Is programmatic bigger than you think?
Last week Australian digital advertising recorded another strong quarter when the IAB/PWC Online Advertising Expenditure Report, showed spend of $1.731 Million for the quarter ending March 2016, a 33.5 percent year on year increase. That's fantastic growth, in fact according to PwC, digital advertising in Australia is growing faster that in the US and UK. Mobile and Video were called out as key drivers of growth, however closer analysis of the figures reveals that programmatic continues to be a key, additional, engine for growth.
The Report measures direct vs cpm general display buys in the quarter, with the direct share, a reasonable proxy for programmatic, holding steady from previous quarters at 49%. With display growing 47% year on year it is reasonable to estimate that programmatic display advertising spend was $300 million for the quarter and tracking to be $1.5 Billion for 2016.
However, that is just programmatic display, Adobe defines programmatic advertising more broadly and believes programmatic centers around three key attributes;
1. It’s automated
2. It's transparent
3. It's data-driven
Defining programmatic that way, search, which is reported separately by IAB/PwC would be included as programmatic spend, meaning that total Australian programmatic advertising in Q1 of this year was approximately two thirds of the market or more that $1 .1 Billion.
With automated buying, selling, and the ability to reach a precise audience with highly relevant ads, Social, which is already included in the display figures referenced above, is also clearly programmatic.
Taking this broad view of programmatic can of course be complex; it can help to gain a more in depth understanding by breaking it down into two components: Real Time Bidding (RTB) and Programmatic Direct:
Real Time Bidding consists of auction-based ads that are transacted in real time at the impression level, mainly comprising of the open marketplace and private marketplaces.
Programmatic Direct is the purchase of display ads via an application-program interface (API), whether it’s publisher-owned (e.g. Facebook or Instagram) or facilitated using preexisting RTB technology like a demand-side platform (DSP). Here, buyers typically agree to a set pricing model (e.g. CPA) and may or may not agree to a fixed amount of inventory.
The growth of programmatic advertising is attributed to two factors: efficiency in ad buying and relevancy in ad targeting. These are readily available at huge scale from many ad exchanges in Australia. Facebook and Instagram also provide programmatic direct at large scale with 15 million and 5 million monthly Australian visitors respectively.
Next year, more than half of all US programmatic display will be purchased by Programmatic Direct, in Australia Programmatic Direct is likely a similar share of programmatic spend. Even more interesting is that a significant share of Programmatic Direct will be driven by Facebook. Facebook currently represents about 25 percent of the digital display market with 2015 revenue estimates in Australia of $500M+
To make the most of the opportunities available in the wider programmatic space and ultimately maximise return on ad spend (ROAS), it is important to manage all of the programmatic channels across search, social and display holistically, leveraging both RTB and programmatic direct buys. When that approach is matched with tracking and targeting the customer journey effectively the results can be exceptional.
For more on the role of social in the programmatic eco-system see; https://blogs.adobe.com/digitalmarketing/social-media/growth-programmatic-advertising-social/