Advertising sales transform as programmatic trading takes off
Programmatic trading of advertising has been around for a decade or so, but advocates believe 2014 could be the year it breaks out beyond its online display roots and takes hold in other media sectors, reports The Media Guardian.
A highly complex, computer auction-based system of buying ads – with transactions taking fractions of a second – programmatic trading is similar to how stocks and share are traded in the city. The trading, which takes the form of automated real-time bidding based on complicated algorithms, matches ads with audiences.
Long-established methods of buying and selling advertising, involving transactions between media buying agencies and media companies’ in-house sales teams, are under threat as publishers, broadcasters and outdoor advertising companies eye up the cost-saving opportunities of programmatic trading.
Jay Stevens, international general manager at automated advertising seller Rubicon Project, which last year struck a strategic deal with News Corp to sell its inventory programmatically, says: “We are seeing entire markets moving en masse. Publishers are watching print revenue decline and looking at digital to make up the [revenue] they are losing in print. They have to move to automated trading or they will die.”
Programmatic trading is forecast to grow from a $12bn industry in 2013 to $32.5bn in 2017, across the UK and eight other countries where it is best established, according to forecasters Magna Global. By 2017 59 per cent of UK digital display ads will traded programmatically, the company predicts. However, scepticism persists about this data-led form of trading, particularly about its opaqueness and the loss of human involvement.
Tim Irwin, chief operating officer at media buying agency Maxus, says: “Some brands remain wary of programmatic buying as they fear losing control of the environment their ads appear in.” Such concerns mean that programmatic trading still has much to prove, while brands geared towards children are unlikely to use it, as there are not full safeguards to prevent ads appearing next to toxic content.
This form of trading has in some form or another has been around since 2003 and in the early years was primarily used to trade unsold inventory that a sales team couldn’t shift. But the growing importance of data, coupled with clients looking for cheaper ways of trading advertising, means premium advertising spots are now being traded programmatically.
“Essentially the main benefit of programmatic buying is that it allows advertisers to only pay for the audiences they really want, avoiding wastage but retaining scale,” Irwin adds. “As all of this is done in real time, for many advertisers it is the ultimate efficiency driver and contributor to positive return on investment.”