Programmatic and RTB industry preview 2016 - Trends and challenges
- 1. Programmatic and RTB Trends and Challenges 2016 REPORT
- 2. Programmatic ad spend in 2015 reached $15 billion globally and is projected to hit $33 billion by 2017! $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$ $$$$$$$$$$$$$$ $$$$$$$$$$$$ $$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$ $$$$$$$$$$$$$ $$$$$$$$$$$$$ $$$$$$$$$$$$$$$ $$$$$$$$$$$$$ That’s according to recent figures by IPG’s Magna Global who project the meteoric rise of digital media in general will surpass the king of them all (TV) by the end of 2017.
- 3. WHAT CAN YOU EXPECT IN 2016? Despite the train leaving the station years ago, there are still hurdles to overcome. There always are. What 2016 holds can be said to be both exciting and a wee bit scary.
- 4. THE EXCITING
- 5. PROGRAMMATIC LOOKING BULLISH As much as we say programmatic buying has been around for about six years now, it has taken time to catch on. Just like any new approach. There was a school of thought that worried it was just a passing cloud. As uncertain as those baby steps may have seemed at first, programmatic wasn’t blown out of the face of the earth as some predicted. That was just a handful of extreme opinions that were silenced before they had a chance to snowball. Thankfully.
- 6. Programmatic is here to stay as stat after stat continues to hammer in. Little wonder then that: eMarketer prognosticates programmatic ad spending in 2016 will account for 63 percent of all digital ad display spending. 63%
- 7. Programmatic advertising is a wide arena as you probably know. If you don’t, here’s a quick pointer: it’s made up of RTB (which is further broken down into open exchange and private marketplace) and programmatic direct (comprises programmatic guaranteed and preferred offer). Now, happenings in the marketplace have diverted the waters to the programmatic direct course as buyers opt for guaranteed inventory in favor of the private marketplace, a trend that will last well beyond 2016. But it’s not all doom and gloom for RTB. See, as advertisers float in programmatic direct waters, they’ll feel more at ease and warm up to bidding. Ultimately, it’s going to really open up the market more. PROGRAMMATIC ADVERTISING RTB open exchange private marketplace programmatic guaranteed preferred offer Programmatic direct
- 8. BEYOND BANNER ADS Banner ads have held the prom queen mantle within programmatic advertising for a while now. This year, that status is set to be diluted as other jaw-dropping entrants join the contest and become viable options: rich media, video, sponsorships. Chances are these newer options will get started in the programmatic direct stage where it’s possible to purchase online spots in advance (at set prices) as opposed to going through auctions as is characteristic of real-time bidding.
- 9. CROSS-DEVICE TARGETING WILL GAIN MORE PROMINENCE Historically, tracking consumers across the plethora of devices (mobile, tablet, desktop/laptop) has been a tricky affair. That though is set to change as digital marketers stamp their foot on cross-device targeting and tracking, more so on a macro level.
- 10. SO WILL QUALITY OF MOBILE INVENTORY You can also expect an improvement in the quality of inventory, particularly in apps. Quality is not a word that has been used to describe mobile inventory, and this can partly be attributed to the role developers have had to play in the supply at the expense of traditional publishers. As mobile gains a foothold this year and we get a tad more discerning though, it is hoped developers will be intuitive and respond to the data without being lured by the idea of placing banners close to where accidental clicks might occur!
- 11. PROGRAMMATIC TV WILL BECOME HOT PROPERTY Programmatic has made a lot of headway as we speak, and TV synchronization is set to be the next phase. With programmatic TV, companies are able to monitor television ads airing in real-time, and when they combine this with paid search, they are able to serve mobile users with tailored ads. No doubt a shot in the arm with the increasing habit of consumer dual-screening (watching Internet-connected TVs) alongside their mobile devices. This is no longer big brand territory, even the smaller fish are set to benefit immensely.
- 12. MORE ACCURATE ATTRIBUTION Attribution has forever been one of the biggest gaps with digital media, and particularly programmatic. We still seem to be facing that famous Wannamaker problem: As more technological advancements are made this year, the industry will be in a better position to track the user’s path to conversion, and consequently, allocation of ad budgets will become more efficient. With the ability to identify the same user across multiple devices, the data advertisers gather will be used to build more accurate attribution models that factor in all the devices. 50% of my marketing works, I’m just not sure which 50%
- 13. THE CHALLENGES We will witness significant leaps and bounds in programmatic advertising in 2016, but beyond the traditional challenges of brand safety, ad fraud, transparency, and viewability, there will be more perturbing issues for the industry to ponder as the landscape keeps evolving.
