The digital advertising market is undergoing fundamental structural changes driven by two dynamics. The first is consumers' shift to all things mobile. The second is the increasing role technology plays in nearly all aspects of our lives and in virtually every industry on the planet.
Before we jump into what these changes mean to digital advertising, it is worth considering them in a broader sense. Both are easily observable by anyone walking down the street; and yet despite their ubiquity, they are extraordinary in their impact.
The global, massive shift to mobile is fuelled by innovation and lifestyle. The rapid pace of innovation in networks, devices, and applications has been astounding. It has come about thanks to a beautiful mix of high-end tech, creativity, and great execution. The fact that mobile fits neatly into how people live, learn, play, and work means that the adoption continues at the pace of innovation.
The role of programmatic technology across a growing number of industries has been evident for more than two decades. It permeates virtually all aspects of our lives. It is the indispensable capability that supports high-volume trading markets, such as stock exchanges, energy trading, or digital advertising.
But what does programmatic mean? Programmatic markets leverage technology to automate workflow, decisioning, and trading. These markets have a common purpose, to drive efficiency at scale while enabling transparency and decisioning at the most granular level. In advertising’s case, that means at the impression-level.
By bringing these two dynamics together, you can quickly understand why mobile programmatic is transforming digital advertising. People’s engagement with mobile already exceeds online. According to Millward Brown’s AdReaction study, mobile is the largest single-screen medium around the world. And in a few short years – 2016 according to eMarketer – mobile ad spend will eclipse online ad spend.
Mobile programmatic technologies – including open exchanges, private exchanges and programmatic direct – will support 80 per cent-plus of spend in the next two years. Some forecasts have mobile programmatic supporting up to 90 per cent of spend by 2017.
Ultimately, the way to test the value and strength of mobile programmatic is whether it provides core business benefits to market participants; most notably publishers, advertisers and agencies.
Advertisers and agencies are certainly adjusting to the shift in consumer preferences to mobile and working to "master" mobile as a precursor to executing cross-screen, since more and more consumer research shows that these devices are increasingly becoming the primary screen.
Programmatic technology enables targeting at the impression level to drive campaign results and efficiency that reduces the cost of media. Both contribute to improving ROI.
Publishers are responding to the consumer shift to mobile by building mobile sites and apps, and bite-sized content purposed for the mobile consumer.
Simply put, publishers need to adapt to the consumer to compete. Programmatic technology plays an important role here. Beyond the observation that the technology is disruptive, publishers will orient themselves to advertiser and agency spend that is dedicated to programmatic markets.
Publishers also benefit from more control, greater transparency, and lower operational costs – all of which contribute to top-line and bottom-line performance.
Mobile programmatic is a significant and arguably disruptive change. It is also a sensible, logical, beneficial, and predictable change that is ripe with opportunity for all market participants.
Todd Tran is the managing director for Europe at Nexage