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IAB - How programmatic advertising is changing the rules

November 11, 2014

This article was first published on –  IAB

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Jon Hewson, Sales Director at VisualDNA takes a look at the ways in which programmatic approaches are evolving the media industry.

Programmatic advertising is changing the media landscape. In a market already worth over $15 billion, online display ads are now routinely bought and sold through automated exchanges. And what started as an efficient way to sell off remnant digital inventory is rapidly spreading to video and other premium inventory. In 2014, 25% of digital video inventory will be traded programmatically, rising to 70% within the next three years.

The predicted tripling of spend on programmatic advertising by 2017 will see it account for more than half of all digital advertising transactions – reinforcing the message that it is fast spreading beyond remnant inventory. For example, a recent Winterberry Group survey found that 91 percent of respondents expect to pursue a programmatic approach to audience segmentation by 2015.

Programmatic approaches are starting to evolve from real-time bidding for online impressions to encompass the broader sweep of managing and optimising customer engagement across channels and devices. This will be a highly disruptive change, but programmatic should not be seen as a threat. Rather, argues Jon Hewson, Sales Director, VisualDNA, it is an opportunity to target ever more precise audience segments and achieve better results.

Demographic data is only the beginning

As programmatic approaches increase the
ability to reach niche audience segments efficiently, the whole industry is looking to target ads in a more precise way. There is a growing recognition among both agencies and brands that demographic data is just the first step on the journey to finding and reaching the right audience.

The desire to target individuals is driving investment in richer, higher-quality data that supplements basic demographic data to provide actionable insight into personality. By adding data on behavioural, emotive and other factors that help predict buying motivation, agencies and brands can enrich and bring to life their demographic segments.

One to one advertising

We are all watching more video content than ever before, and the fragmentation of traditional TV into multiscreen, multichannel online viewing allows us to choose exactly what we watch. Although this could seem like a threat to the traditional model it is, in fact, an opportunity to put the most relevant advert in front of each person at the most opportune time.

Adding psychographic to demographic creates a new opportunity to better align typologies and segments with planning and buying activities. By helping to bridge the gap between what the brand wants and what the agency delivers, data can improve advertising response rates and increase the agency’s perceived value-add.

Follow that consumer…

The growth in digital reach across multiple channels and devices is changing how brands and agencies plan and execute advertising campaigns. There are now numerous ways to reach and engage audiences beyond traditional display advertising, which is driving a move towards more granular segmentation using third-party data. In the background, the trend for greater audience fragmentation – across both channels and devices – implies the need to be able to identify and follow connected consumers.

In this context, cookies are getting an increasingly bad reputation, particularly because they work poorly on the mobile devices that more and more people are using to access online content.

But in combination with the use of richer third-party data to create detailed audience profiles, cookies can help to guarantee that advertisers are reaching a human audience, helping agencies and brands alike to ensure genuine ROI.

As consumer expectations for personalised, one-to-one marketing grow, brands know that they need to improve their ability to understand and target online audiences. Failure to engage audiences in the most appropriate way may even result in brand damage rather than just consumer indifference. Big data – including data on emotive and personality factors – will be the key to building richer and more precise audience segments. And to achieve targeting and personalisation at the speed and scale demanded in the online world, programmatic approaches will become increasingly important.

With a better understanding of who customers are and why they choose to buy, agencies and brands can define much smaller and more precise segments, create messages that will resonate best with each segment, and build campaigns that will deliver improved results. Combined with the speed and precision of programmatic buying, better insight from new data sources will bring the industry closer to the holy grail of real-time, one-to-one digital marketing at scale.