The world just celebrated 10th anniversary of the first ad exchange. When the concept of ad exchange was first introduced back in 2005, it truly brought about a revolutionary change in our perception of selling / buying ad space on the web.
In this new paradigm, it was possible to buy ad space on impression-by-impression basis, and not in pre-packaged bundles (in thousands of impressions) that it was done previously. This also meant that price for these impressions was dynamic and not static like before. This process of bidding on ad space in real time came to be known as Real Time Bidding, or RTB. This concept was later expanded on a new term – programmatic media buying, and buyers / sellers introduced direct automated buying (using RTB principles) that was known as programmatic direct.
Programmatic buying for display ad inventory came from 0% market share to 55% of total display expenditure in 2015 (projected US programmatic ad spend, eMarketer). This number is expected to grow by 63% next year. And it’s crucial to note that the actual revival of programmatic buying didn’t really start until 2009 or 2010, when the entire advertising technology system took shape with the introduction of new things such as Demand Side Platform (DSP), Supply Side Platform (SSP), Data Management Platform (DMP),and Ad Verification companies
Programmatic Buying also revitalized video, native and mobile ad buying. eMarketer projects that it will grab 40% of digital video ad spending in 2016 (or equivalent of $3.84 B) in US alone. Programmatic buying is also poised to flourish the way media is currently bought on other (traditional) channels, such as Radio, Outdoor and TV.
So what are main advantages that programmatic media buying is providing to marketers?
1. Speed to market
This automated way of placing ads results in a quicker turnaround in the company, provided that media buyers have a direct access to a technology that allows placing these ads (DSP). This becomes very vital when planning cycles get shorter, and performance goals call for constant testing of new strategies to beat the competition.
2. Unprecedented targeting capabilities
Programmatic buying introduced a concept of audience buying, which helps marketers target a specific segment of users, no matter where they are. The targeting capabilities of the marketers include showing a previous interest to a specific product or service (by visiting a specific site, or searching for a specific product).
3. Better ROI
Better ROI is achieved by the efficiency of buying media (from time and cost perspectives), as well as ability to target and optimize the use of resources in real time. The ability of gaining momentum in the market with new strategies also allows marketers to test various targeting methods simultaneously and to allocate more budgets to showcase items where return on investment grows by the highest figure
There is no doubt that programmatic media buying will continue its impressive growth by creating new opportunity. So, it’s not difficult to predict that close to 100% of all media will be bought and sold that way. Exciting times ahead!