The rise in programmatic advertising is no surprise to anyone working in the ad sales industry. According to eMarketer, an estimated four out of every five ad US dollars spent on digital display was transacted programmatically in 2017, with over 75% of total advertising spend expected to transact programmatically by the end of 2018.
This means big changes in the market, including significant growth in the way ad servers and exchanges operate in the streaming media realm.
With such adoption rates, we examine key trends shaping the future of programmatic advertising.
1. Programmatic TV: Countless Ad Inventory Alternatives
The rise in programmatic ad sales on television has been slow but notable; according to eMarketer, the US market expects 5% of all TV ad spend to be programmatic by 2019. Sound insignificant? It isn’t: 5% equates to $3.8 billion.
The industry is expansive, covering broadcast television, Video On Demand (VOD) options such as Netflix, digital channels such as Sling, and YouTube-like video content. With the growth in programmatic, the advertising options in these avenues will increase exponentially, inspiring expansion of existing models like over-the-top (OTT) and ad select, in which customers choose an advertising message, as well as customer interaction with advertisers.
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2. Programmatic Radio: Integrating New Players to the Market
While traditional AM/FM radio still holds a footing in the industry – 90% of US consumers still listen on a weekly basis – internet and streaming radio are growing rapidly.
- Spotify has 159 million monthly active users
- iHeartRadio recently surpassed 100 million registered users.
- The case of SoundCloud is also significant. According to Forbes, it has 175 million users and rising!
This provides plenty of ad sales opportunities for the likes of iHeartMedia, Spotify, and TuneIn Radio to all participate in programmatic with the inclusion of ad servers such as AppNexus, FreeWheel and Adswizz available.
3. Programmatic Guaranteed
The ad sales world is notoriously complex. However, programmatic guaranteed aims to simplify things. This concept takes the guesswork out of sales. For instance, it enables a buyer to cookie match or device ID an audience with a publisher to create a pre-agreement to buy at a pre-specified price so long as the publisher provides a correct ID on the supply-side program or exchange.
In essence, this system allows a link of sorts to develop between agencies and publishers for the pairing that targets the perfect audience. The benefit here comes with taking the headache out of a private marketplace, guaranteeing an adequate volume of impressions in a desired demographic.
4. VAST’s Evolved Video Advertising Standards
VAST, or Video Ad Serving Template, is essentially a script that dictates what ads to play, for how long and if they should be skipped along with the target audience. This standard, set by the Interactive Advertising Bureau (IAB), creates a shared language between video players and ad servers, which in turn increases the volume at which ad publishers can sell content.
VAST has evolved greatly over the years; the current 4.1 version, released in June 2018, improves compatibility with the open measurement in addition to enhanced measurement web-based ads. As the system continues to evolve, the technology behind this form of streaming media is only going to move forward.
5. Dynamic Pricing
Selling the entire ad inventory at the best possible price is always a challenge for broadcast media. For the International News Media Association (INMA), the goal is to sell as much inventory as the company can and, unlike traditional media, every day you go with unsold impressions you are losing revenue. It’s virtually impossible to assign the exact same value to different radio or television shows.
They depend not only on variables such as location, viewership, and demographics but subjective perceptions: does the advertiser like the program or is its content matching their message at a given day, time or location?
- Dynamic pricing is the best of both worlds, creating a situation in which pricing is based on results as opposed to predicted outcomes.
- It’s hard to match supply and demand. The content of the show changes and so do the likings of prospects and leads.
- It’s far easier to place ads on exchange portals, where the pricing structure follows the dynamic rules of the market and moves with supply and demand.
This deviation to guaranteed contracts provides much-needed flexibility and transparency, offering creative pricing solutions that include options such as:
- Cost per thousand impressions (CPM)
- Cost per click (CPC)
- Cost per acquisition (CPA)
In the future, ad sales managers will be able to increasingly blend these dynamics not only in their order management but their budgeting, quoting, billing and reporting to agencies and advertisers.
6. Blending Programmatic and Direct Sales
Today, we have integrated sales channels for programmatic transactions, taking them to the next level, combining inventory, regardless of the product or platform. This offers one streamlined alternative to even standard ad sales, allowing advertisers to purchase ad space over a company’s entire portfolio of products, regardless of the ad server or exchange system they work out of.
Historically, programmatic and direct ad sales have stood apart, operating under two different teams and two disparate models. However, this is now starting to change. Major industry publishers, like The New York Times, are now combining all ad sales operations under one umbrella:
- They’re using the same team of representatives for direct and programmatic advertising.
- Instead of working with two points of contact, advertisers can enjoy one streamlined process that facilitates a smoother sale.
Streaming media companies must also blend the use of programmatic exchanges with direct sales. While exchange servers help out a great deal in trading the inventory, customers critically need the orientation and assistance of ad sales management professionals, combining a dynamic ad inventory with precise quotations and billing services.
7. Artificial Intelligence-Powered Ad Sales Management
Artificial intelligence (AI) is playing a role in many tech-centered industries with a dynamic market structure, such as the airline business and retail companies, so it’s no surprise that ad sales management is next.
While AI has yet to replace humans, it’s certainly assisting them, offering predictive capabilities that can rapidly streamline the relationship between advertisers and publishers at a speed beyond what the average person can accomplish, assisting advertisers, agencies and adops professionals in the making of difficult decisions.
In fact, media planners consulted by Broadcasting & Cable saw artificial intelligence affecting the way decisions are being made in the media business and other industries. They added that the “array of new data” available to them and “the promise of more accurate ways to measure the impact and effectiveness of advertising” were actually changing how they worked.
For instance, AI can:
- Build separate custom inventory management and ad selling algorithms to use with each client.
- Provide personalized recommendations, options, and rules depending on location and industry.
- Ultimately improve fill rates, increasing ROI and ad revenue when used effectively.
As AI technology learns and develops over time, the potential here is only likely to improve, facilitating a better platform for programmatic transactions.
Streaming Media Ad Sales Future: What Lies Ahead?
In many ways, streaming media has become a key driver in technology advancement for ad sales, whether it’s on television or radio. However, it’s still an industry where ad ops professionals require ways to optimize their ad management. These include:
- Bridging the gap between programmatic and direct ad sales.
- Aligning their different ad inventory suppliers into the same strategy.
- Promoting attractive ad placement opportunities whilst aligning with security, quality, and privacy standards.
Innovators and early adopters will always address such optimization challenges with readily available technology solutions while others will wait for each to become the norm. For the rest, they will procrastinate and face the risk of losing market share.