Programmatic advertising platforms have been around for a while and have been popular mostly among bigger advertising brands because of their ability to augment display, native, and video efforts on multiple channels while managed in the same interface. Put it all together and programmatic can provide robust audience targeting capabilities at affordable cost-per-thousand-ad-impressions (CPMs).
Smaller advertisers have largely stayed in the comfort of Google’s Display Network and paid social waters for their higher funnel efforts and remarketing.
As we outlined in our Biggest Digital Marketing Phenomena article, one of the conflating impacts of (1.) the increase in privacy, (2.) marketers’ diminished insights and levers alongside (3.) legislative pressure over Google, Meta et al. is the reemergence of programmatic advertising. This leads to the need not only for bigger brands but also smaller ones to at least place programmatic on their testing plans in 2023.
In fact, despite a looming recession, recent research predicts programmatic advertising to increase by 15.2% year-over-year to $142B.
What Factors Have Affected Programmatic Advertising Growth?
First let’s discuss why we at (un)Common Logic think programmatic will take a bigger front and center role in digital advertising:
Sunsetting of Third-Party Cookies and More First-Party Data Solutions
Traditionally, programmatic platforms relied heavily on third-party cookies, so when third-party cookies deprecation was announced, the digital marketing community knew that programmatic platforms would have to adapt quickly or be highly impacted and perish on the vine. It is apparent they have responded well and are now better positioned than even their largest competitors, i.e. Google and Meta.
At first programmatic fell back towards familiar territory:
- Using contextual targeting. In other words, instead of targeting specific users, targeting relevant quality content throughout the digital world
- Pushing marketers towards larger use of first-party data to generate high quality audiences
However, contextual and first-party data only scratched the surface, so developing more robust solutions took place, namely:
- Utilizing secure “clean rooms” where audience data is fed from different sources of traffic, anonymized, and then bundled into a similar group for targeting
- Programmatic is zagging. They offer more transparency and control for marketers and because of the ability to manage different channels within one platform, reporting is more accurate. Google and Meta are so concerned with their data that they have been pressing for an increase in walled gardens alongside black-box solutions which in turn results in inflated conversion reporting and shrinking profit margins in the long run
Ability to Reach Audiences on a Large Scale on Connected TV (CTV), Audio, and In-Game Advertising
Taking contextual to another level, all 3 of the above traffic sources have seen huge increases during the pandemic, a trend that did not falter. Cord cutters, game streamers, and audio each provide unique opportunities to reach mass audiences while targeting users based on preference of media usage.
Advancement of Digital Out-of-Home (DOOH) Ads
While billboards used to cost brands a small fortune, the ability to reach audiences outside their homes on digital screens in the right place at the right time (e.g. gas stations, grocery stores) gives advertisers a unique capability of testing and measuring the impact of out of home at scale without the need to buy individual static placements.
What is the Future of Programmatic Advertising?
Programmatic still isn’t a solution that would automatically work for every business right away and should likely be managed through an agency.
By its nature programmatic is more of an upper funnel activity with scale that must be tested appropriately through match markets at minimum recommended testing budgets of $5K/month.
Currently, programmatic platforms do not have access to enter any auctions on Google (Search, YouTube) or social media properties (e.g. Facebook, Instagram, TikTok). This presents a problem because most advertisers start their annual budget on those channels leaving relative scraps for programmatic.
The future may look different, however. Regulators around the world, including the US, have already identified the issue of allowing Google, Meta et al. to own both sides of the demand side platform (DSP) and supply side platform (SSP) without letting anyone else compete. This practice has resulted in increasingly higher prices for marketers.
At (un)Common Logic we are speculating that at some point these monopolies will be forced to let competition into the market which of course includes programmatic. This in turn should result in innovation and better pricing.
This process has already secretly started at a very small scale. In September 2022, Microsoft announced that some advertisers will have the ability to use the Microsoft Ads platform to create ads and bid in Google and Facebook.
It is important to note, Microsoft Ads is not considered a programmatic platform, but this step alongside their new ability to run ads on Netflix may tip the hat into Microsoft’s ultimate desire to become one.
Who is (un)Common Logic’s Preferred Programmatic Platform?
Throughout our vetting process, we have found that many of the programmatic platforms offer very similar capabilities for targeting, bidding, and access to channels/networks as well as comparable CPMs. It will hard for marketers to go wrong with any programmatic platform.
TradeDesk has been for a very long time the leading preferred vendor for most. While we have worked and enjoy working with TradeDesk with our clients, our agency has chosen StackAdapt as our preferred platform.
We found StackAdapt’s service to be superb when consulting on campaigns, strategy, and assistance with pitches. Additionally, since StackAdapt does not have any minimum spend requirement, it is a great place to test programmatic without being confined to budgets.
In conclusion, our agency believes that despite and possibly due to third-party cookie deprecation and its consequences, programmatic platforms are well positioned to succeed and grow further in the years to come. While substantive testing is needed to understand the impact and incrementality of each marketing effort, every business will do well to start testing programmatic as soon as possible.
Contact us to talk with our experts about how your business can test programmatic advertising and other digital marketing strategies for 2023.
Want to learn more about how to prepare for the cookieless world? Read about Google’s enhanced conversions and how to upgrade to GA4 (if you haven’t already).