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10 Stats to Know About Programmatic Advertising

  • 25 July 2017
  • Dean Schmid

The value in programmatic advertising is that it addresses an age-old problem with marketing. If you’re hanging a poster in the middle of the town square in the 1650s or broadcasting a beer advertisement during a sporting event, people are going to see your advertisement who either don’t need your product or aren’t interested.

In digital marketing, we call this ‘wasting impressions,’ and it is a surefire way to drive up the cost per lead by burning cash in the top of the funnel. For as long as marketers have been paying for ads by the click or impression, we have been trying to get these costs down.

Programmatic advertising uses a data-based approach to bid on ad space in real time. When done correctly, this means you are showing your advertisements to prospects that are interested in them across multiple channels.

What kinds of results can you expect to see from effective programmatic advertising? Let’s break down these ten programmatic advertising stats to better answer that questions.

10 Stats to Know About Programmatic Advertising

1. 62% of marketers are using programmatic for brand objectives, with the expectation of increasing this budget by an average of 37% in the next two years.

Based on a survey of more than 100 senior marketers in the U.S. and the UK, and interviews with leaders in the field, the report by Econsultancy and Quantcast, found that 62% of marketers are using programmatic for brand objectives, with the expectation of increasing this budget by an average of 37% in the next two years.

Image result for 62% of marketers are using programmatic for brand objectives, with the expectation of increasing this budget by an average of 37% in the next two years.

This report was based on leading marketers, but I would still expect similar results among small to medium businesses and startups if they increased the size of the focus group.

The report went on to say that, “for programmatic branding to develop, the industry must focus on enabling better measurement of brand advertising campaigns. Execution of programmatic campaigns is only one key aspect of great online advertising with the measurement being the second – a key ingredient for this will be continuing to innovate in our use of data. Programmatic branding cannot scale without the right tools to measure brand metrics.”

In short, the growth is there, what remains to be seen is if the tools, algorithms, and developments can keep up with demand and sustain it.

2. US programmatic digital display ad spending will reach $22.10 billion.

In 2016 eMarketer predicted that programmatic spending for just the U.S. would reach $22.10 billion, that’s a jump of 39.7% over last year, and represents 67.0% of total digital display ad spending in the US.

Buyers and sellers are becoming more comfortable with the technology and large, trustworthy open auction marketplaces are lowering the barrier cost to advertise programmatically.

In the past, ad spaces were bought with something called waterfall bidding. It is a type of RTB that auctions off ad space by sorting through available DSPs in order of who has historically bid the highest. A drawback of waterfall bidding is that bigger companies, which historically bid higher, get first pick on the best spaces.

The fifth advertiser in the daisy chain might have been willing to pay twice what the first was for the impression, but they never have a chance to, if it is sold to any of the DSPs before theirs.

https://i0.wp.com/www.adpushup.com/blog/wp-content/uploads/2017/02/daisy-chain.jpg?resize=242%2C425

Now a lot of exchanges have shifted to something called header bidding. I could talk for hours on the subject, and I advise you to do your own research, but for the purpose of this article, I’ll delve no deeper than telling you the $22.10 billion in spending was spurred on by innovations like header bidding and other tools that improved programmatic targeting capabilities.

3. Ad space bought via programmatic trading increased 76% year-on-year to April 2015.

Research by Adform has found that advertisers are buying up more space programmatically than ever before. Considering that programmatic adverts can be shown across channels and multiple mediums to targeted audiences this makes a lot of sense.

In spite of the growing popularity and increased spending, it isn’t all positive for programmatic advertising. The report found that despite brand advertisers paying more attention to programmatic, ad viewability across Europe declined 0.7% to 55% over the past year.

Why?

Well there is no clear-cut answer to that question. Poor inventory, growing mobile audiences – which are harder to market to programmatically-, ad blockers or a combination of these and number of other factors.

Interestingly, viewability rates were considerably higher in Germany (64%) and France (62%) where the programmatic marketplace is less advanced. It’s important to remember that correlation is not causation, but a good portion of add inventory isn’t being seen in some of the most developed programmatic markets.

4. Open auction marketplaces fueled 70% of programmatic revenue in 2014, while invitation-only auction, unreserved fixed-rate and automated-guaranteed markets collectively accounted for the other 30%.

A study by AdAge in the beginning of 2015 was one of the most conclusive ever done on programmatic advertising. Among the treasure trove of information was the 70% 30% statistic that has been quoted in hundreds of marketing journals, reports, and board meeting since.

What does it actually mean?

A private marketplace is by invite only. Publishers contact certain buyers to bid on their inventory. The buyer knows where their ad is going to run and payment is normally fixed or at least more predictable than open marketplaces.

Private Marketplace

“With Private Marketplaces, your buying platform (DSP) plugs directly into the premium publisher’s inventory source, combining the strengths of both buying approaches to essentially create a third buying approach,” Mediative.

