In this article, we’re going to cover a few key topics:
- A brief overview of programmatic campaigns and how they work.
- A brief look at the relevant “jargon.”
- Our top three programmatic advertising trends that you must know.
What Is Programmatic Advertising?
Here’s our short and sweet summary:
Programmatic advertising means using intelligent software to buy advertising space on various channels and platforms automatically. There are no negotiations, RFPs, or manual insertion orders required. Essentially, intelligent software does all the work.
Does that sound familiar? It’s also known as programmatic buying and real-time bidding, a term you’ve likely heard before. This type of advertising uses a vendor-neutral RTB ecosystem that can reach 98% of the internet.
Here’s how a programmatic campaign works:
- You first buy ad space through an Ad Exchange.
- Enter your budget and bids.
- If you’re the highest bidder, your ad is displayed.
While it sounds simple enough, programmatic is one of the most dynamic types of advertising. The technology and its capabilities are continuously evolving, and learning how to keep up is a full-time job.
Is it worth the effort? Absolutely. In our experience here at Softonic, programmatic advertising is highly targeted, multichannel, adaptable, and has an excellent ROI.
It’s also highly effective, as The Economist showed with its stunningly robust programmatic campaign in 2015. Within nine days, the site achieved 50% of its target and a 10:1 ROI. Even though the technology and its capabilities have evolved significantly since then, it’s an excellent example of what this type of advertising can accomplish.
Key Terms to Know
We know that marketing and advertising jargon can be overwhelming. That’s why we’ve listed some of the standard terms you might come across while reading about or researching programmatic buying.
- Real-time bidding (RTB): The buying and selling of ad space in real-time auctions.
- Ad Exchange: Digital marketplaces like Google and Rubicon, where publishers and advertisers can buy and sell ads.
- Cookies: A data packet that stores info about your online activity. With new data privacy regulations and P3PC, it’s possible cookies may lose some of their usefulness.
- Demand-side provider (DSP): Platforms that advertisers use to bid on and buy ads automatically.
- Supply-side provider (SSP): Platforms that publishers use to sell ad space automatically. The SSP “sits” between the DSP and the publisher.
- Multichannel advertising: Programmatic buying lets you run ads across several devices and exchanges, and the process is referred to as multichannel advertising.
- Programmatic direct: A type of programmatic advertising that’s also known as “automated guaranteed.” It allows you to buy ad space without bidding.
- Over-the-top (OOT): A fast-growing channel for programmatic advertising, OOT refers to video and TV content that’s available on mobile or online without the need for a subscription to a cable or satellite service. These include HBO Max, Apple TV+, Disney+, and others.
Now that we’ve gotten the technical terms out of the way, we can begin to look at programmatic advertising trends that will play a significant role in 2021.
Top 3 Trends You Need to Know About in 2021
Advertising technology is continuously evolving, and we’ve learned that adaptability and early adoption is critical. That’s why we stay on top of the latest programmatic advertising trends.
Here are the top four you need to know about in 2021:
Adopting Emerging Formats
Several emerging formats are readily available to but notably underutilized by advertisers:
- Connected TV (CTV)
- Over-the-top (OTT)
These programmatic advertising formats are expected to achieve significant growth in 2021. According to IAB, 60% of agencies and advertisers invest less than 20% of their budget on Connected TV and related formats.1 However, 35% are already planning on adjusting their marketing tactics and increasing their spend budgets by 35% or more.2
One of the reasons why CTV and OTT ads are rising in popularity is a high completion rate. Ads in these formats are played through to the end around 98% of the time3. According to one study by Fierce Video, advertising spend on these platforms could surpass $10 billion.4
Podcasts are another rapidly growing medium available to advertisers. Although some channels have almost 30 million unique monthly listeners, barely 4% of podcast ad spend was programmatic.5
Asset Optimization Is Critical
We believe that consumers don’t hate all ads, but rather poorly made and unoptimized advertisements. In fact, statistics show that 83% would prefer to filter only those that are intrusive, irrelevant, and ruin their experience.
Ad blockers are rising in popularity, but so are acceptable ads. Browsers, including Chrome, are now blocking “heavy ads” while allowing high-quality ones to appear. Consequently, the production of quality assets should be a top priority for programmatic advertisers.
If an ad meets any of the following criteria, it’ll be classified as a heavy ad:
- Using more than 4MB of data.
- Fifteen seconds or more CPU usage for 30 seconds.
- Sixty seconds of overall CPU usage.
If you want to keep your programmatic advertising campaigns running smoothly, you’ll need to prioritize asset optimization.
Phasing Out Third-Party Cookies (p3pc)
The advertising industry has depended on third-party cookies for many years. These data packets are stored on our devices and track our online behavior and activity. They form the basis of any personalized experience, from customer service to marketing and sales strategies.
Enter Google and the announcement that they’re planning to phase out third-party cookies by 2022. It’s a move that’ll significantly change the industry since advertising space is built on a foundation of data gathered by these packets.
That doesn’t mean that programmatic buying is a doomed industry. It merely means that you’ll need to prepare for a post-third-party cookie (P3PC) environment. It also signals another shift towards consumer control, brand transparency, and responsible advertising practices.
A Few Other Interesting Trends
Although they didn’t make our cut for the top three, there are a few other programmatic advertising trends you may want to keep in mind as you plan your strategy for 2021:
- Enhanced user experience through personalization with real-time AI analytics.
- The ability to run interactive ads at high speeds over 5G networks.
- Blockchain security measures preventing ad fraud.
- Obeying regulatory and data privacy laws surrounding user information and targeting.
There are many programmatic advertising trend predictions for 2021, but it’s always tricky to pinpoint which ones will significantly impact the market. However, these four trends have already begun to change the industry and will likely continue to do so.
It’s critical to adapt to evolving technology and practices, and early adoption is the key to running a successful programmatic campaign.