- 14. Publishers are projected to loose $41 billion globally due to ad blocking According to research from Adobe and PageFair: AD BLOCKING GOES MAINSTREAM We may still be living in the early days of the ad blocking battle, but both advertisers and publishers will need to adapt to the landscape and technology that is quickly evolving. Everyone across the board will get serious with regard to addressing this issue. Advertisers will raise the bar among themselves, as well as with their vendor cohorts, on things like precision targeting and ad creative. Publishers, on the other hand, will be looking to better understand their customers, and they will get nifty with their data-driven offerings.
- 15. STILL FIGURING MOBILE AND VIDEO This year, mobile programmatic spend in countries like the US is expected to surpass desktop for the first time ever. As the platform continues to gather pace, we will need to confront mobile challenges head-on. Did you know half of advertisers are now using programmatic to buy smartphone inventory? Yup, that’s according to findings by the IAB that looked at a remarkable 301 markets. Surprisingly: 44 percent have little or no knowledge of it!
- 16. On which side of the divide do you lie? Based on this survey, the main barriers of mobile programmatic were identified as: Challenges in tracking 32% of respondents Lack of budget 29% Creativity restraints 29% In addition, a number of advertisers have been buying mobile blindly without any data. It’s been more about scale at the expense of accuracy with a slew of probabilistic vendors running around leaving marketers craving for a more deterministic methodology.
- 17. Mobile and desktop are completely different worlds. Totally. Especially with regard to fragmentation. With mobile, it’s more about understanding what the user is doing at this moment in time and leveraging local data to make predictions. And doing so precipitates a consideration of three layers (which creates a mapping of the world): location history patterns audience segments real-time data
- 18. SHORTAGE OF QUALITY INVENTORY In this business, quality inventories are a gem; rare and costly. With the deficiency of quality ads out there, advertisers will hope more publishers join the fray to put up ads on exchanges. And for any brand that wants to reach its users more effectively, it will require fresh and innovative data sources that are deterministic, not mapped from cookies using probabilistic approaches.
- 19. LAST-CLICK ATTRIBUTION The entire digital industry has an issue with last-click attribution, one of the shortcomings of programmatic advertising. Even big boys like Facebook have singled it out, arguing the system is way too narrow to gauge campaign performance. As it grows into a trend this year, a new model will lend credibility to ads that have in the past escaped the attention of the user (by being clicked on or in engagement speak).
- 20. FRAUD ACTIVITY Some issues like ad fraud will forever be a challenge, and 2016 is no exception. And if previous patterns are anything to go by, embrace for more headlines on the digital fraud front. Digital advertisers will lose $7.2 billion worldwide this year This figure is based on a January 2016 report by the Association of National Advertisers which showed bot fraud, for example, to be on the up: It impacted 37% of ads in 2015 compared to 22% the previous year.
- 21. Programmatic buys were found to have more incidences of fraud compared to direct buys, with higher CPM (cost per 1000 impressions) campaigns being most under threat, a fact that remains unchanged from previous year’s findings by White Ops. On the mobile side of things, the picture isn’t in rich tone either. 34% of programmatic mobile ad inventory is fake That’s according to recent figures by Forensiq and Applift.
- 22. When it comes to mobile, fraud comes in three main flavors: click fraud impression fraud install fraud
- 23. LACK OF IN-HOUSE RESOURCES In 2015, more and more brands shifted base in-house as they sought to cut the cord conjoining them to agencies. This year, it’s a trend that’s set to continue as companies seek to enjoy the benefits that come with the move. Be warned though, this path is fraught with challenges. For starters, a good deal of marketers have no clear idea what parts they can (and should) glue together to have a better grasp of ad tech. It remains too complex, too technical, and too fragmented for the average marketer to figure out and consequently implement effectively. And while there are some who have cultivated solutions that serve them very well, most tend to lack the manpower, or technical and operational capabilities to pull it off.
- 24. LOOKING AHEAD
- 25. In summary, the industry has (and continues) to evolve tremendously. Issues like brand safety, viewability, transparency, and ad fraud will remain constants for the foreseeable future, but the industry is past the stage where they were its main preoccupation. Programmatic (and RTB) has a couple more warts and while we may find them a pain in the short term, the point is we will be able to work on them in the long term. It will be interesting to watch the trends unfold in 2016 as new initiatives and platforms are launched every day. Better yet, it will be interesting to see how companies respond and adapt their digital marketing budget and policies.
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