Post written by Ofer Garnett CTO & Co-Founder of mobile growth marketing platform YouAppi, bringing nearly 20 years of R&D experience to make mobile engaging.
Digital advertising has grown steadily over the last two decades with no signs of slowing. As consumers shift to mobile, brands have digitally migrated.
Currently, over 80% of all digital display ad spending in the U.S. is programmatic, and those numbers are expected to increase. Programmatic advertising is done by computer systems that automate the process of buying, selling and optimizing ad placements on digital media. Advances in machine learning and smart algorithms have proven far more reliable than humans in determining ideal timing and location to reach a desired audience. Where the focus used to be on finding websites that generally attracted the same audience as your product, programmatic allows you to drill down on an individual’s digital behavior and place an ad in front of the eyes most likely to engage.
But if you think programmatic advertising is best left to your marketing department, think again. Reaching consumers digitally has never been more important — or more challenging. Deeply segmented platforms, shifting consumer preferences, stricter privacy laws, and increasing expectations of more direct, personalized and highly relevant ad content make it harder than ever to reach your customer at the right time and place with the right message. Programmatic looks to be the key to driving meaningful digital engagement in 2019, with several promising trends.
Technology Will Address Current Market Challenges
Most programmatic ad spend is done in real time via real-time bidding (RTB), which buys ad inventory on a per-impression basis and works much like financial market trading. The prominent protocol is OpenRTB, and it’s had its fair share of critics. As the ecosystem has grown, it’s become increasingly problematic for brands to trust the data, protect themselves from fraud and maintain brand integrity and safety.
A new version, OpenRTB 3.0, has finished beta and is expected to release before the end of 2018. This is the most significant overhaul of OpenRTB since its inception in 2010, and it delivers enhanced visibility into the process of programmatic buying and selling. I expect adoption of the 3.0 protocol to be significant throughout 2019, as brands are eager for greater transparency and clarity.
OpenRTB 3.0 is not backward compatible, however. Significant effort from all participating parties in programmatic — buying systems, selling systems and the exchanges — will be required to make this migration. Whether you oversee your company’s marketing or not, it’s important to understand the direction of the technology in order to ensure your ad dollars are spent in the smartest and safest way possible.
Supply-side platforms (SSPs) are critical players in the programmatic ecosystem. They help publishers (website/app owners) sell ad space in a quick and efficient way, using RTB to negotiate the most advantageous rates. One of the main goals of SSPs is to maximize publishers’ yield.
In the programmatic flow, computerized systems need to decide whether to buy (bid on) a certain ad placement, and that will strongly depend on who the potential audience is. I believe the coming year will see SSPs invest in more sophisticated machine learning capabilities to better understand a potential audience and deliver higher-quality results, increasing the success factor for advertisers and justifying a higher price per ad or impression.
SSPs collect a lot of data about the people who visit publishers’ sites or use their mobile apps. Employing more powerful machine learning to analyze this data can provide insights that could prove significant to media buyers, and SSPs that develop such capabilities may have a competitive advantage as they achieve higher yield for their publishers’ ad inventory.
Regulation Will Matter — A Lot
New privacy regulations that took effect this year, such as the EU’s General Data Protection Regulation (GDPR), and those in the works, such as California’s Consumer Privacy Act, will continue to create disruption, as will the first GDPR-related lawsuits. The advertising industry, and specifically programmatic, will need to further adapt.
This year was highly focused on preparing for GDPR and ensuring compliance. However, when applied to digital marketing practices, there was a variety of interpretations to some parts of the regulation, leading players to take significantly different lines of action. Throughout 2019, I believe legal activity around GDPR-related lawsuits will gradually bring clarity to some of this confusion and will require even further adjustment from players in the digital advertising industry, specifically in the programmatic sector where automation prevails.
In 2019, much of the activity around privacy will become more streamlined, continuing to shed light on loopholes and potential problems for both brand and consumer alike. If you think your brand won’t be affected by regulation, carefully reconsider, as you can easily bear the brunt of stiff penalties if you are not fully compliant around the world.
Consolidation Will Mean Changes For Everyone
The last two years have seen significant consolidation in the ad tech industry, with notable M&As including AT&T’s acquisition of AppNexus, Amobee’s(SingTel) acquisition of Turn and Inmobi’s acquisition of AerServ. This trend has been driven by a challenging market, including new regulations and standards, ad fraud and the increasing demand for a simplified and more transparent supply chain for the digital advertising industry.
Well into 2019, I predict these forces will drive similar trends, with many smaller players in the ecosystem disappearing and larger players potentially facing punishment by the market for stagnation or shady practices. Whom you choose to partner with will matter as the industry weathers this volatile season.
The world of digital ad buying is highly complex, and as the ecosystem grows, technology improves and regulation takes a heavier hand, it will only get harder to navigate. It’s imperative that you understand the trends shaping this industry and how they can impact your business. There is great opportunity to engage consumers digitally, and leveraging changes in programmatic is one of the smartest, safest and most cost-effective ways to reach them.
CTO & Co-Founder of mobile growth marketing platform YouAppi, bringing nearly 20 years of R&D experience to make mobile engaging.