That programmatic advertising is now a booming industry is no longer in dispute. Forrester and eMarketer both predict massive gains for programmatic in the years ahead. BI Intelligence, for its part, anticipates that digital media buying through real-time bidding platforms will rise to over $18.2 billion in 2018.
The question is no longer whether programmatic will become a dominant force in digital marketing but rather what’s driving the industry forward so rapidly. Has programmatic overcome the hurdles that held it back in the past? Do most marketers now understand how programmatic works?
To get to the bottom of these and other questions about programmatic, Chango and Brand Innovators recently conducted a survey of marketers at Fortune 500 companies. While the results of the survey, the Programmatic Advertising Pulse, confirmed that programmatic’s popularity is surging, they also held some surprises with respect to the challenges marketers perceive.
To better understand these challenges and why some marketers haven’t yet fully adopted programmatic advertising, the survey asked respondents to rank the relative importance of issues that are currently inhibiting them. Among these issues “measurement of results” clearly stood out as the most important (67% ranked it very/extremely important) followed by data integration (57% ranked it very/extremely important). Slightly more than half of respondents indicated that site quality/brand safety issues can inhibit the adoption of programmatic and half of respondents cited a lack of sufficient resources. Other areas of concern mentioned were transparency, fraud, availability of quality inventory, cost, and ROI.
Depending on one’s perspective, these numbers might be seen as either good for bad news for the industry. On the one had, the Programmatic Advertising Pulse clearly found that marketers at Fortune 500 companies still face real obstacles that prevent them from fully adopting programmatic advertising. On the other hand, these obstacles indicate that programmatic still has enormous room for growth. In the past year the industry has gone a long way toward addressing the problem of bad actors and brand safety. And new and better measurements, such as view-through attribution, are now replacing outdated metrics, such as click-through, that give a distorted picture of a campaign’s effectiveness.
Just how much room is there for growth? Despite the seeming ubiquity of programmatic today, the survey found that some 30 percent of marketers have yet to run a programmatic campaign and that a third of marketers who are currently running programmatic campaigns only began to do so in the last year. In light of these numbers, it’s perhaps not surprising that one in four of the marketers currently using programmatic still feel they need more education.
Another surprising find from the survey: The world’s leading marketers are taking very different approaches to managing their campaigns. In response to the survey’s question on how they execute their campaigns, a full third revealed that they have now taken their programmatic initiatives in-house. Meanwhile, 28% indicated they were now dividing their programmatic campaigns between in-house and agency solutions. (Interestingly, among the marketers who divide programmatic between agencies and in-house resources, the most important tactics, such as Google search (63%), Facebook Audiences (60%), and display media (49%) remain in-house.)
If the survey made it clear that the in-house trend is real and growing, it didn’t necessarily offer all bad news for agencies. Nearly half of Fortune 500 marketers said they intend to move more programmatic initiatives in-house in the future but the other half plan to do even more outsourcing — a fact that can perhaps be explained by the struggle even among some enterprise marketers to maintain sufficient resources for in-house managment.
Related to the resource question has been the question of staffing. As of yet, the turn to programmatic has had little impact on staffing but there’s good reason to think this will change in the near future. Almost a third of respondents are now evaluating resources to better support their efforts while 7% have reallocated internal resources to support their programmatic campaigns. Slightly more than a third of respondents anticipate internal organization and staffing changes due to programmatic in 2014-15.
The big picture? Programmatic appears poised to cross the threshold from emerging trend to dominant player. But the industry is still facing some very real growing pains. Once obstacles such as brand safety and unreliable measurements are entirely eradicated, it’s likely that the industry’s resource problems will also disappear as more CMOs move their spends towards programmatic.
In short, the Programmatic Advertising Pulse provides a striking portrait of an industry on the rise. While it’s never safe to make predictions in the fast-changing world of digital marketing, the survey gives programmatic marketers very good reason for optimism.