Programmatic: the state of play in key markets
Discover the latest predictions and trends in programmatic advertising
Programmatic advertising is the automated purchase and sale of digital media. While it is often associated with real-time bidding (RTB) – where advertisers can buy advertising space and impressions in an online auction – programmatic can offer much more than just RTB. The automated buying of guaranteed impressions and the use of private marketplaces is also possible with programmatic, as well as automated spending decisions based on data about the audience.
Programmatic ad spending is growing rapidly, with 85 billion USD expected to be spent on it globally in 2019 compared to 58 billion in 2017. Campaign Live estimates that programmatic made up 28% of total global digital media spend in 2017/2018, so there is still a lot of room for the technology to grow.
In this article we will look at the current spread of programmatic advertising in key markets, trends and predictions for the future, as well as what challenges programmatic still has to overcome.
With a large population and a rapidly growing economy, India is becoming an increasingly important market for digital advertising. Programmatic, however, only accounted for 6% of ad spend in the country in 2018 – far behind other major markets.
Despite the slow adoption of the technology so far, programmatic is predicted to see huge growth in the next couple of years in India. The 2018 ‘Mobile Ecosystem and ad-Sizing Report’ by the Mobile Marketing Association (MMA) and GroupM, expects that with India’s vast market and the growth of new online streaming and gaming platforms, programmatic will enable marketers to reach customers quicker and more efficiently. The reports predict that the share of programmatic in Indian ad spend will grow to 17% by 2020 – an increase of 52% in just 24 months.
The penetration of programmatic advertising in the Chinese market is far ahead of India. China Internet Watch (CIW) reports that this year 71% of ad spending in China is expected to be spent on programmatic. This is an increase of about 5% from 2018, and CIW expects growth to remain at 4% in 2020.
CIW also reports that while programmatic spending in China is relatively high, it is also centralised among the few Chinese internet giants: Tencent, Alibaba and Baidu, who account for about 80% of programmatic spend in the country. Much of the growth in programmatic advertising is expected to come from small-to-medium businesses setting up their own platforms for programmatic buying.
Video – especially on mobile – is also driving programmatic advertising growth in China. The immensely popular video-sharing app TikTok – with over 250 million users in China – recently announced they are expanding programmatic advertising on their platform with biddable ads.
In many European countries, programmatic already dominates digital ad spending. In 2019, spending on programmatic is expected to account for 77.0% of digital ad spend in Germany, 83.2% in France and a substantial 87.0% in the UK according to eMarketer.
The 2018 Interactive Advertising Bureau (IAB) report finds that programmatic is the favourite model of the majority of marketers in Europe, but fraud and other issues are still a source of concern. While fraud needs to be overcome, IAB reports that 90% of stakeholders are set to increase their programmatic spend in the next 12 months – there is no sign of growth in programmatic slowing down yet.
The USA is currently the largest market for programmatic, with an estimated 58% of global programmatic spending being spent there. This is reportedly due to advertisers investing in infrastructure and data to make their advertising more effective.
eMarketer predicts that in 2019 84.5% of digital display ad spend in the USA will be spent on programmatic. Mobile advertising is at the forefront of programmatic – eMarketer predicts that by 2020 two-thirds of programmatic spend will go to mobile advertising.
Due to the deep penetration of programmatic in the US market, it is also where most challenges have surfaced. In 2017, many major companies pulled their advertising off YouTube due to their ads showing up on controversial videos, which was caused by insufficient checks of content where ads were placed through programmatic.
While YouTube has since promised to fix this, there was recent controversy about harmful comments on videos where advertisers had their ads, which caused multiple major brands to pull out of the platform again. Ensuring ads are only displayed on or near content that is not harmful to the advertiser’s brand is a challenge that platforms offering programmatic advertising must overcome.
Mobile and video advertising are widely expected to lead the charge in the growth of programmatic across the major markets. Due to the quickly changing landscape of platforms like TikTok, Instagram and YouTube, programmatic advertising allows flexibility and efficiency for advertisers – a driving force behind programmatic, especially in China and India.
With advertisers leaving platforms such as YouTube due to lack of control over ad placements and IAB voicing concerns around fraud, programmatic platforms still have hurdles to overcome before we will see universal adoption of the technology.
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