The state of programmatic in 2015

Contributor, January 8, 2015

“For years most online media as sold directly through ad sales reps. Over the past year there has been a dramatic change in this field”, Sivan Tafla, Oraki.

According to the article, today most of the pricy display ads in publisher sites are still sold by sales people, but robots and ad exchanges are expected to replace the rep and revolutionize the way online ads are sold.  In the coming years, ad sales will function through complex algorithms in a new marketplace that will make automatic decisions about online ad pricing and placement.

In our local market it is predicted that by 2017 30% of media will be sold through exchanges. Already many publishers are replacing sales reps with automated IT environments.

Programmatic is a new online advertising model that automatically identifies the optimum target audience for each ad campaign. It is a booking mechanism to sell inventory for advertisers over an exchange or through direct and even premium channels.

RTB (Real Time Bidding), a component of programmatic creates an auction environment where marketers can bid to show a different ad to a specific user based on data about that user. RTB holds the promise of delivering the right ad to the right person at the right time. Advertising inventory bought and sold through Real Time Bidding (RTB) on a per impression basis, operates similar to the way financial markets work.

Today programmatic advertising is one of the hottest buzz words in the industry and reached 45% of all display advertising. eMarketer recently released figures indicating that programmatic in the US grew by 140% in 2014, reaching $10 Billion.

Magna Marketing research predicts that by 2016 programmatic will be double and reach $20.4 Billion, and will represent approximately 63% of all display advertising.

Premium and remnant traffic
Until recently, programmatic ad bids were conducted on remnant traffic. In 2014 a shift paved the way to a direct marketplace. Programmatic Direct opened a new market for premium placement of ad display spaces in prized real estate locations. Today only a small portion of premium ad inventory is sold through programmatic, while the rest is still sold by ad sales reps. eMarketer predicts a shift in the next few years, so much so that by 2016 the premium RTB market turnover is expected to reach $8 billion compared to $80 million today.

Programmatic for mobile and video advertising
Industry findings indicate that most programmatic sales will come from mobile advertising. The online video marketplace will also witness exponential growth; eMarketer predicts programmatic video will reach $3.8 billion by 2016.

According to Sivan Tafla, the local market is already using advanced systems, but is not yet realizing its full potential.

“We are in the midst of a process. 25% of online media here is sold through RTB, but the market is uncertain . In the US, a sizable portion of media is sold this very way. In 2017, 30% of media is expected to be sold through programmatic.”

Industry misconceptions
Meanwhile, most publishers still want to hold onto their premium ad placement to preserve their high rates. There is a misconception that placing ad inventory in programmatic exchanges, where there is uncapped user data, can harm publishers’ ability to demand higher fees on prized page placements.

Tafla believes that serving campaigns through programmatic exchanges will actually contribute to publisher’s bargaining power. With exchanges there are more bidders for every impression and more useful data accessible to marketers.

“As soon as you can use sophisticated viewer data, you can increase the value of every impression. This is bound to affect revenue making capabilities.”  The immediate impact is firstly and for mostly in heightened efficiency. Human resources costs allocated to direct sales are suddenly challenged by automatic systems. There is a shift in focus from the traditional direct sales to trade room management and analysts.” said Sivan Tafla.

Oraki offers digital and mobile advertising solutions based on advanced technologies. The company is the sole Israel representative of Google’s advertising platform – DoubleClick, an ad serving and inventory management platform for publishers and advertisers. It has been integrated into large media publisher groups including: Ynet (largest daily digital newspaper), Mako (largest news and entertainment site ranked in third place), Haaretz, Globes and more.