Sizing Up Advertising’s Future

Video advertising is not only on a healthy trajectory, it will be powered by programmatic, according to   Lauren Fisher, Principal Analyst, eMarketer who presented research findings at the recent VideoNuze conference. “U.S. advertisers invest nearly 2 times the amount of dollars in digital for every $1 in television spending today,” she noted at the conference. Recent eMarketer reports indicate that digital spend is booming, growing +19.1% to $129.34 billion this year and surpassing traditional TV spend by nearly $20 billion. That means digital now accounts for 54.2% of total US ad spending.

Power of Programmatic
But the path forward, according to Fisher, “requires programmatic to bring things together.” Programmatic, which she defined as the automated method of buying, selling or fulfilling advertising, currently accounts for $106.84 billion or 34% in digital spend. “It is growing faster than predicted,” she noted. By 2021 it is projected to exceed $10 billion. One factor that is accelerating programmatic is the desire to leverage first party data and advanced targeting for both advertisers and content owners. And, as programmatic expands into connected TV, “advanced targeting will be critical,” leading to more high value premium ad formats.

Importance of Connected TV
She predicted that Connected TV will become a significant factor in programmatic as well as in the larger media landscape. Over half of the U.S. population is connected TV users today and OTT represents over 60%. Connected TV spend, “will hit its stride 2020 and 2021, taking share from mobile,” she prophesized. But she noted that, “not all connected TV advertising will be programmatic. It will be packaged with other opportunities.”

It is still very early for programmatic TV, with “just 4% of TV ad dollars going through some form of automation.” Currently though, she sees the use of automation in planning and realizing more efficiency in buying and selling, inventory and audience discovery. “Advanced targeting is the entry point in the push into TV programmatic. Seven to 10% of the estimated portion of upfront inventory is going towards advanced targeting buying in the upfront. Not all is transacted programmatically but for many, this is where the value of programmatic begins,” she stated.

How to Move Forward
Among the factors affecting TV programmatic adoption is the industry’s ability to transition from legacy tools and systems. “It is currently difficult to change the ways of doing business and changing mindsets. It is critical to change in order to move forward with programmatic,” Fisher said. In addition, there are still concerns about the commoditization of inventory as well as concerns about consumer privacy and regulations. But the drumbeat of progress in programmatic indicates that these factors will be addressed as this advertising format grows.

This article first appeared in Cynopsis