Unveiling the Value of Programmatic Advertising: Insights From IAB Europe’s Programmatic Trading Committee

  Programmatic advertising has transformed the way digital ads are bought and sold. First introduced to the market in the […]

 

Programmatic advertising has transformed the way digital ads are bought and sold. First introduced to the market in the mid-2000s through the advent of real-time bidding (RTB) technology, advertisers can now target specific audiences with greater precision and efficiency through automation. Something that adds immense value to any media plan. But what is the real value of programmatic today and how has it evolved from Header Bidding and Supply Path Optimisation (SPO) to tackling new and emerging channels and formats such as AV and TV?

This year, members of IAB Europe’s Programmatic Trading Committee have been sharing their thoughts on the value of programmatic advertising in Europe today in our dedicated blog series. In this edition, we speak to members on why continued programmatic investment is important, discuss the essential elements of programmatic trading, and speak on how programmatic has evolved. 

A big thank you to the following contributors for sharing their thoughts

  • Nick Welch, Head of Programmatic Sales, EMEA at IAS & Chair of IAB Europe’s Programmatic Trading Committee
  • Azad Hosenbokus, Programmatic Director UK at Verve Group
  • David Bauckmann, representative of SPIR (IAB Czech Republic) 
  • Lisa Kalyuzhny, RVP, Advertiser Solutions, EMEA at PubMatic

 

We begin with an overarching comment from Nick Welch, who is the Chair of IAB Europe’s Programmatic Trading Committee:

“Advancements in programmatic have helped advertisers improve their efficiency in buying and the measurement of campaigns, across multiple digital screens hugely over the years. 

Programmatic buying and selling of inventory democratised the industry and has allowed many more brands to be able to reach their audiences through advertising. However, the increasing fragmentation and sheer volume of supply - coupled with the proliferation of bad actors trying to cash in on the programmatic supply chain - has led to confusion and some scepticism among advertisers of the true value of buying across the open web. 

As an industry, we need to simplify our processes as well as ensure transparency across the whole supply chain in order to maximise ROI and optimisation for advertisers, and revenue for quality publishers. It’s really only when you understand and measure a campaign in its entirety, from pre-bid to post-bid, that you can truly optimise performance, maximise ROI and minimise wastage.`` 

The Value of Programmatic Q&A with some of the members of IAB Europe’s Programmatic Trading Committee

Q1. What is the main value of programmatic to you, and why do you think we should increase investments in programmatic?

Nick - “When executed well, programmatic has the potential to offer advertisers the efficiency, scale, and performance that they are looking for from their advertising budgets, to maximise their return on investment (ROI) and improve each subsequent campaign. 

Issues arise, however, when advertisers mistake reducing their spending on measurement, or other verification and optimisation tools, in their program pre-bid, as making ‘efficiencies’. The net result of this is that spend is actually less effective and likely to lead to more waste, reducing their ability to optimise towards ‘working media’. 

The best way to maximise value in programmatic is to ensure your ads are viewed by humans, in safe and suitable environments across screens. That increase in investment upfront leads to improved effectiveness, removes waste, and delivers a much better return on ad spend (ROAS), as well as better peace of mind for marketers.”

Azad - “The value of programmatic lies in being able to deliver safe, campaign precision at scale, allowing for more time for creative strategy and thoughtful planning of campaigns. 

When executed well, the technology offers seamless and secure campaign delivery, which is achieved through trusted supply paths, knowledge sharing, and maintaining good relationships across the ecosystem.” 

David - “The main advantage of programmatic, from my point of view, is its versatility. Primarily it can be used to purchase advertising across a range of different ad types. It can also be used across media channels such as video, Connected-TV (CTV), audio, and Digital-Out-Of-Home (DOOH). 

Programmatic brings all of this together and enriches it with advantages, such as precise targeting and an auction model, where the buyer controls the price they are willing to pay, and the seller has the advantage of always selling to the highest bidder.”

Lisa - “Programmatic technology was introduced to solve challenges of scale and efficiency across the open internet. DSPs arose to facilitate and optimise all aspects of buying, and SSPs were introduced to facilitate and optimise all aspects of selling. We are still operating within this overly simplistic, category-based view of the digital advertising supply chain, and it’s time to put the days of ‘one-size-fits-all’ behind us. 

Programmatic is now being applied to a growing number of use cases. Buyers and sellers of digital media should no longer be limited to the previously identified set of constraints. Rather than thinking about the alphabet soup of company types, such as DSPs, DMPs, CDPs and SSPs, we should instead start thinking in terms of supply chain components, including: media planning, dynamic bidding, audience ingestion, audience targeting, audience matching, inventory curation etc.”

 

Q2.  Since Real-Time Bidding came into play and programmatic was born, what are the key elements of programmatic advertising that have always been and will remain essential to programmatic? What elements of header bidding and SPO are still vital to the programmatic supply chain?

Nick - Transparency across the supply chain is fundamental to building trust in advertising across the open internet. In the fragmented landscape, Supply Path Optimisation (SPO) has enabled marketers to make smarter decisions by understanding how a supply chain is performing with impression-level granularity in real-time. 

Buyers can compare quality CPMs (qCPM) across different strategies and have an apple-to-apple comparison, providing full transparency on the cost of media at the impression level and how it correlates to verification signals such as viewability, IVT brand safety and brand suitability. 

