Brands Adopt Programmatic Buying While Agencies Lag Behind

Brands seem more willing to adopt programmatic technology than agencies, according to a recent study by Adap.TV, a division of AOL platforms.

On the whole, ad spending on video has risen for the fifth straight year, and that spending is increasingly directed at programmatic channels. Brands reported that a whopping 60 percent of their budgets are now focused on programmatic buying, as opposed to agencies, which are allocating just 38 percent of their budgets to programmatic.

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This year’s report signifies a turning point in attitudes toward data-driven buying. “Brands are aggressively looking to programmatic as the mechanism to activate large amounts of targeting data,” says Toby Gabriner, chief executive (CEO) of Adap.TV.

And agencies’ failure to adapt to programmatic buying seems to be driving brands to manage their programmatic video buying efforts in-house. Eighty-eight percent of brands say that they will begin to buy in-house within the next 12 months, as opposed to just 26 percent of agencies.

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The brands that expressed a desire to manage their own programmatic buying felt as though they had no choice. “They did so because their agencies lacked the expertise to do their programmatic buying for them,” according to the report.

Demand-side platforms (DSPs) are also on the rise, as brands and agencies scramble to keep up with programmatic buying technology. The number of brands buying from DSPs has risen to 47 percent as opposed to just 21 percent last year, while 74 percent of agencies are now utilizing DSPs.

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While brands seem just as likely to buy video inventory direct from publishers as they did last year, agencies are moving away from publisher direct sales, down to 67 percent from 86 percent last year.

These shifts in buying trends are driving publishers to increasingly adopt automation technology. “Many publishers previously viewed programmatic advertising as a way their video inventory would be commoditized,” says Gabriner, “but the opposite happened -75 percent of publishers said they saw an increase in their ad rates, even as they made nearly one-third of their video available for purchase through programmatic.”

While video budgets are increasing, video ad buyers aren’t planning overall budget increases to facilitate purchases. Instead, they’re increasingly funneling money from other channels. Display, broadcast TV, and cable TV are the hardest hit, with 47 percent of buyers shifting money from display to video, 40 percent planning to decrease broadcast TV budgets, and 35 percent cutting cable TV budgets.

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Buyers could be shifting budgets away from TV because “legacy technology systems and a lack of targeting data” have made automated ad buying difficult for networks, though television is rapidly catching up to other platforms. “Over the last couple of years there have been tremendous advances in both these areas, and programmatic TV is now at an inflection point,” says Gabriner.

In fact, 43 percent of brands say they are using data-driven technology to drive traditional TV transactions, and AOL platforms expects that number to jump to 60 percent in the next year.

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There are certainly still roadblocks on the path to fully integrating programmatic technology. Sixty-two percent of buyers are worried about ad viewablity, while ad verification and fraud are also concerns. Only 25 percent of both brands and agencies felt fully up to speed on all these issues, which clearly suggests that a call for more transparency in the programmatic buying process is in order.

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