year-old males on sites such as ESPN and Yahoo Sports. Though both websites index high among that target demographic, females might account for 25% of Yahoo! Sports’ audience. In the past, buying directly from Yahoo Sports would require the client to assume that female percentage as the cost of doing business. By leveraging programmatic buying, however, the brand’s trading desk can instead swap in another client to provide a female target demographic for the 25% share of impressions.

Today’s marketing strategies are more focused on the audience, which enables agencies, trading desks, and technology firms to make smarter decisions on behalf of brands. Whether you are buying an open or private marketplace or within programmatic direct channels, data is at the root of the decision process. When you couple this level of data with premium inventory channels, brands get the best of both worlds: more efficient buying, high quality inventory, options for high-impact ad creative and audience targeting. In return, publishers get to command a higher price.

Publishers

In the early days, publishers looked to RTB as a way to sell inventory that otherwise might have gone unsold. Early on, some publishers also had concerns about pricing controls, which left many of them on the fence about whether or not RTB’s open marketplace represented their best interests. Even with the advent of private exchanges, publishers still seemed hesitant to step into the auction-based market. Just about a year ago, the following was cited as “leading concerns from publishers”:

1.     Controlling CPM/pricing by advertiser or segment

2.     Maintaining direct relationships with buyers

3.     Controlling ad quality

Fast-forward one year and things have started to change with the rise of programmatic premium. Brands are without a doubt moving dollars to programmatic buying, which is pushing more publishers to open up their eyes to audience-based buying strategies. This has helped bridge that gap between using data-driven media buying for performance vs. branding campaigns, while simultaneously creating more options in which brands and publishers can buy audiences and sell inventory. New technologies and transaction opportunities have made it possible for more players to enter the audience-based buying eco-system, making data-driven advertising an even more viable market for the digital advertising industry.

Today, premium is contributing heavily to programmatic growth, and will be a key factor in helping brands recognize the value of audience targeting and data-based buying. It won’t be long before programmatic becomes the standard way to buy media across all digital channels, from direct to the open market.

Tags: programmatic, rtb
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