Growth of Programmatic Advertising

In 2019, worldwide digital ad spending is expected to rise by 17.6% to $333.25 billion according to a report by eMarketer.com.  This is also the first time that digital ad spend will exceed traditional media spending not just in the USA but globally, we are observing similar trend in other countries. Importantly, Programmatic Advertising is fast becoming the pre-dominant choice for efficient purchase of digital advertising as it accounts for more than 65% of digital ad spending (including display mobile, social and search). Briefly, Programmatic Advertising involves using computer programs instead of the traditional process where it involves manual insertion orders and human negotiation. Often nowadays, Programmatic Advertising is getting increasingly sophisticated with use of advanced algorithms and machine learning (ML) or Artificial Intelligence (AI) as transactions begin to increase and at much faster speed.

In a study carried out by Association of National Advertisers (ANA) in 2017, about 35% of brands surveyed indicated that they were expanding in-house capabilities, more than doubling the 14% rate that was reported in 2016.

To adopt execute programmatic advertising for your advertising campaigns, there are varying forms of operation that you can adopt. It all depends on your business needs and hence the ensuing strategic business decision to meet the demand. You should consider from your business needs and stage of growth to arrive at the right model.

 

OPERATING MODEL

One can broadly classify the operating model into the following three categories below:

  1. Fully in-house – In this model, you operate all programmatic functions within your organization by tapping on your internal team resource. You will need to set up an ad tech stack within your organization along with devising and developing your media strategy, ad operations and optimization.
  2. Outsourced or managed services – You work with one or more partner(s) to execute virtually every programmatic function. All parties work together by setting the KPIs and working diligently towards the target.
  3. Hybrid – Using a combination of (a) and (b), partial functions are outsourced while certain functions that you would like to keep in-house are executed internally, primarily to achieve the strategic balance.

Choosing the operating model that best suit your stage of familiarity of programmatic advertising adoption would be imperative instead of focusing on cost-saving.

 

BENEFITS OF PROGRAMMATIC IN-HOUSING

Taking programmatic advertising function in-house does bring about a number of benefits including:

  • Flexibility, control and accountability. You get to decide how you want to execute your ad campaigns to scale across the various advertising channels by aligning with your business strategies and goals to drive higher revenue and profitability.
  • Greater transparency. You get to operate the platform and have direct understanding of your campaigns’ execution, including delivery costs, ad placements, brand safety, media, technology, and data partners.
  • Cost efficiency and increased productivity. Automation, reduction of waste, cost reduction, and streamlining your operations to eliminate unnecessary overheads to improve media performance / ROI.

 

CONSIDERATIONS BEFORE IN-HOUSING

To fully realize the benefits of programmatic advertising in-housing though you should consider the following before taking the function in-house:

  1. Do you spend over US$1mil per year on online advertising?
  2. Do you have your organization buy-in to commit the resources?
  3. Do you have the talent to execute in-house?
  4. Have you established your success metrics to measure effectiveness?
  5. Do you have the tech stack / platform to execute in-house?

In summary, moving progressively into an in-housing model might be a good move to get acclimatized while also providing your team(s) the necessary time and experience to develop the necessary supporting structure and processes. It also allow for better planning while you can ease into in-housing.

This article consists of 2 parts. In the next article, we will explore the tech stack selection criteria should you opt for in-housing.

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