By David Darby
The word ‘programmatic’ can strike fear, excitement and bewilderment into the hearts of publishers. And while this automation trend is a tidal force in the digital ad space, it’s a wave that can be surfed by savvy media managers who cut through the jargon to get clear on how to automate more effectively.
This topic demands our attention because programmatic is a leviathan: automated buying will top US$15bn this year in the US, representing nearly 60 per cent of digital display ad sales. In the UK, programmatic will surpass £2bn in sales next year, and across Europe, programmatic video ad sales alone are on track to top €2bn by the end of this decade, according to eMarketer.
The rise of programmatic is powered by a shared quest by sellers and buyers for speed and efficiency, resulting in higher yields for publishers and higher ROI for advertisers. Both sides remain tantalised by the promise of moving beyond the cumbersome direct-sold model where a sales team deciphers a Request For Proposal and negotiates its way to an agreed Insertion Order, then ad operations manually traffics the deal.
While the motivation remains the same, the definition of programmatic continues to evolve. At the highest level, programmatic is about using technology to automate the selling and/or delivery of digital ads. Up until recently, this mostly meant selling individual ad impressions on a real-time-bidded (RTB) basis in an auction conducted via an advertising exchange. From the beginning, programmatic took on a bargain basement image as RTB was used to clear out the tail of publishers’ remnant inventory at very low prices.
However, the growing trend of Programmatic Guaranteed – where the buyer and seller agree on a certain volume of impressions sold at a specified price, transacted using Deal IDs or in private exchanges – blurs the distinction between direct and programmatic sales. This form, and the rise of programmatic video, show that programmatic is going up-market in both image and reality.
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