By Phil Parrish on January 8th, 2019
Top 5 Programmatic Advertising
Trends to Prepare for in 2019
The holiday season is behind us, we have launched into 2019, and it’s time to start getting back in the swing of things so we can deliver on our 2019 goals from a personal and professional level.
To assist with your knowledge of the programmatic advertising industry, provide updates on advertising technology, and give you a glimpse into the future of programmatic, we are excited to offer our perspective on the key trends to focus on in 2019.
In this article, we’ll start by reviewing our 2018 programmatic advertising trends and then reveal our top 5 programmatic advertising predictions for 2019 so you can start planning for the future of programmatic today.
Let’s look back at our predictions for 2018.
As we wait for the release of official data on programmatic advertising spend in 2018, we project that nearly 80% of all U.S. digital ad dollars were transacted through programmatic technology.
Programmatic is defined as data-driven and automated ad buying, and it has certainly become the norm for digital display advertising. As brands invest more in this advertising channel, they continue to push for more transparency. On the upside, new programmatic infrastructure is being developed for additional media channels that will enhance the scale of omnichannel advertising.
In 2018, our team of programmatic experts were very bullish on the growth of OTT or Connected TV advertising (as many industry insiders were). You will notice that OTT continues to be a focal point of ours trends in 2019, but for different reasons than last year. As traditional TV advertising continues to decline, only 5 percent of TV inventory is sold programmatically, so growth within this channel is here to stay.
Last year, we highlighted the focus on the IAB’s introduction of ads.text and ads.cert as an automated method to stopping fraudsters from tampering with, modifying, and/or gaming programmatic inventory. In 2019, look for the deployment of app-ads.txt, which will begin to solve ad fraud woes that currently plague programmatic mobile app advertising.
In stride with reducing ad fraud, we projected substantial growth within private programmatic setups for brands seeking more control and transparency over their programmatic buys. DSPs have focused a lot of engineering resources on expanding their Publisher Management Platform (PMP) capabilities, which has made it much easier for brands to purchase a larger share of premium inventory through less-competitive private auctions.
In 2018, we projected that mobile advertising would pass all other channels in traditional or digital advertising. Mobile advertising will continue to grow in 2019 as brands will invest more in video, native, and audio ad formats to engage audiences while they are on-the-go.
Lastly, we announced that more enterprise brands would bring programmatic media buying in-house in 2018. We outlined some of the organizational challenges with bringing programmatic in-house, but despite some of the hurdles, many brands are seeing success with this shift by gaining more control over campaign management while reducing investment in traditional ad agencies. In fact, a recent IAB report highlights that up to 40% of advertisers are executing a portion of their programmatic campaigns in-house.
After a review of key trends that permeated through the programmatic marketplace in 2018, it’s time to help you plan and prepare for the upcoming year by introducing new tactics that you can implement into your 2019 programmatic strategy. So, let’s dig in and explore our top 5 trends for 2019!
- Facebook & Google duopoly begins to decline
Facebook and Google continue to dominate the digital display ad industry with a duopoly controlling 52% of digital ad revenues in the marketplace:
Many experts in the field believe the duopoly will continue to grow in 2019, despite the mounting frustration from brand marketers and consumers over improper collection of user data (primarily on Facebook’s end).
Here’s our key reasons why the duopoly will see a slight decline in 2019:
- Amazon’s huge growth in ad revenues: In 2018, Amazon more than doubled their growth in ad revenues to over $4.6 billion, according to eMarketer. Amazon’s advertising platform has surpassed Microsoft and Verizon’s Oath to become the third largest player behind Facebook and Google. Investment in Amazon will continue to grow as the company works hard to enhance its advertising platform, and Amazon’s growth will work to slowly erode the duopoly’s share of the market.
- Rise of OTT and Digital Audio advertising: As more traditional TV and radio budgets shift to OTT/CTV and Digital Audio advertising through programmatic technology, more digital advertising investments will be allocated to OTT distributors (e.g. Sling, Hulu, DirecTV Now, etc.) and streaming audio platforms (e.g. Pandora, Spotify, Soundcloud, etc.).
