Analysis: Programmatic spend said to be 'bright spot' for struggling ad markets

The COVID-19 pandemic has without a doubt changed industries, impacting travel and tourism while boosting eCommerce and digital, for example. Likewise, the programmatic industry has also witnessed changes during this period. According to statistics from SaaS firm MediaRadar, which works with clients including Bloomberg, A+E Networks, Flipboard and Cosmopolitan, programmatic advertising dipped 8% between March and April this year, with the drop largely attributed to industries such as travel (-79%), automotive (-40%), and events (-34%).

At the same time, other industries that witnessed the largest month-on-month increase when it came to programmatic spend are those in technology, education and training, toiletries and cosmetics. MediaRadar's statistics showed that programmatic spending for these categories increased by more than 35%. In particular, companies that have increased their programmatic spending include Slack, Electronic Arts, Facebook, while companies that have decreased their spend the most include Coca-Cola, Harley Davidson, Royal Caribbean and LVMH, the SaaS firm added.

Besides technology and education, Laura Quigley, managing director, Southeast Asia at Integral Ad Science (IAS) told Marketing that other verticals that have seen an increase in programmatic spending are pharmaceuticals, CPG, eCommerce and delivery services. While programmatic spending volumes for finance and telco trended the same as 2019, spending for automobiles, tourism, hospitality and retail in Asia Pacific have dipped.

Quigley explained that IAS has seen a mixture of approaches towards programmatic spending depending on the type of clients and how digitally-savvy they are - or how locked into contracts they are for the long term. 

"Some clients have accelerated programmatic spend. These are those clients that are unable to make long term commitments with direct publishers due to uncertainty, so they have invested in programmatic given the ability to pull spend or flexibility to increase or decrease and pull budget as they please," she added. Conversely, many clients have also pulled the plug on programmatic completely, pushing spend into the existing commitments on digital and traditional such as year-long TV contracts. That said, Quigley said that programmatic gives marketers more control of the budgets, and ensures it is driving efficiencies and outcomes.

It can be optimised on the fly across multiple publishers as more than ever, ROI is the name of the game.

"We have seen verification investments increase in programmatic as brands look to tap on quality inventory to drive highest possible ROI," she added.

Meanwhile, Deepika Nikhilender, senior vice president, Asia Pacific at Xaxis, said programmatic spend on many categories are going up as brands want to leverage the increased digital consumption of the audience. Verticals she noted that have increased programmatic spending during this period include food products, eCommerce brands, music, gaming, toiletries and home care, among others. On the other hand, Nikhilender said verticals that have witnessed a dip besides travel include hospitality, tourism, retail, jewellery, luxury brands, as well as certain CPG brands that are reducing marketing spends due to cause-related focus.

In addition to the changes in spending, Nikhilender explained that the programmatic space is now more skewed towards performance-related campaign objectives. Also, the cost-effectiveness of programmatic and its data-driven capability are also taken centre stage in marketers' conversations, she added.

Also weighing in on the issue was Rose Huskey, Wavemaker's CEO, Southeast Asia, who said although Asia Pacific is seeing growth in web consumption, specifically mobile, premium video, streaming, and gaming apps, global ad spend has been heavily impacted. Programmatic buyers are adjusting or pausing planned ad spend across a variety of verticals.

"Besides travel, other verticals have also seen a demise in programmatic ad spend, these include law government and politics, sports and science, as consumers begin to prioritise savings and shift their spending habits elsewhere, such as focusing on wellness and reduce travel and discretionary spending," Huskey said.

However, with so much economic uncertainty, she explained that consumers are intending to reduce spending across most verticals. In China, for example, less media spend is dedicated to programmatic buying, as clients have less revenue and media spends, which aligns with users spending priorities, specifically across verticals such as luxury, travel, restaurants and gambling.

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How will programmatic spend change once lockdown measures ease? 

Hemant Menon, associate director, programmatic at Dentsu Aegis Network (DAN) Singapore said that digitally-transformed businesses will demand an integrated advertising ecosystem and hence, there will be a surge in investments being funneled into programmatic buying.

Along with this surge, due to the economic implications of COVID-19, brands will start closely monitoring each marketing dollar and this will lead to a demand in transparency in the programmatic supply chain.

Meanwhile, history has shown that programmatic advertising is "in a strong position" to withstand downturns, IAS' Quigley added. According to her, the tendency of marketers to place more focus on business performance and ROI during difficult times, coupled with programmatic's efficient audience-targeting capabilities is an advantage. She added that advertisers will inevitably look to deploy data and insights via programmatic channels, including private marketplaces and programmatic direct deals.

Programmatic remains a bright spot for struggling ad markets at this time, which stand to benefit from the streamlined, non-human processes inherent to automated ad buying.

Like DAN's Menon, Quigley also said that the pandemic has also accelerated the digital transformation with some of the traditional brands, as they are compelled to make a giant shift to bolster their eCommerce offering in order to survive. This means that programmatically, the industry is likely to see a lot more dynamic re-targeting given eCommerce starts to be a bigger part of their business strategy.

Meanwhile, from a consumers' perspective, marketers will see a more digitally-engaged audience given that traditionally, the digital audience has traditionally been young and there was a lack of data for those in the 50-year-old demographic. "We believe this age demographic has been forced to try and become more digitally-savvy, which will increase reachability online and ultimately their targetability programmatically," she added. Quigley also foresees more investment in programmatic, especially since the current pandemic allows time and resources for individuals to upskill in this area. 

When it comes to eCommerce, Wavemaker's Huskey said that would also be an area that is expected to grow exponentially even after COVID-19, with growth also extending to emerging platforms for the distribution of products and services. Additionally, given the anxiety and fear around any form of social interaction, live-streaming content will see a surge in availability as more people have time on their hands to produce and consume it. According to her, this may set a precedent for the marketing sector to relook at the model of paid entertainment, with the implications for monetisation pointing to IP-related merchandise and more ads.

"As online consumption endures, online user acquisition will take precedence in the first half of 2020, and digital marketers will have their mettle tested as they try to break through the funnel and produce practical results, or risk disappearing in the expected saturation of ads," she said.

Huskey also said that new digital services introduced to cope with the crisis may have longevity. One such service, for example, is WeChat's "Health" segment which was added to its wallet sub-menu that includes the ability to track real-time epidemic data of every province in China.

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The nagging issue of brand safety

IAS previously said there was a 10 times increase in "coronavirus" blocking in Asia Pacific during the first two months of the year. In February, "coronavirus" became the top most blocked keyword in the region and had four times higher blocked impressions than the blocked keywords such as "killed" or "death". Not surprisingly, brands have also become more concerned about brand safety during a sensitive period such as this. "Advertisers tend to not want to sponsor negative news or news as a whole. Many more new words have crept into the block list for keyword blocking in brand safety approaches," Xaxis' Nikhilender added.

Like Nikhilender, DAN's Menon also said that while news publishers have seen a surge in traffic, they have also witnessed a decrease in demand due to perceived brand safety issues. This has resulted in perceived brand safety issues which has led to a dip in CPMs and loss in revenues. "Some publishers have requested buyers to alter their content blocking methodologies since they claim that not all COVID-19-related content is non-brand safe," he explained.

Nonetheless, he also noted an increase in programmatic spend across majority of its clients. This comes as plenty of brands have undertaken digital transformation initiatives to their consumer journeys by pivoting to the online space. Following these initiatives, Menon said there have been many brands enquiring about more connected and efficient ways of programmatic buying. According to Menon, the growth in programmatic buying during this period is driven by the demand for connected TV and mobile advertising

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