With more ads being bought through automated exchanges, how will the ad industry evolve in 2016? Kevin Tan, CEO, Eyeota looks at five key trends that he believes will impact programmatic this year.
Over the last few years, programmatic has led the charge for disruption within marketing. We’re now seeing more brands from more verticals invest more in programmatic in order to drive better quality, timely and relevant interactions with consumers. In fact, eMarketer numbers are predicting that this year UK programmatic spend will surpass £2bn. That is an impressive growth trajectory, but its continued ascendency will – to my mind – be shaped by a few key trends:
A rise in bidders
One of the key elements driving the growth of programmatic is that more and more advertisers are bidding on programmatic inventory. For publishers this is something of a ‘gold rush.’ Yet it leaves brands with a fragmented view of spend vs. associated ROI across different platforms. They lack a consolidated view about the value programmatic is adding to their campaigns. The complex task of correlating performance stats from multiple different sources is in direct contrast to what attracted brands to programmatic in the first place – simplicity and the ability to eradicate inefficiencies.
As a result, in 2016 I believe that we will see many companies – advertising agencies in particular – invest in Meta DSPs, not unlike Havas’ Affiperf Meta DSP or trading platforms like meta markets, so that they can efficiently manage and view activity across multiple platforms.
Viewability has been bubbling away as a point of contention for quite a while now, but thanks to Cannes and Martin Sorrell it is now firmly back on the agenda.
If digital is to survive – and display ads in particular – this is an issue that needs to be addressed. Especially if the eMarketer prediction that 60 per cent of ads will be bought programmatically is to come true. In 2016, viewability will become the norm but ads will be optimised to more viewable ad slots. Media will be bought via vCPM, a pricing structure for online media associated with viewable impressions thereby meaning that advertisers only pay for ads that pass viewability thresholds.
Programmatic convinces the traditionalists
Programmatic is often associated with digital channels, but the industry stalwarts of TV, radio and OOH are also seeking to jump on the automated bandwagon. This is largely because whilst they still command big budgets, their inventory models could benefit from being transformed to reduce their reliance on manual processes.
Moving to a programmatic model – as we are increasingly seeing these channels do – will mean being able to monetise ad inventories regardless of screen size, location or audience numbers. For someone like Sky that gives users access via their TV, tablet and smartphone to their content, the ability to monetise each of these channels efficiently is utopia. Advertisers can be much more specific with their targeting and viewers will not be bothered by irrelevant ads.
We are seeing tentative steps being taken towards this model already, but in 2016 we are going to see their inventory being traded at a much higher rate, setting a precedent that programmatic will completely dominate TV in just a few short years. In turn, this will open up opportunities for adtech players across the board.
Adblocking is the word that has struck fear into the digital advertising industry. Whilst on the face of it adblocking is akin to an apocalypse, in reality the shadow it casts is very small. Nonetheless the fact that consumers are downloading adblocking software in their millions should be considered a wakeup call.
There is no doubt that for years, the user experience has deteriorated due to poorly targeted ads resulting from wide-net strategies like retargeting, which have only caused the rift between advertisers/publishers and users to grow. Instead of worrying about the what-if scenarios that adblockers can create, 2016 is a time for proactive action and taking time to refocus on the relationship between the customer and the brand. I see more data being used in the future for better targeting, and advertisers and publishers re-examining what appeals to their audience the most when serving ads.
Our Eyeota Index indicates a trend where brands are investing more in audience data for their online advertising campaigns. Advertisers are growing in confidence and experimenting with different segments of audience data. Whilst Sociodemographic remains the backbone, B2B and Intent data are rising in prominence, helping advertisers to better understand their audiences and interact with them on a human level. In 2016, I expect to see continued spend from key sectors such as finance and automotive, which typically have larger budgets for programmatic. The electronics & computers sector will be a sector to watch as one that will likely increase their spend.
By Kevin Tan