The time has come for programmatic: 5 important findings from IAB's programmatic advertising research

Last week, IAB was combined with PricewaterhouseCoopers published a study that covers the programmatic industry for 2014 in terms of market share (as measured by income) and sets a forecast for future growth.

The report contains information about cash flow in such a complex ecosystem as programmatic, examines definitions in the industry (including the very value of programmatic) and provides the results of surveys of dozens of companies that contain comprehensive data on the difficulties and opportunities encountered.

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Overall, the results were impressive.

Here are 5 key findings:

1. Programmatic advertising occupies most of the revenue from display advertising in general

Earlier in 2013, programmatic occupied only 23% of the display advertising market, according to eMarketer. In October 2014, the same eMarketer estimated the share of programmatic at 45%, but the latest data from the IAB show that programmatic reached 52% by the end of last year. Despite the fact that this rapid growth rate does not surprise the leading programmatic companies in the world, it definitely turned out to be much faster than many expected. And this is an important milestone for the entire industry.

2. Public RTB auctions make up the majority of programmatic earnings.

According to the report, 70% of inventory is sold at “open auctions”, in which each advertiser can participate. This lion's share is due to the fact that "open auction" is in fact the only way to achieve the desired scale in conducting outreach campaigns. It is also the only programmatic procurement method that provides complete automation and efficiency.

3. Companies in the field of advertising technologies richer publishers

Suppliers of advertising platforms and technologies earned more money than publishers (55% vs. 45%, respectively). There are a large number of elements in the space of the advertising technology system. The more suppliers, the more money comes in the whole money chain. Not to mention the fact that these funds come from all elements of the system, ranging from 1% or less for ad servers and up to more than 50% for ad networks. With an increase in audience-oriented procurement (rather than on specific publishers and sites), publishers risk being marginalized in the world of programmatic, while the importance of advertising platforms is growing day by day.

4. Banner advertising is still the dominant creative format.

Rumors about the death of banner advertising are greatly exaggerated. According to IAB, banner advertising accounts for about 80% of total program revenue. This is not surprising, especially given the history and standardization of formats, as well as the simplicity with which they are created. The expected shift towards other formats, such as mobile and video, is visible, but at present their adoption is difficult for various reasons. There is not enough premium inventory in the video, and therefore most of them are not programmed. In mobile, users are still waiting for more advanced cross-device targeting and metrics.

5. The rapid growth of programmatic advertising will continue, but not without obstacles.

First, there are misunderstandings on definitions, especially for the private market and direct types of purchase. The lack of ability of many suppliers to distinguish income from different types of programmatic purchases in their reporting is also manifested. There is also a lack of standardization and transparency worthy of attention and malicious impressions, which are related to the perception of the quality of equipment available through programmatic advertising. In addition, many believe that fragmentation hinders the final growth of the industry - there are too many manufacturers.

Despite these difficulties, the introduction of software advertising continues to grow rapidly. According to the report:

Programmatic has become a significant part of online advertising revenue. The potential for growth is obvious, but the demystification of the scope of programmatic as such is crucial to achieve this potential.

In addition to clarifying incomprehensible to many nuances in the field of programmatic, some other issues must also be resolved. First, in addition to the importance of understanding the sphere, so important for advertising agents and campaign specialists is an understanding of the technology of buying digital as such. In addition, advertiser confidence should be encouraged, acting accordingly in relation to brand visibility and security. Technology needs to be developed, so that there is more confidence in cross-device targeting and metrics. And finally, with such a large fragmentation in the ecosystem, consolidation will help increase operational performance indicators and give more confidence in the overall value chain.



BYYD • Mobile Advertising Platform