Programmatic and RTB Trends and Challenges2016 REPORT

Programmatic ad spend in 2015 reached

$15 billionglobally and is projected to hit

$33 billionby 2017!

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$$$$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.

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.

THE EXCITING

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.

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%

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

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.

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.

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!

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.

MORE ACCURATE ATTRIBUTIONAttribution 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%

THE CHALLENGESWe 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.

Publishers are projected to loose

$41 billion globally due to ad blocking

According to research from Adobe and PageFair:

AD BLOCKING GOES MAINSTREAMWe 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.

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!

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 respondentsLack 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.

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

SHORTAGE OF QUALITY INVENTORYIn 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.

LAST-CLICK ATTRIBUTIONThe 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).

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.

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.

When it comes to mobile, fraud comes in three main flavors:

click fraudimpression fraud

install fraud

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.

LOOKING AHEAD

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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