How will programmatic advertising be transformed in the next few years? We can’t make long-term projections, especially when it comes to the tech industry. As digital marketing has always been one of the most unpredictable spheres, its current state of global transformation, tech layoffs, and inflation surges has certainly been an unexpected surprise for marketers. The global programmatic advertising market was valued at $173.13 billion in 2022. Where will it go next year?
Companies are changing marketing strategies by cutting costs or, on the other hand, increasing resources for some platforms and channels. At the same time, we are witnessing an exponential increase in screen time and users' reliance on web solutions and apps. That’s why the ability of marketers to be flexible and react to any changes is critical today.
So again, do you have any idea how programmatic advertising will be transformed in the future? It will undoubtedly be a game-changer in 2023.
Spoiler: the article will keep you here long enough to know everything about programmatic advertising.
To start with programmatic advertising, let’s briefly introduce what it is and how it can be leveraged amid our wobbly economy.
Programmatic advertising is a form of digital advertising that uses automated processes to purchase and display online advertising. It involves the use of software to purchase digital advertising space and target specific audiences with advertisements. Let’s take a pause here.
Often, programmatic advertising is confused with programmatic buying, especially in non-professional communities. Those are two inseparable but different things.
Programmatic buying uses software and algorithms to automate purchasing digital advertising inventory from publishers through real-time bidding (RTB) on an ad exchange. It allows for efficient and automated purchasing of ad inventory, enabling advertisers to reach specific audiences at scale.
Programmatic advertising, on the other hand, is a broader concept that encompasses the use of technology to automate and optimize the entire advertising process, including media planning, targeting, creativity, and measurement. It allows for more efficient and effective advertising by using data-driven insights to inform decision-making and targeting the right audience at the right time with the right message.
In short, programmatic buying is a specific aspect of programmatic advertising that involves using technology to automate ad inventory purchasing. In contrast, programmatic advertising encompasses a wider range of activities, including planning, targeting, and optimization, driven by data and automation. Today we will focus on programmatic advertising.
Unlike traditional purchasing advertising methods, which involve manually negotiating deals with publishers and placing ads on specific websites or platforms, programmatic advertising facilitates all the processes, generating faster results that would have been impossible manually.
Programmatic advertising allows advertisers to target specific audiences using data such as demographics, interests, and browsing behavior. It also allows real-time bidding on advertising inventory, which means that advertisers can compete with each other to display their ads to specific users.
Programmatic advertising can effectively reach targeted audiences and help advertisers optimize their ad spend by only showing ads to users who are likely to be interested in them. However, it can also be complex and may require specialized knowledge and expertise to set up and manage effectively.
Programmatic advertising channels
6 programmatic advertising channels will perform at their best in 2023.
Display ads are a form of online advertising that typically uses banners along with other types of media to promote a product or service on a broad network of publishers. While "display" is a broader term, typically, display advertising is referred to when ads are placed on websites or mobile apps and sold on a cost-per-impression (CPM) or cost-per-click (CPC) basis.
Video ads use video content to promote a product or service. They can be displayed on various platforms, such as YouTube, social media sites, video streaming sites, etc. For the past few years, connected TV (CTV) has become the most promising programmatic advertising platform for streaming video content.
Social ads are placed on social media platforms such as Facebook, Instagram, Twitter, and LinkedIn. They can be used to promote different content, including text, images, videos, stories, and carousel ads.
Audio ads are a type of online advertising that uses audio content to promote a product or service. They can be displayed on streaming music services, podcasts, and radio stations. For a couple of years, programmatic audio has been on the rise due to the growing number and popularity of podcasts. As of 2022, more than two million podcasts were available, and that number is likely to rise.
Native ads are designed to blend in with the surrounding content on a website or mobile app. They are often created to match the look and feel of the content they appear alongside and can take on various forms, including sponsored content, in-feed ads, in-ad with native element units, or recommended content widgets.
Digital out-of-home (DOOH) advertising displays digital content on digital displays in public spaces such as billboards, transit shelters, and other out-of-home (OOH) locations. DOOH advertising allows for the real-time targeting of specific audiences and locations and changes in content.
Stay tuned with the latest digital marketing trends to grab the wave of coming changes.
Programmatic advertising trends 2023
The media landscape is rapidly expanding, bringing more diversification and fragmentation. Against the backdrop of these changes and uncertainty, environmentally-conscious customers are more and more demanding sustainable solutions from brands. Sustainability can mean reducing ad fraud levels in media buys in the ad world.
Adobe, AdReady, AdRoll, Magnite Inc, Baidu Inc, Basis Technologies, Choozle, DoubleClick, Tencent Holdings Ltd, Yahoo, Google, DataXu, AOL, Amazon.com Inc, Outbrain, Media.net, and Microsoft are still the major players in the programmatic advertising market.
While marketers need at least three years of data to plan for next year, in this light, there have been so many changes that anyone can hardly extrapolate on that data as an accurate predictor. One thing you can do is to be as agile as possible and reduce strategies to 3 months instead of 6 or 12.
Quick stats of the 2022 programmatic advertising market
Here are the top 10 trends and predictions that will help you rock with programmatic advertising.
More companies will shift from open ad exchanges to private marketplaces (PMPs) that use first-party data and offer higher transparency and more control over ad placement. In the future, PMPs will scale and include mid-range publishers, premium inventory, and ads. One big advantage of PMP is prime placements, better quality for the advertisers, and the option to choose the inventory to bid on selectively.
After almost two years of the stay-at-home policy, marketing finally started looking for new ways to reach customers on the move. Thus, digital Out-of-Home (DOOH) advertising is going to be one of the main trends of 2023. Programmatic DOOH will allow businesses to target specific locations and demographics and to quickly and easily change the content of their ads in response to changing market conditions.
