March 20, 2017 AudienceScience

Four Programmatic Trends That Can Influence Your 2017 Marketing Strategy

[This article was originally published in MarTech Advisor on March 20, 2017]

As the programmatic universe evolves to handle media buying across an increasing number of channels, its growth is set to continue. In this article, Michael Greene, VP of Product Strategy at AudienceScience focuses on four areas of programmatic he believes are going to be highly significant to marketers in 2017. He also discusses the latest issues and developments in each area, and the effect they are likely to have on marketers in the coming year

2016 was milestone year for digital advertising. We saw programmatic evolve to handle media buying across an increasing number of channels, taking ad share away for other media, and according to eMarketer, surpassing media spend on TV in the US for the first time. This acceleration in adoption is also happening globally. In fact, Magna Global predicts that programmatic will make up 50% of all global ad spend by 2019. It’s an exciting time for the industry, so let’s take a look at the most significant trends marketers need to take into account when planning for the year ahead.

The Rise of Header Bidding

Header bidding was a hot topic towards the end of last year and its popularity is only set to continue. The technology allows publishers to sell inventory to multiple ad exchanges at the time same time rather than dropping down through a sequence of preferential ad exchanges that decrease in value until someone buys the space. Though not without its faults – most notably the latency issues required to run the technology — header bidding has been well received by publishers, who are enjoying yield improvements. With advertisers also seeing the benefits of visibility into all of a publisher’s inventory, the trend is set to continue – and globalise – in the year ahead. With that in mind, marketers should prepare now for the implications of global shift to header bidding.

First, marketers should work with their agencies to develop a plan to deal with rising CPMs. Early indications from the US, show that increased competition for quality ad impressions is causing prices to rise. Bottom-barrel programmatic prices may be a thing of the past – especially for marketers demanding highly-viewable placements on brand-name premium publishers.

Second, marketers and their agencies should be looking to use header bidding technology to their own advantage. We’ve already seen sales side platforms (SSPs) move into header bidding, and we can expect major moves from the buy-side platforms moving forward, especially from agencies. In an effort to scale back on costs – reducing the ad tech tax and eliminating fees paid to middlemen –  it’s only a matter of time before agency holding companies announce their own entrance into the market via white-labelled header-bidding solutions. This, in conjunction with a shift to server-side implementations, is due to significantly shake up the programmatic supply chain and eliminate the middlemen, who add very little value.

Consolidation of Technology

While some advertisers will continue to manage programmatic in-house, we can expect to see more marketers adopting hybrid models where agency, advertisers, and tech vendors work in close collaboration. Advertisers will have significant input in technology selection, while deferring to agencies for expertise in operations and execution. One notable effect of this shift will be technology consolidation. While global agencies continue to work with walled gardens, like Google’s YouTube and Facebook, they are shifting from using 50 or 60 additional DSP partners to a pool of around half a dozen preferred DSP partners. The DSPs that remain in this select group will be those that can deliver the best in terms of efficiency, global scale, and reach. They will need to have access to large growth markets like China and having proprietary header bidding tools will also be hugely important. The buy-side platforms that succeed will have easy integration into agency planning, buying, and analytics tools (via open APIs and real-time data feeds) as well as flexibility when it comes to third-party measurement and optimization.

The Rise of Offline Sales Attribution

Programmatic has already revolutionised the media buying process, but what’s really exciting is the effect it can have on another area of the marketing ecosystem. Marketers have long been collecting massive amounts of offline data from in-store purchases, coupons, promotions, direct mail responses and the like, but it’s generally classified under the realm of CRM. In 2017, we’ll see a greater emphasis on linking this with aggregate data from addressable media channels – display, video, mobile and increasingly connected TV, online radio and even digital out of home. We’re already starting to see deeper integration in advanced markets like the UK and US, but this will become more global in the coming year.

This integration will lead to a change in how marketers measure campaign success. Despite advances in marketing technology, most brands still have to make do with using a variety of proxies including demographic reach, viewability, video completion rate, etc. As a result, marketing planning, execution and optimisation are also based on proxies rather than insight into what actually drove product sales.

Programmatic can play an important role in managing consumer data across the whole of the customer lifecycle, from the moment a consumer sees an ad to post-purchase – the point that CRM has traditionally kicked in. This year, we’ll finally see more brands joining the dots by linking their offline consumer data with digital media execution to create more meaningful measurement objectives like sales.

Programmatic TV

The last few years have seen a dramatic shift in the way consumers watch TV with more and more of us using “over-the-top” services (OTT) like Netflix and Amazon Prime to receive content via an internet-connected screen or TV set. However, the advertising experience has remained fairly static, forcing brands to show the same ad to everyone in a household. There’s been a lot of talk about addressable TV, but technology and limited scale have held it back.

In 2017, the focus will shift from addressable TV to truly programmatic, connected TV. We’re already seeing cable operators like Sky, US-based AT&T and Charter offer their own OTT streaming services that deliver live and on-demand TV content via the internet without a set-top cable box. Likewise, major European broadcasters, like RTL Netherlands, have begun to open up their connected TV inventory for programmatic buying. This trend is set to continue as pay TV operators battle to attract ‘cord-cutters’ – those cancelling their cable subscriptions in favour of OTT services – and ‘cord-nevers’, who have never even bothered with cable.

While the commercial hurdles still need to be resolved, this route paves a much clearer path to RTB-enabled programmatic buying and related technologies like cross-device targeting and frequency capping. As TV goes truly programmatic, we’ll also see previously manual efforts – like coordinating TV and digital buys to maximise reach – becoming increasingly automated based upon user-level data. This will fundamentally shake up traditional planning and buying models by prioritising both reach and relevancy.

So what does all of this mean for marketers? Programmatic has come into its own and savvy brands will seize the opportunity to invest in the creative and media planning necessary to take full advantage of the technology. Agency planning work will shift from channel-planning to audience-planning; marketers will no longer have to trade reach for relevancy; and consumers will benefit from a less invasive, more targeted advertising experience. It looks like 2017 is going to be a win-win all round.