Report: Two-thirds of digital media to be programmatic in 2019
- 21 November, 2018 10:52
Sixty-five per cent of all money spent on advertising in digital media in 2019 will be traded programmatically.
According to Zenith’s Programmatic Marketing Forecasts, programmatic ad spend is also set to grow 19 per cent next year, reaching US$84 billion globally or 62 per cent of digital media expenditure, with Australian programmatic spend to reach US$1.64 billion next year.
In Australia, programmatic spend has grown from $83.7 million in 2012, to $1.74 billion this year, as businesses, such as Accenture, increasingly look to bring programmatic capabilities in-house.
According to recent research ‘Programmatic In-housing: Benefits, Challenges and Key Steps to Building Internal Capability’ by the Interactive Advertising Bureau (IAB), 65 per cent of companies buying media programmatically have brought the capability in-house. The report also found marketers who purchase digital ads programmatically have either completely moved programmatic buying in-house (18 per cent) or have partially begun the process of internalising the function, with plans to continue further down the path (47 per cent).
By 2020, Zenith predicts programmatic spend will rise to $2.92 billion in Australia, representing 67 per cent growth between 2018 and 2020. Programmatic now comprises 46.8 per cent of digital display advertising, which is predicted to jump to 67.2 per cent by 2020. Programmatic spend will represent 27 per cent of all digital ad spend by 2020, up from 18 per cent in 2018.
Zenith Australia CEO, Nickie Scriven, said the breadth of ad formats available through programmatic trading is improving, with more mobile, video and audio formats coming online all the time, though brands and agencies need to do more to push publishers to improve the quality of their inventory, which needs at minimum to be safe and viewable.
“In Australia we anticipate that a number of new channels will be transacted programmatically, such as audio [music and podcast], radio and addressable TV, which is why we are seeing continued programmatic growth,” Scriven said.
“The biggest change we will see in 2019 will be in the video space. The TV networks have been actively promoting addressable TV and Catch Up TV [CTV] and, coupled with the launch of VOZ next year, we predict that a number of large TV advertisers will transact more of their online video programmatically. As TV and CTV become more connected, and first and second party data becomes more important and more widely used, the effectiveness of targeting will offset any technology and data costs. Programmatic will become the most efficient and effective way to buy media in the future.”
Zenith Australia estimates that local programmatic ad spend will grow 59 per cent in 2018, up from 54 per cent growth in 2017, and forecasts 29 per cent growth in 2019, and 30 per cent in 2020.
In dollar terms, the biggest programmatic market is the US, followed by China and the UK, with Australia in sixth position.
By 2020, Canada will have almost completed the transition to pure programmatic trading, spending a predicted 99 per cent of digital media programmatically that year. Zenith expects all markets to follow Canada and use programmatic trading for all digital media transactions eventually.
The introduction of privacy legislation such as the EU’s GDPR, however, has made certain data previously used in programmatic transactions unavailable, and making other data more costly to process.
“Programmatic trading improves efficiency and effectiveness, and is gaining a dominant share of digital media transactions,” said Zenith global head of digital and innovation, Benoit Cacheux. “The scale of operational restructuring to make the most of it is both extensive and expensive, though, and advertisers are spending more carefully while they invest in infrastructure and data and review the quality of media. All programmatic advertisers need a strategy for acquiring the best and most comprehensive data available, and to treat this data as a vital corporate asset.”
The most valuable data is first-party data, either explicitly provided by consumers or gained by tracking their activity on owned websites. It is also becoming more common to use second-party data, by forming data sharing partnerships, between brands and online retailers. Third-party data is widely available but does not give advertisers a competitive advantage, since all advertising can use it to target the same segments.
“Technology is making programmatic advertising work harder for brands,” said Zenith head of forecasting and director of global intelligence, Jonathan Barnard. “Artificial intelligence promises to unlock new understanding of customers as people, as well as improving the optimisation of the trading process.”
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