It was a mixed year for programmatic advertising in 2017. Growth is still buoyant, with programmatic on target to account for 81.5% of digital spend in 2019. Innovation is strong, with programmatic models continually evolving. Yet some of the issues that have long lurked beneath the surface of programmatic -- such as a lack of transparency, brand safety and ad fraud -- have become more prominent.
Now that we have said goodbye to 2017, what will 2018 mean for programmatic advertising?
A new era of transparency will begin
The need for greater clarity and visibility into the programmatic supply chain has dominated the ad-tech agenda this year, with transparency identified as the top priority for global brands in a World Federation of Advertisers (WFA) report, above brand safety, viewability, and ad fraud. Brands quite rightly want to know where their budgets are being spent and what they are getting in return, and are increasingly limiting their partnerships to agencies and tech providers that they see as transparent and trustworthy.
As market-leading ad-tech providers respond to buyer needs and begin disclosing the fees included in media buying, other suppliers will come under pressure to do the same or lose out, as this level of openness becomes an expectation. In tandem, 2018 will see renewed emphasis on in-depth performance insight reporting, and third-party verification as brands demand evidence that they are getting a return on their investment.
Artificial intelligence will be ubiquitous
Subsets of artificial intelligence (AI) such as machine learning are central to the success of programmatic, but concerns have arisen over letting machines make the decisions at the expense of human experience and input. Throughout 2018, the role of AI in programmatic will shift from a decision-maker to a trusted advisor, with more transparency into algorithms and inputs. Machine learning will do the heavy lifting, analysing vast quantities of data in real-time -- an impossible feat for humans -- while also providing more opportunity for input from clients and their agencies.
As the industry becomes more comfortable with this altered role, other uses of AI will also increase. Semantic analysis and natural language processing will be used to develop a human-like understanding of the meaning of content, helping brands identify fake news or damaging content and avoid brand safety issues, while AI-based technologies will increasingly be used to detect and filter out fraudulent activity. By the end of the year, providers that cannot offer AI-based solutions may struggle to remain afloat in a highly populated marketplace.
GDPR will redefine data privacy and security
With programmatic advertising relying heavily on consumer data, the imminent GDPR enforcement in May 2018 will have a monumental impact. Any organisation collecting, storing or processing the data of EU citizens will need to ensure they have explicit consent to do so, and that they are only using data for the purposes for which permission was obtained. With one in four brands still in the initial planning stages for compliance, there is much ground to be covered in a short amount of time to avoid the potential fines of up to 4% of global turnover or €20 million.
While compliance with the GDPR may appear onerous, it is an essential step forward at a time when the volume of data from sources such as the Internet of Things, wearables, and smartphones is continually increasing. The regulation will compel brands to streamline their data processes, deciding where data really adds value to the business, and to review the tech partners they work with to ensure they are compliant. It will also give brands the opportunity to demonstrate their respect for data privacy, ultimately gaining consumer trust and loyalty. Overall, the GDPR will transform the way the industry thinks about data protection and security.
Data, creative, and media will work together
Conflicting priorities are commonplace in programmatic advertising. Brands struggle to split their focus between data enablement, which allows them to gain audience insight and build meaningful relationships, creative optimisation -- which enables them to leverage tools such as dynamic creative and deliver impressions that inspire, and media, including planning, buying, executing, and measuring campaigns. Throughout 2018, integrated solutions will begin to emerge that bring all elements of the media plan together in one place, allowing data, creative, and media to work together and deliver optimal campaign performance across the entire customer journey.
While the coming year may be characterised by upheaval, with businesses preparing for the GDPR and attempting to bring clarity and openness into their activities, it will also be a time of incredible innovation in AI and integrated advertising solutions. There’s no doubt 2018 will be a busy year for programmatic, but by the end of it the ecosystem will have more transparency, enhanced respect for consumer privacy, and greater opportunities for brands to drive value throughout the entire customer journey.