The growth of programmatic advertising isn’t exactly breaking news at this point, and yet the numbers can still be startling. According to BI Intelligence, a research division of Business Insider, digital media buying through real-time bidding platforms amounted to $3.1 billion in 2013 and will rise to more than $18.2 billion in 2018. And BI Intelligence isn’t an outlier. Forrester and eMarketer also anticipate massive gains for the industry in the years ahead.
How can a seemingly thriving industry still have so much room for growth? Chango and Brand Innovators recently surveyed marketers at Fortune 500 companies to gain a better understanding of how they use programmatic advertising now and how they intend to use it in the future. The results of the investigation, recently published in The Programmatic Advertising Pulse, create a striking portrait of an industry taking enormous strides even as it continues to wrestle with obstacles that have slowed the industry’s growth in the past.
Different marketers use the term “programmatic” in different ways. For the purposes of the survey, we defined programmatic as “the systems, rules, and algorithms used to automate and optimize the purchase and delivery of data-driven, targeted and relevant ads to consumers.”
Starting with that definition, the marketers we surveyed offered feedback on a wide range of topics. A full 70 percent of the marketers surveyed are currently running programmatic campaigns of one form or another. That number might not come as a surprise to those who have followed the industry closely, but had we surveyed the same marketers only a year earlier, the responses would have been very different. Nearly one-third of the marketers surveyed revealed they had been using programmatic for less than one year. Meanwhile, one-quarter of marketers currently buying programmatically acknowledged that they need additional education on programmatic advertising.
Another surprise: The shift to in-house buying is taking place faster than many in the industry could have predicted. Asked how they were currently executing their programmatic efforts, only 39 percent of respondents said they were relying entirely on agencies. Another 28 percent were splitting their efforts between agencies and in-house solutions, and a remarkable 33 percent had taken all of their programmatic initiatives in-house.
How these numbers will change in the years ahead remains to be seen. Will the in-house trend continue until agencies are entirely removed from the programmatic equation? The survey found that agencies have no reason to panic — at least not for now. While nearly half of all respondents anticipate more in-house management of programmatic in the future, the rest of the respondents expect to be doing more outsourcing.
If it seems strange that Fortune 500 companies have such divergent views on how to manage programmatic, it’s worth remembering that the industry is still very much in its infancy and best practices are still being refined. Indeed, for all of programmatic’s successes in recent years, marketers continue to wrestle with some of the fundamental obstacles that have plagued the industry since its inception, including determining reliable measurements, ensuring site quality/brand safety, enabling data integration, and maintaining sufficient resources.
The very good news for the industry is that Fortune 500 companies show no signs of moving away from programmatic despite these obstacles. Rather, the survey found that programmatic spending is continuing to grow thanks, in large part, to a handful of specific factors: targeting across devices, improved performance, data/insights, and cost efficiencies.
Taken as a whole, the survey results paint a picture of an industry poised to make a major leap in the very near future. But if programmatic fails to address its measurement and brand safety issues, the optimism that runs through the industry today could evaporate almost as quickly as it arose. The good news is that many in the industry are already hard at work on these challenges and already making important strides. There is still work to be done, but, as the analysts’ numbers suggest, it’s a great time to be in programmatic advertising.
In 2015, Verizon purchased AOL for $4.4 billion. Now, the mega wireless carrier is leveraging its wireless network as part of a new ad offering called BrandBuilder by AOL.
Programmatic is a game-changing technology in the advertising industry.
As the ball drops on December 31st, make sure your media strategies are stacked with timely resolutions to make the most of 2017.
Easily spotted on the mobile web: holiday ad next to plane crash story; Muslim dating ad next to KKK story; beauty ad next to domestic violence story; car ad next to emissions scandal story.