From an engineering standpoint, DSPs are making it much easier for brands to transact internet-based TV and Radio inventory through streamlined programmatic solutions. We believe that only a very small percentage of these additional media dollars will be going to Facebook or Google because they do not have an adequate amount of OTT or Digital Audio inventory available relative to mainstream DSPs.
- New & emerging programmatic media inventory: In the not too distant future (a little foreshadowing for later in this article), new advertising inventory through media channels like Out-of-home (OOH – synonymous with outdoor or billboard advertising), and voice advertising via in-house smart speakers will be transacted through programmatic technology. As these new dollars flow into digital, mainstream DSPs are better positioned to capture these ad dollars than Facebook and Google.
- Concerns over improper collection and distribution of user data: Facebook spent a lot of time in 2018 comprehending the consequences of platform abuse. This was highlighted in the Cambridge Analytica scandal and potential influence on political elections. As Facebook and Google crack down on 3rd party data providers, more brand marketers are wary of allocating the same percentage of digital advertising investments to Facebook and Google.
- Growth & emerging capabilities for Digital Audio Advertising
Investment in digital audio advertising grew over 45% from 2016 to 2017 to $1.6 billion. As we await final estimates of investments in digital audio advertising in 2018, consider this – in the U.S., consumers spend on average 18% of their time streaming music on mobile devices. Proportionally speaking, if 18% of ad spend on mobile devices was allocated to digital audio advertising, the total would exceed $10 billion through mobile in-app targeting alone.
As streaming radio providers offer more of their inventory through programmatic RTB platforms, and as traditional radio dollars shift to streaming radio, growth will continue to rise in this immersive and compelling media channel.
What gets our team excited are the advancements that will roll out for digital audio advertising in 2019. Custom and audio-specific ad formats will emerge. Imagine a brand being able to tell the listener to shake their phone to download a coupon. Real-time interactions with audio ads via voice activation is another interesting opportunity that will emerge in the audio marketplace.
- More inventory & better attribution fuels growth for OTT & CTV Advertising
We highlighted the growth opportunity for Over-the-top (OTT) and Connected TV (CTV) video advertising in last year’s article, and we are re-emphasizing it this year (but with additional reasons).
To start, it’s important to look at the change in business models and consolidation within the niche OTT marketplace.
More mergers and acquisitions over the past year, as well as efforts between big networks and broadcasters, have helped to address some of the measurement inconsistencies between traditional TV and digital. Now, with the advancements of programmatic ad tech and partnerships with key players like Nielsen, brand marketers can measure the performance of programmatic TV campaigns using traditional metrics like Gross Rating Points (GRPs), On-target Percentage (OTP), and incremental reach. Forward-thinking brands can supplement traditional TV metrics with modern metrics like Cost-per-completed-view (CPCV) to attribute brand lift and performance to OTT advertising like never before.
In addition to better performance measurement and attribution, more OTT inventory is becoming accessible to brands of all sizes looking to engage their audiences on the big screen or whatever device consumers are using to stream digital video content from. Recently, Hulu released an automated private marketplace that allows brand advertisers to purchase Hulu CTV inventory with their own DSPs while avoiding minimum media commitments.
OTT viewership is still a small fraction of the broader video and traditional TV landscape, but that is changing every day. In fact, the number of OTT “only” U.S. homes has tripled over the last 5 years. Ad-supported OTT inventory will prove to be a strong contender for television advertising dollars as more and more viewers shift away from traditional television. With precise targeting capabilities, improved measurement, and access to more inventory, brands will continue to invest more of their media in OTT advertising.
- Programmatic access to Digital-out-of-home (DOOH) advertising inventory
Some of you reading may find it surprising that investments in an “old school” ad format – Outdoor Advertising or Billboard Advertising – is growing steadily alongside digital advertising.
