The Explosive Growth of Programmatic Advertising
As the number of websites grows daily, according to some estimates the number exceeds 350 per minute, so does the growth of programmatic advertising. There are a number of factors contributing to this growth, which are detailed in this article. But first, a quick refresher on programmatic is in order.
Programmatic advertising is the automated process of buying and selling ads online. It uses a variety of different platforms for advertisers to buy ad space and place ads on publisher’s websites. These ads are then shown to website visitors using different criterion, such as visitor’s demographics, interests and past website viewing history, to name a few.
According to emarketer, the average adult in the U.S. spends nearly three hours per day on their smartphone, and this amount continues to increase. Add in the time spent on laptops and desktops, for both personal and business use, and the growing market for online advertising is readily apparent.
In addition to the sheer number of technology users and increasing time spent on multiple devices, there are a number of other factors at work which are leading the way for the explosive growth of programmatic advertising. Here are several.
Artificial Intelligence (AI): For marketers, the accuracy and speed in which their ads are placed in front of the right consumer is critical to the success of their ad spend. With programmatic being a real-time auction operating at lightning speed, it would be impossible for a human to match the scale at which AI can assimilate data to assess and improve the effectiveness of ads placed.
Ever increasing ad viewer conversions and corresponding ROI are the benchmarks which attest to the success of AI. IBM’s Vice President of Marketing, Ari Sheinkin, shared that IBM’s AI based bot, Watson, is optimizing programmatic media buying and it has reduced Cost Per Click (CPC) by 71%.
In addition, Deloitte’s survey of over 1,100 advertising executives reported that over 80% of them saw a positive ROI from AI. It is success such as this that is leading to the ever-increasing use of programmatic advertising.
Voice Activated Ads: It is becoming increasingly easy to make purchases through technology. Just by speaking aloud, anything from everyday household items to apparel to entertainment can be ordered. This is made possible through voice-based, in-home smart devices.
For example, Amazon reports that it has sold over 100 million Alexa devices, with users speaking to it tens of billions of times per year. Programmatic allows these devices to play relevant, voice produced ads to these smart devices and their users. Each year the number of devices sold increases, as does the corresponding use of programmatic ads.
5G: Cellular bandwidth is increasing with the 5G platform. The bandwidth of 5G is over 100 gigabits per second, which is 100 times faster than 4G. This allows websites and videos to load faster, which in turn enables delivery of the best medium at the best time at incredible speeds.
Video viewing is set to increase exponentially because of the high-speeds and lack of buffering delays, encouraging its use on every type of mobile device. Sharper and more interactive ads will be run across these devices, without any lag time. The amount of video programmatic will increase exponentially as 5G availability increases.
Increased Customization and Personalization: Whether it be a socially responsible brand, or one that is ecologically focused, millennials and Gen-Z love customization. They have distinct buying patterns, often preferring social media or celebrity influencers to endorse the products that they purchase. Programmatic is allowing this customization to be precisely tailored to these targeted consumers, which are spending at an increasing rate as their spending rises with age and family size.
Personalization of ads is also is continually improving in focus. Because of the abundance of consumer data available, dynamic ad delivery through programmatic continues to evolve, taking into account such variables as time, location, device type being used, and user demographics. This personalization has enhanced the effectiveness and growth of programmatic advertising.
In-house Programmatic Management: Increasing amounts of marketers are foregoing the use of agencies managing their programmatic advertising. This is primarily because marketers have wanted more transparency when it comes to effectiveness and mark-ups. This is now becoming a favored advertiser model as over 35% bring programmatic in-house and increase ad spend on their own.
This does not sound the death knoll for agencies, however. There are still large numbers of advertisers increasing programmatic spend by using a hybrid model of bringing programmatic in-house and managing the platform in tandem with agency support. As transparency of cost and margins has increased, so has the use of programmatic by marketers.
“As technological advancements and consumer sophistication are increasing – so is the phenomenal growth rate of programmatic advertising” says Lazar Rubin, Founder and CEO of Next Millennium Media, a full-service provider of comprehensive digital solutions for web publishers and brand advertisers in New York City.
A rapidly expanding firm, Next Millennium Media uses cutting edge technology to award their clients the highest returns on their websites all while retaining that ‘old-school’, personal relationship with their clients. “Advertisers are able to more quickly place targeted ads in front of the right consumers at the right time – this has led to an increased ROI for marketers, and the investment in programmatic is following the profits”, asserts Rubin.
Though agencies are losing some of their profits to marketers bringing programmatic in-house, the future looks bright for both. More discretionary income on the part of the consumer is paving the way for better advertising methods to get products and services in front of prospective buyers. Programmatic advertising is leading the charge and its prospects for continued and rapid growth never looked brighter.