There are lots of advantages to PMPs, but they tend to cost more because they are run by top publishers trying to attract advertisers with large budgets.

5. Mobile programmatic ad revenues account for 43% of US mobile display-related ad revenue.

Research by Invesp found that nearly half of mobile display ad revenue can be attributed to mobile programmatic. Mobile programmatic is a massive achievement because it presented significant technical challenges. It wasn’t that long ago that skeptics ruled out mobile programmatic advertising saying it was impossible to implement at scale.

Image result for 5. Mobile programmatic ad revenues account for 43% of US mobile display-related ad revenue

The problem was crumbling cookies. 86% of time on the mobile device is spent inside applications, and apps don’t support browser cookies that desktop programmatic is so reliant on. Now we are looking at a mobile programmatic industry that can target users better than desktop ever can, with apps that collect far more data. An online shopping app, for example, serves you ads when you are most likely to make a purchase or where you are in the store.

Tracking users and collecting enough data to target them on mobile devices was achieved by adding code to APIs, SDKs, and incorporating client log ins into applications.

6. In 2017, programmatic display spending will reach nearly $33 billion.

eMarketer’s estimate that programmatic display spending will be worth $32.56 billion That is an estimated 80% of display dollars being spent on programmatic.

Image result for 6. In 2017, programmatic display spending will reach nearly $33 billion

In an eMarketer podcast Lauren Fisher breaks down the numbers to reveal a line share, over 80%, going to mobile devices. This has to do with the majority of digital impressions occur on a mobile device and the large share that social players bring to programmatic via mobile devices.

eMarketer also estimates, which I think is really interesting, that direct programmatic and PMPs are set to overtake the open markets. The 5th statistic in this article reported that PMPs had a share of around 30% in 2015; two years later we have predictions saying that they are overtaking the open market. This is why digital marketers can never stop learning.

7. Nearly 33 Percent of Users Had Less Than a Year’s Experience with Programmatic Advertising.

According to a recent Chango Programmatic Advertising Pulse survey, 33% of programmatic users have less than 1 year of experience. The report goes on to say that because of this, best practices haven’t immerged and programmatic strategies are still in their infancies.

This is probably why we see stats like over 80% of programmatic advertising is being used to show display banner ads. We know that audiences aren’t engaged by these advertisements and the companies doing this are just automating an old-fashioned approach that is going to see rubbish engagement.

I recommend you check out these startups pushing the boundaries on the front lines of programmatic advertising.

The same study by PWC said they expect revenue to shift towards mobile and video formats over time. This is definitely happening. We are witnessing automated native advertising, massive growth in mobile programmatic, and video.

8. Gartner said it expects global mobile advertising spending to reach $18 billion this year, up from the estimated $13.1 billion in 2013. By 2017 it’s projecting the market will have sized up to be worth $41.9 billion.

This report by Gartner wasn’t far off with their estimation for growth in mobile advertising spending.

According to the latest Internet Advertising Revenue Report from PricewaterhouseCoopers and the Interactive Advertising Bureau Gartner went a little high with current valuations at $36.6 billion. Facebook and Google account for around 75% of this revenue.

IAB Quarterly Growth Trends

While this statistic isn’t directly related to programmatic advertising it is the reason for the meteoric growth for mobile programmatic.

9. Programmatic TV is small, but growing opportunity. PTV is still in very early days, with ad spend reaching an estimated $1 billion in 2016, just over 1% of traditional TV’s $73 billion.

Programmatic television marketing is making headlines as companies slowly but surely ramp up their spending. Business Insider’s report claims that it is still early days for the platform, with ad spending reaching $1 billion. I think the consensus that this programmatic tv advertising is going to grow is unanimous. Startups are investing millions trying to better target television audiences and as more tech finds its way into our living rooms we will see targeted advertisements.

ptv vs trad

There are some major barriers that TV programmatic needs to overcome before it makes major headway, but the will to do it is there.

10. Ad blocking grew by 41% globally in the last 12 months.

This report by Pagefair highlights one of the largest hurdles that advertising needs to overcome as a whole. Ad blockers are being downloaded on mass, and there is very little that advertisers or publishers can do to stop it.

Image result for Ad blocking grew by 41% globally in the last 12 months.

Some suggestions/prediction that has been put forward are that publishers will start restricting content for ad block user, or they might offer a button that disables the ad block temporarily, for their site. I like to think that the solution is a more elegant one. As the tech improves and we get better at targeting, individuals will only ever see advertisements relevant to them in volumes that don’t annoy them. It is a big ask with a healthy bit of optimism behind it, but I think the ad blocking trend will slow or stop with a clever combination of programmatic, high-quality native ads, and some clever AI.

About Dean Schmid

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