Opinion: Where is programmatic investment right now?

Michael Scruby
By Michael Scruby | 25 March 2014

Australia is not the best place in the world to get a good grasp of programmatic investment for a number of reasons. But the main one is that we are lagging behind the game played by the US and UK by a big margin. As such, I’m here in San Francisco for Programmatic I/O, a one day expose of the programmatic environment as it stands right now in the country leading the programmatic game.

As Kerry McCabe wrote in an opinion in AdNews just a few weeks ago on the state of programmatic in Australia, “What [...] numbers suggest is that we are way under the odds in terms of investment into programmatic compared to the US and European markets – as much as 50 per cent behind as a proportion of total investment.”

Why is this? You should read McCabe’s piece if you want to know the answer to that - it’s well worth the time. But I’m not here in San Francisco to answer that. Instead I want to uncover where programmatic is right now and what the biggest issues are as the advertising industry continues to struggle to get its head around this complex beast. And when I say struggle, I mean it, because most of the people I speak to in the industry, some quite high up, still don’t know what programmatic buying and selling is or how it works.

The industry has to do a better job of selling its message - the more we over complicate the environment with acronyms and big words, the more people lose track and the more they think they don’t understand it, even if the concept is actually fairly simple. Programmatic is supposed to make things simple by its nature, lets not make it hard.

Joanna O’Connell, director of research at AdExchanger, did a lot to uncover the state of programmatic at the moment and what the biggest issues are. Some were truly eye opening. Out of 99 respondents to a survey (50 per cent big advertisers, 50 per cent agencies and publishers), display is still by far the biggest medium using programmatic technology - 96 per cent of respondents were using programmatic for display. This is great for display but programmatic, in my humble opinion, is far more than just display. It’s something I want to prove for the outdoor industry which I play in with Site Tour.

The way advertisers are using the technology as well was very interesting. Forty per cent of them use one general DSP while 25 per cent use a mix of general DSPs and 10 per cent go down the multichannel DSP route. The general consensus is that agencies are far more willing to use a mix of DSPs and didn’t like the idea of ad networks at all. Advertisers though are continuing to spend up large parts of their programmatic budget through open exchanges, with 61 per cent being spent this way. Just 29 per cent is spent through private marketplaces.

So what are the concerns in the market? For advertisers, the biggest concern according to AdExchanger was inventory quality, closely followed by the complexity of the programmatic market. The latter isn’t a surprise based on what I was saying earlier about the industry’s understanding of it. But for agencies and publishers, it was alarming to see that they too ranked a lack of understanding as the biggest concern in the programmatic game.

Thankfully it looks like 2014 could be the year that things change. While it was disappointing not to see more Australian representatives at AdExchanger (sure, it was a long trek but well worth it for Site Tour), Google’s Neale Mohan, vice president of display advertising products at Google noted that this year more than 50 per cent of the AdAge 100 will have in-house programmatic specialist teams. From the publisher perspective, he also noted that there’s a 180 degree shift from remnant inventory to premium inventory - big publishers are now comfortable putting their top inventory on programmatic in private marketplaces.

These are very promising signs - signs that hopefully Australia will take note of and follow in the very near future. I’m looking forward to seeing this happen.

Michael Scruby
Site Tour

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