Advertisers projected to spend $98 bn on programmatic advertising by 2020: Zenith

MUMBAI: Advertisers are projected to spend $98 billion on programmatic advertising by 2020 representing 68% of their expenditure on digital media advertising, according to Zenith’s Programmatic Marketing Forecasts.

By digital media, the agency means all forms of paid-for advertising within online content, including online video and social media, but excluding paid search and classified advertising.

The report further stated that advertisers will spend $84 billion programmatically next year, up from $70 billion this year, which represents 62% of digital media expenditure.

The media agency further forecasted that 65% of all money spent on advertising in digital media in 2019 will be traded programmatically.

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 to be safe and viewable.

Growth in programmatic advertising is slowing as it cements its position as the most important method of digital trading. The agency estimates that programmatic ad spend will grow 24% in 2018, down from 32% growth in 2017, and forecast 19% growth in 2019, followed by 17% growth in 2020.

In dollar terms, the biggest programmatic market is the US, where the agency expects $40.6 billion to be spent programmatically in 2018 – 58% of the total. China is in a distant second place, spending $7.9 billion on programmatic advertising this year, followed by the UK, with $5.6bn of programmatic ad spend.

The US is also the market that has most embraced programmatic advertising, trading 83% of all digital media programmatically this year. Canada is in second place, trading 82% of digital media programmatically, followed by the UK, with 76%, and Denmark, with 75%.

By 2020, programmatic advertising will account for more than 80% of digital media in all four markets. Canada will have almost completed the transition to pure programmatic trading, spending 99% of digital media programmatically that year.

The agency expects all markets to follow Canada and use programmatic trading for all digital media transactions eventually. Indeed, it’s only a matter of time before programmatic trading becomes the default method of trading for all media.

According to Zenith, advertisers have to reorganise internally to give programmatic trading the high-level support and understanding it needs to make the most of their programmatic campaigns. Agencies can only extract maximum effectiveness from their programmatic strategy in a proper partnership with their clients. And a programmatic strategy can only ever be as effective as the data used to execute it.

“Programmatic trading improves efficiency and effectiveness and is gaining a dominant share of digital media transactions. 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,” said Zenith Global Head of Digital and Innovation Benoit Cacheux.

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 – for example – 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.

Advertisers should continually vet and interrogate third-party data to ensure they are truly adding incremental reach. By combining all this data with their own CRM systems, advertisers can model consumer behaviour, and the more advanced are using machine learning to predict it. Data and new technology are enabling brands to move from tracking cookies to communicating with individuals.

“Technology is making programmatic advertising work harder for brands. Artificial intelligence promises to unlock new understanding of customers as people, as well as improving the optimisation of the trading process,” said Zenith head of forecasting, director global intelligence Jonathan Barnard.

Tags