It’s been a good year in programmatic, but disparity still dominates

Dan Sheppard of Xpand Group's adtech division
By Dan Sheppard of Xpand Group's adtech division | 4 February 2015
Dan Sheppard

The questions being asked in programmatic are evolving, as a result of tangible benefits being seen across all sectors.

In addition, brands are beginning to go it alone in real time bidding, which has agencies on the defensive. Plus, big data is finally breaking through into boardroom conversations - but are we still just scratching the surface?

The last year in Australia’s programmatic industry saw acquisitions, IPO’s, intensive growth, significant hires, the emergence of new players and brand-side platforms - to mention just a few of the exciting tech breakthroughs. It was a year for setting standards and breaking records.

As recently as 2011, Australia was still widely considered a late-entrant to the global programmatic market, but since then we’ve proved once again that we are receptive to change and, more importantly, that we have the ability to lead the way in new technology innovation. What made 2014 so special was the evidence of true progression in the field. The big question has evolved from “What is programmatic?” to the more profound “What can programmatic do for us and our customers?”

From a neutral view point from which to observe this space we’ve been very fortunate to witness first-hand an incredible shift towards automation efficiencies, across the entire real-time bidding (RTB) market. The blossoming benefits are impossible to miss – everyone from agencies and publishers, tech companies and data providers, even consumer brands themselves have been lapping up the advantages on offer through programmatic.

Advertising technology has been at the forefront of programmatic buying for the past few years, but it’s only now, with the very recent developments in structured, attributed audience data - and the ease with which it can yield robust audience insights – that we are truly grasping the sheer magnitude of technology benefits at our figure tips.

The conversation about “big data” was previously confined to be among us back-office tech nerds, but it’s pleasing to see now that it’s finally made its way into countless boardrooms both globally and across Australia. Again the evidence of this is plain to see in the evolving question, which is no longer just “What is big data?”. Now the decision makers want to know “How valuable is our data, and how do we monetise it?”

The fact that the right questions are being asked about data is encouraging, and the growth of the market made some significant impacts on programmatic performance last year. However, based on what we’ve learned during data’s abrupt arrival to market, my guess is that we’ve only just begun to scratch the surface. We’re in the very early stages of a very steep learning curve.

People closest to the action say that in spite of some super smart, highly impressive platforms like Turn, Krux and Adobe, the data management space still needs further clarification. There’s wide scale confusion among brands about what data management actually is – and this begs the question, how can they know what they really need?

It’s a question that agencies should start trying harder to answer, because 2014 saw a significant swing towards brands entering the open RTB market directly, through their own brand-side platforms, in-house solutions and “white label” managed services. This trend is clearly of grave concern for those whose agencies who previously enjoyed a somewhat captive market – and they never miss an opportunity to dismiss it - but at the same time it’s great news for tech vendors and managed service providers, whose customer bases can finally grow outside of agency control.

As these early-adopter brands forage further into doing RTB direct, some of the larger agencies have been considering the possible implications and focusing on client retention. And when they do so, they are coming across objections about detailed data and reporting around their margins. Transparency has been one of the dominating conversations of 2014, along with viewability, brand safety and, as I mentioned above, the overall disparity in the programmatic space.

Publisher activity in the online data space is clearly on the increase, too. Last year the likes of Mi9, Yahoo!7, Fairfax, News Ltd and MCN all invested heavily. Oracle increased its market share and enhanced its suite of data management solutions with two important acquisitions (BlueKai and DataLogix), while Google’s purchase of Adometry and Atlas highlights how data now extends beyond audiences and deeper into attribution.

Video got a big piece of the action, recording the largest percentage of private marketplace deals. In 2014 both Yahoo! and Facebook acquired video exchanges (BrightRoll and Liverail), which poses an interesting question regarding the service proposition and growth potential of those businesses in competition with Google and AdX.

Looking forward to 2015, it feels good. More investment is most certainly on the cards, which by definition breeds innovation. Also, as many advertising technology businesses reach the end of their four year tenders, more acquisitions and IPO’s will add fuel to the fire of the programmatic revolution.

Lets take a glance at 2014 programmatic growth:

  • Audience buying desks across agencies grew at an impressive rate over the last 12 months. The majority of staffing investment went into programmatic account managers, ad operation specialists, campaign optimisers, client services and traders, closely followed by data insights, data science, yield management and sales. 
  • By Q2 of 2014, programmatic buying activity in Australia had claimed an impressive 13.4% of all digital bookings through a demand-side provider – blitzing the UK’s 9.8% and more than double the equivalent of our US counterparts (6.6%). This is a true testament to the combined success of our nation’s programmatic community.
  • Supply-side platforms have focused primarily on publisher data, cross platform penetration and cross device engagement, which has improved yielding inventory significantly. Providers have embraced programmatic as the new “norm” as enhanced attributed data comes into play – and the knock-on effect of more accurate campaign variables has increased inventory value across the board. 

By Dan Sheppard

Regional practice director in Xpand Group's adtech division

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