Ad dollars: How much are marketers putting aside for programmatic in 2019?

In 2019, 65% of the money spent on advertising in digital media will be traded programmatically, according to Zenith’s Programmatic Marketing Forecasts report. Advertisers will spend US$84 billion programmatically next year, up from US$70 billion this year, which represents 62% of digital media expenditure.The report predicts that by 2020, advertisers will spend US$98 billion on programmatic advertising, representing 68% of their expenditure on digital media advertising. Digital media will include all forms of paid-for advertising within online content, such as online video and social media, excluding paid search and classified advertising. Although the breadth of ad formats available through programmatic trading is said to be improving, with more mobile, video and audio formats coming online, the report states:Brands and agencies need to do more to push publishers to improve the quality of their inventory. This has to be at minimum, safe and viewable.The report forecasts that growth in programmatic advertising is slowing as it "cements" its position as the "most important method of digital trading". It further added that programmatic ad spend will grow 24% in 2018, down from 32% growth in 2017, and forecast 19% growth in 2019, followed by 17% growth in 2020.In the US, it expects US$40.6bn to be spent programmatically in 2018 – 58% of the total, while China is in a distant second place, spending US$7.9bn on programmatic advertising this year, followed by the UK, with US$5.6bn of programmatic adspend.US also holds the spot as the market that has most embraced programmatic advertising, trading 83% of all digital media programmatically this year. Meanwhile, Canada is in second place, trading 82% of digital media programmatically, followed by the UK, with 76%, and Denmark, with 75%. By 2020, programmatic advertising will account for more than 80% of digital media in all four markets. Canada will have almost completed the transition to pure programmatic trading, spending 99% of digital media programmatically that year, the report added. The forecasts expects all markets to follow Canada and use programmatic trading for all digital media transactions.Last year, Zenith had forecast that 64% of digital media would be programmatic in 2018, and 67% would be programmatic in 2019, but the current forecasts have been pulled back by 2%. According to Zenith, the reason for the slowdown in spending on programmatic media is that advertisers are investing more in infrastructure and date to make their programmatic activity more effective. In addition, the introduction of privacy legislation such as the Europe’s GDPR has had some "chilling effect" by making certain data previously used in programmatic transactions unavailable, and making other data more costly to process.To make the most of their programmatic campaigns, advertisers have to reorganise internally to give programmatic trading the high-level support and understanding it needs. Agencies can only extract maximum effectiveness from their programmatic strategy in a proper partnership with their clients. However, a programmatic strategy can only ever be as effective as the data used to execute it.“Programmatic trading improves efficiency and effectiveness, and is gaining a dominant share of digital media transactions,” said Benoit Cacheux, Zenith’s global head of digital and innovation. He added that the scale of operational restructuring to make the most of it is both extensive and expensive, and advertisers are spending more carefully while they invest in infrastructure and data and review the quality of media.Cacheux explained that all programmatic advertisers need a strategy for acquiring the best and most comprehensive data available, and to treat this data as a vital corporate asset.The right data setsThe most valuable data is first-party data, either explicitly provided by consumers or gained by tracking their activity on owned websites. It is also becoming more common to use second-party data, by forming data sharing partnerships, between brands and online retailers. Third-party data is widely available but does not give advertisers a competitive advantages, since all advertising can use it to target the same segments.Advertisers should continually vet and interrogate third-party data to ensure they are truly adding incremental reach. By combining all this data with their own CRM systems, advertisers can model consumer behaviour, and the more advanced are using machine learning to predict it. Data and new technology is enabling brands to move from tracking cookies to communicating with individuals.“Technology is making programmatic advertising work harder for brands,” Jonathan Barnard, Zenith’s head of forecasting and director of global intelligence said, adding that AI promises to unlock new understanding of customers as people, as well as improving the optimisation of the trading process.Read also: Planning for the future: Should you consider bringing programmatic in-house? Transparency still problematic in programmatic, states R3 report Does programmatic deserve a bad reputation?