Outdoor ads on billboards, buses, and large venues like football stadiums and music festivals reached record levels in 2018. According to Zenith Advertising, global investments in “out-of-home” advertising exceeded $38 billion in 2018. With over 3% growth compared to 2017, and a staggering growth rate of 35% since 2010, OOH advertising is the fastest growing non-internet-based advertising channel outside of cinema advertising, according to Recode. A big asterisk should be placed next to cinema advertising because it is a significantly smaller channel with the majority of growth attributed to advertisers in China (though cinema advertising inventory will be transacted programmatically in the future too).
Which brands are leading the way in OOH advertising? It’s not just the household names you may come to expect like McDonald's, Ford, or Coca-Cola. Major tech and online companies like Netflix, Apple, and Facebook are spending big on this ad format.
So, what does this traditional media channel have to do with our programmatic predictions for 2019?
Drum roll please…
Our team of programmatic experts have engaged with key ad tech influencers and are confident that access to digital-out-of-home inventory will become available through programmatic platforms on a beta level in late 2019. As online brands search for ways to engage with their audience outside of internet silos, they are finding success avoiding some of the “digital noise” and breaking through with traditional media channels that are becoming more programmatic overtime.
We have the insider knowledge to keep you ahead of the curve in this emerging channel. We will soon be able to help you analyze mobile location-based data to pin point where your audience is so we can precisely place billboard ads (programmatically) in specific locations where your audience is most likely to be found.
Further down the road, we’ll be able to demonstrate the cause and effect from exposure to an outdoor ad, like the incremental lift in foot traffic or website visits before and after exposure to a programmatically placed outdoor ad. Though the technology is in the early stages, advancements will be made as tech providers connect more data sets with inventory sources. Check back for future updates on this exciting new media channel!
- Rise of voice activated advertising
To close out our top 5 predictions within programmatic for 2019, we shift our focus to another new and compelling media channel – voice advertising.
Consider this for a moment – over 56 million in-home smart speakers were shipped in 2018. With purchases and use of voice activated technology skyrocketing, brands are looking for new ways to engage with active “listeners” on their household smart devices.
Right now, voice activated technology providers like Amazon, Google, and even Apple (think Alexa, Echo, and Google Home devices) are developing ways to monetize these product lines by implementing audio ads on voice search devices.
Audio ads in voice search, similar to upcoming advancements in digital-out-of-home advertising, will take time to develop and find its way on media plans because it’s a new format in a completely new channel.
We believe that following best practices from traditional radio advertising, and what we have started to learn in digital audio advertising, will prove very influential in how brands and agencies approach voice advertising.
At the end of the day, if a consumer is searching for a product or service via an in-home smart device or mobile phone, brands can add value by serving a compelling audio ad that guides the end user in the right direction. We currently have access to audio inventory on smart devices like Echo, but we are eagerly awaiting more advancements in voice activated advertising that will take internet-based searches in a whole new direction starting in 2019.
So, there you have it. Our top 5 predictions on key trends that will shape the programmatic advertising industry in 2019 and beyond are:
- The start of a modest decline for the digital advertising duopoly of Facebook and Google
- Growth and emerging capabilities in Digital Audio Advertising
- Sustainable growth of OTT/CTV advertising due to more inventory and better attribution
- Programmatic access to Digital-out-of-home (DOOH) inventory starting in late 2019
- Emergence of voice advertising and its long-term influence on search results from smart devices
Our team is poised to help brands and agencies that are committed to success in programmatic advertising through the development of a differentiated strategy that will separate them from the competition.
Whether you are looking to hire an agency to enhance your programmatic strategy and execution, or if you want to partner with a trusted team of experts to guide you on the journey for bringing programmatic in-house, please contact us to share your story so we can help to address your needs.
Remember to check back in for future updates on new programmatic advertising channels like DOOH and voice advertising that will help you take your omnichannel programmatic advertising to the next level!