Voice-activated advertising refers to the use of voice recognition technology to deliver targeted advertising messages to users of voice-activated devices, such as smart speakers and voice assistants. These devices are activated by voice commands and can be programmed to deliver specific ads or sponsored content in response to certain keywords or phrases.
Some potential benefits of voice-activated advertising include
Improved ROI: By targeting specific users and offering a more convenient and engaging experience, voice-activated advertising can help businesses achieve a higher return on investment (ROI) compared to other forms of advertising.
The game industry, which has been steadily growing in recent years, will continue to expand. The revenue in 2022 was $300 billion, exceeding previous years’ predictions. No wonder why programmatic advertising will heavily rely on in-game ads.
As the gaming industry is still young for programmatic advertising, there is a lot of space and opportunity to grab your piece of the pie.
The pandemic changed everything worldwide, and OTT (Over The Top) and CTV (Connected TV) were those industries that gained a new role in our lives. Streaming services like Netflix, Amazon Prime, Hulu, and Disney Plus, boosted the OTT sector and created a new type of programmatic ad placement. OTT ads now have all the chances to have 1/3 of global TV ad revenue.
We have been waiting for third-party cookie cancellation since February 2021, but Google has delayed it from 2022 to 2023. While you can still use third-party cookies for programmatic advertising, it is wise to start leveraging first-party data for your needs. Think over the Privacy Sandbox and tips that efficiently extract data from first-party infrastructure that can be used later for targeting.
What you can do in 2023 is invest in contextual targeting. Contextual targeting refers to the practice of targeting online ads at specific users based on the context of the content they are consuming. This can include targeting ads based on the specific web page or app a user is viewing, as well as the keywords or themes of the content.
Combining first-party data with contextual targeting can allow companies to create more targeted and personalized advertising campaigns for their customers. For example, a company might use first-party data about a customer's past purchases to show ads for related products or services when users view content related to those products or services.
By leveraging data and technology, omnichannel advertising will be more prioritized among advertisers as the means of delivering a cohesive message across all channels, reaching customers in the right place, at the right time, with the right message, while at the same time measuring campaigns and optimizing ad spend for maximum effectiveness.
As consumers continue to use multiple devices and platforms, omnichannel advertising will continue to be in high demand. The integration of multiple advertising channels, such as display, video, mobile, and social media, will deliver a unified and consistent advertising experience to consumers. This approach utilizes data and technology to target customers across various touchpoints and provide personalized, relevant, and engaging advertisements in real-time.
AI has penetrated almost every industry, and programmatic advertising will only benefit from this technology. Machine learning will greatly reduce human labor and increase sales efficiency, letting marketers focus more on strategy development. Automated bid assignment will allow automatic bidding for keywords and ad groups, saving time and optimizing cost per conversion.
We will still have a strong increase in demand for non-standard ad formats in 2023, and audio ads are going to be the most popular format. The growing adoption of digital audio will result in $11.85 billion in global audio spending by 2027, so it is definitely the best time to switch to audio. Think of streaming services like Spotify, Apple Music, and podcast channels as platforms for programmatic advertising.
Here are some ads you may consider incorporating into programmatic advertising:
Bonus trend: The line between DSPs and SSPs will become increasingly blurry, as many SSPs now offer performance and capabilities similar to those of DSPs. This is due in part to the fact that SSPs have become more powerful and capable of handling more complex tasks, and also to the fact that DSPs have become more integrated and flexible, allowing them to be used in a wider range of applications. Also, SSPs have started partnering with media agencies, a relationship that was previously handled by DSPs. 2023 will be the year of platforms’ business diversification through new inventory ecosystems that will bring buyers, sellers, and publishers together on a universal platform that will be more efficient and transparent.
The fifth generation of mobile networks has come to facilitate all the processes from information processing to communication and, for sure, programmatic advertising. Automated programmatic advertising systems rely on fast, stable internet connections to function effectively, and 5G technology can provide faster and more stable connections compared to previous generations of mobile networks. Besides, the technology will bring several improvements;
2022 was a great year for programmatic advertising with private marketplaces, new digital offerings, and automation. Amidst new uncertainties, as an advertiser, you will need to consider more than just sales figures as success metrics. Think of long-term transformations and success when implementing a new strategy. Also, every company's most effective marketing channels vary based on factors such as industry, go-to-market strategy, and maturity stage. The previously mentioned programmatic channels primarily focus on the upper levels of the conversion funnel, so it's crucial to have a robust analytics and multi-touch attribution system in place before jumping into running campaigns at scale to be able to track, analyze, and optimize the results.
2023 will be the year of great surprises. Metaverse, sustainability and carbon-conscious media, CTV and OTT, omnichannel strategies, and cross-device advertising—so many words and so many experiments ahead!
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Programmatic advertising is a type of digital advertising in which automated systems are used to purchase and place advertisements on websites or other digital platforms. It is based on real-time bidding and uses algorithms to determine the most effective and cost-efficient way to target and deliver ads to specific audiences.
Programmatic advertising works by using algorithms to automatically buy and place digital ads on websites or other platforms. Advertisers define their target audience and set their desired ad placement and budget, and the algorithms use this information to determine the most effective and cost-efficient way to deliver the ads to the desired audience. The entire process is automated and happens in real-time.
An example of programmatic advertising would be an advertiser using a programmatic ad platform to target a specific audience, such as users who have previously shown an interest in outsourcing services. The advertiser could set a budget and specify that they want their ads displayed on websites that are related to digital services. The programmatic ad platform would then use algorithms to automatically purchase and place the ads on the most appropriate websites based on ad space availability and the likelihood that the target audience will see the ads.
October 27, 2023
8 min. read