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Impervious to change, publishers still slam programmatic ads

Faultline Online Reporter first started covering the field of programmatic advertising in late 2014, since covering the topic on 174 separate occasions, of which 43 articles were delivered this year, a surprising 27 times less than in 2017. As we close out the year, the question here is if this is truly representative of declining interest in the new frontier for advertising and what could 2019 possibly have in store?

Well, a report published this week has dug up opinions on programmatic advertising – the process of automated audience buying through real-time bidding – from a sample of industry experts and conclusively it shows negative views on the technology have hardly changed.

According to a survey of 185 executives in the publishing industry, conducted by Digiday, programmatic advertising continues to drive down the price of ads and therefore is a deeply embedded thorn in the side for publishers. Of these, 30% cited downward pressure on ad pricing as their primary concern regarding programmatic advertising. To be honest, we’re surprised it isn’t higher. Latency issues and trouble finding transparency with vendors were each selected by 14% of respondents as the primary concern triggered by programmatic systems.

Let’s be clear here, the whole idea of programmatic ads is that you can pick and choose the right people, receptive to your products, and so should pay more for the audience, not less.

Presumably, all 185 respondents are in the US which, ironically, is the country where broadcasters are least susceptible to change despite its technical innovations in advertising. Europe and China, for instance, have embraced taking the same broadcast free to air content and giving it over to OTT delivery, meaning these markets are well ahead of the US, and the shift in the advertising base is also more advanced.

But we mustn’t forget the benefits. For publishers, programmatic advertising delivers flexibility in monetizing inventory across channels; for advertisers, it’s the ability to more precisely target audiences across platforms and channels.

Ever since its emergence, the practice of programmatic advertising has been coined a “race to the bottom” – but where’s the floor? That said, a separate recently released report from eMarketer shows that 80% of digital display ads in the US are being bought programmatically, as of this year, in a market valued at $47.4 billion today and forecast to grow to $68.9 billion in 2020, but that’s not all video adverts or adverts inside videos.

The most recent major shake-up in the programmatic ad industry arrived only a few weeks ago when Disney decided to boot out Comcast’s Freewheel and instead promote Google Ad Manager as its primary ad tech supplier. Some missed the significance of this move, forgetting that Google Ad Manager is effectively the merger of DoubleClick for Publishers (DFP) and DoubleClick Ad Exchange (AdX), brought under a unified programmatic platform, along with a bunch of other simplified brands including Google Ads and Google Marketing Platform. The entire essence of the move is to break away from “the traditional constraints of ad severs and SSPs to build new programmatic solutions”, including features like Optimized Competition to maximize yield across reservations, private marketplaces and the open auction.

It involves the mammoth task of transferring Disney’s entire global digital video and display business onto Google Ad Manager in preparation for the 2019 launch of the much-anticipated Disney+ streaming service. When we also factor in figures such as Disney-Fox spending some $22 billion by the end of 2018, according to an Ampere Analysis report out this week, we can begin to appreciate the sheer scale of the move and its importance to the digital ad industry. It could, of course, exacerbate the negative views held by many, as highlighted earlier by Digiday, causing prices to tumble further.

Looking back at the programmatic advertising report from our sister service Rethink TV, published in October last year, we see a landscape where programmatic advertising will account for nearly 90% of all digital video advertising by 2022. By the end of 2019, programmatic ad spend will account for $14 billion of the total $17.4 billion video ad spend, although please note our advertising numbers will soon be getting a refresh so these figures are likely to change – so keep an eye out for an all new advertising report from Rethink TV in the new year.

 

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