65 percent of digital media will be programmatic in 2019

65 percent of all digital media ad spend in 2019 will be programmatic, according to Zenith's Programmatic Marketing Forecasts released Monday. Advertisers will spend $84 billion programmatically next year, up from $70 billion this year, representing 62 percent of digital media spending. Zenith projects that advertisers will spend $98 billion on programmatic advertising in 2020, representing 68 percent of their digital media advertising spend. Digital media refers to all forms of paid advertising in online content, including online video and social media, but excluding paid search and classifieds.

The range of available advertising formats in programmatic buying is increasing as more and more mobile, video and audio formats are distributed online. However, advertisers and agencies need to do more to encourage publishers to improve the quality of their inventory. The minimum requirements are safety and viewability.

Growth slows down

Programmatic advertising has already become the most important method of digital shopping. Now growth is slowing down. Zenith expects programmatic advertising to grow by 24 percent in 2018, compared to 32 percent growth in 2017, and forecasts 19 percent growth in 2019, followed by 17 percent growth in 2020.

The largest programmatic market is the US, where Zenith expects USD 40.6 billion to be spent programmatically in 2018 - 58% of total spend. China is in second place with 7.9 billion US dollars for programmatic advertising this year, followed by the UK with 5.6 billion US dollars for programmatic advertising.

The USA is also the market that has embraced programmatic advertising the most. This year, 83% of all digital media there was already traded programmatically. Canada is in second place with 82 percent programmatic share of digital advertising, followed by the United Kingdom with 76 percent and Denmark with 75 percent. By 2020, programmatic advertising will account for more than 80 percent of digital media in all four markets. Canada will have almost completed the transition to pure programmatic trading, with 99 percent of digital advertising activities being handled programmatically.

Programmatic will become the standard

Zenith expects all markets to follow Canada and eventually use programmatic trading for all digital media transactions. Furthermore, it is only a matter of time before programmatic trading becomes the standard purchasing method for all media. However, the transition is taking a little longer than Zenith expected. The introduction of data protection regulations such as the EU's GDPR has had a certain braking effect. Data that was previously used in programmatic transactions was no longer available and the processing of other data has become more expensive. But Zenith still believes that the main reason for the slowdown in programmatic growth is that advertisers are investing more in infrastructure and data to make their programmatic activity more effective.

Restructuring is expensive

In order to make programmatic campaigns as effective as possible, advertising clients must reorganize themselves internally to build up the necessary know-how. Agencies can only achieve maximum effectiveness with their programmatic strategy in a good partnership with their clients. Furthermore, a programmatic strategy can only ever be as effective as the data with which it is implemented.

"Programmatic trading is improving efficiency and effectiveness and is gaining a dominant share of digital media buying," comments Benoit Cacheux, Zenith's Global Head of Digital and Innovation. "However, the restructuring required is extensive and expensive. Advertisers investing in infrastructure and data are scrutinizing their investments and the quality of media more carefully. All programmatic advertisers need a strategy to get the best and most comprehensive data available and treat this data as a key business asset."

Data from third-party providers brings no advantages

The most valuable data is first-party data, which is either explicitly provided by consumers or obtained by tracking their activities on your own websites. It is also becoming increasingly common to use third-party data by forming data-sharing partnerships, for example between advertisers and online retailers. Third-party data is widely used but does not give advertisers a competitive advantage as all competitors can use it to target the same segments. Advertisers should continually review third-party data to ensure that it is truly generating additional reach. By combining all this data with their own CRM systems, advertisers can understand consumer behavior. The more advanced ones use machine learning to even predict it. Data and new technologies are enabling brands to move beyond cookie tracking and communicate with individuals.

"Technology is making programmatic advertising more effective for brands," said Jonathan Barnard, Zenith's Head of Forecasting and Director of Global Intelligence. "Artificial intelligence can help develop a new understanding of consumers as people and improve the optimization of the buying process."