Effective SPO tools help buyers identify waste across advertisers' media plans and can enable them to understand the relationship certain signals have with success metrics, such as conversions, so they can realise the true value of their programmatic investment and optimise the quality of the inventory purchased to drive results. Adoption of SPO technologies has been slower than you might expect given the value they can bring to marketers’ budgets. We are, however, seeing this change as more brands and agencies begin to understand that the ROI achieved makes it a worthwhile investment. Especially as more scrutiny is placed on ‘how’ budgets are allocated.”

Azad - “programmatic has and always enables good competition in the market; better yields for publishers, and increased choice and reach for advertisers.

By automating the transaction we already see the benefit of the hours saved negotiating each placement. The challenge with this though, which has led to the rise of solutions such as header-bidding with the resulting flurry of duplication, has been the need to see parity and fair market share for innovative technologies.”

David - I see personalisation and automation of the entire buying process as key elements of programmatic. Small and large advertisers have access to almost all ad spaces, formats and media types thanks to Demand Side Platform (DSP) access.

Header bidding fundamentally helps publishers increase revenue simply by putting all advertisers in the same starting position and allowing a fair auction between them. I believe that with the help of header bidding, working with SPOs will gradually become easier, because advertisers will learn to choose the shortest path available to the publisher. But I would be very happy to see the same development SPOs have seen, with Demand Path Optimisation (DPOs), which is still lagging behind. “

Lisa - “It is important to note that publishers and advertisers have a vast amount of use cases when it comes to programmatic, and it has come a long way and should be expected to adapt to the needs of the customers it serves, not the other way around. I see the ability of data-targeting as one of the key elements of programmatic that is here to stay as programmatic advertising leverages vast amounts of data to identify the most relevant audience segments. It utilises various data sources like demographics, browsing behaviour, contextual cues, location, and more, to deliver personalised and highly targeted ads to the right audiences, increasing the chances of conversions. 

It is also important to note that as the ecosystem has shifted away from cookies and other identifiers, the buy side has been feeling the impact in terms of audience matching capabilities. As a result, some buyers shifted audience onboarding and targeting to the sell side, where they’re finding better results. ”

 

Q3. How do you think programmatic has evolved in the last 1-2 years? What key advances have been made? How has programmatic enabled efficiencies in media channels such as CTV, audio etc.

Nick - “The ability to buy ad space omnichannel - across any screen in multiple formats, through one point of entry - is a huge evolution of course. However, programmatic at its most fundamental, including the improvements of measurement at the impression level and the power we now have at our fingertips to ensure campaigns are targeted and measured effectively across all of those screens, before we even commit to the spend, should not be underestimated as one of the key innovations in our industry. 

And most importantly, to use the information we can gather both pre-bid and post-bid to then optimise the campaign is immensely valuable. It’s fundamental to building the trust that advertisers need when investing their budgets - especially when those budgets are also being challenged by macroeconomic environments.”

Azad - It’s encouraging to see the steps that many independent and holding companies have taken to enable skilled and smart people in their organisations to innovate technologies, processes and leverage in the programmatic space. Hire more of them!”

David -  “Over the last two years I’ve seen many key developments, mainly in extending programmatic buying to other devices that are increasingly connected digitally, such as TV and radio. But we are also seeing digital OOH or other devices come into play here. It's very useful for advertisers to be able to buy all media types from one place and through one technology. As an industry we've started to pay more attention to the supply chain, both in terms of the carbon footprint it leaves and also in terms of its buying efficiency and quality (a shorter journey is more simple and cost effective). 

Additionally with the end of cookies forcing the entire industry to develop new and alternative solutions, we have been able to create options that are more interesting for a broader concept of programmatic buying that  involves multiple media types and devices. User identity solutions coming to the marker are one such example of this.``

Lisa - “We have seen that both buy-side and sell-side think about their supply chains and how they can best leverage various technical components to achieve their objectives. For example, we have seen CTV publishers leaning in on programmatic technology to automate a successful direct IO business. On the buy-side, we see that biddable programmatic is strong, but there is an increased emphasis on performance-based campaigns, as well as e-commerce and retail business. In the TV arena specifically, premium online video inventory will become one with broader TV, just activated in a different way. Here programmatic can bring interoperability to current format and platform silos that should result in more spend directed towards diverse environments, which will positively impact the survival of the open web.”

 

Q4. What are the biggest innovations and advancements in programmatic advertising today? Which channels and formats should we be focusing on in the programmatic space?

Azad Hosenbokus - “There are two sides here. One is the need to challenge for improvements in how we currently trade and mitigate for the crutches that we rely on. The second is the need to provide solutions that preserve an open internet and respect audience experiences.  Ultimately, we should emphasise education, excellence and best practice ahead of innovating ourselves out of a created confusion, aka Header Bidding and SPO.” 

David Bauckmann - “If I had to name one thing that's most exciting right now, I would definitely name CTV, or the intersection of TV and programmatic buying.”

Lisa - “Let’s not neglect the immense impact that the growth of commerce and retail media platforms are having on the programmatic industry. These days, retailers might find themselves in the role of an advertiser, a data owner and a media owner, and programmatic ad tech should be nimble and equipped to support multiple functions right alongside the retailer as needed. In other words, success in commerce and retail media require a consolidated tech offering featuring a complex set of capabilities that have historically existed across multiple company types. Programmatic will play a vital role in the development of this space”. 

 

Q5. What does the future hold for programmatic advertising? What do you see happening in the next 6-12 months?

Nick Welch - With cookies destined to disappear by the end of 2024, any companies that have not yet begun testing and experimenting with different and new targeting and measurement tools will certainly be ramping up their efforts. We’ll see continued developments in the tools that don’t rely on cookies and companies leaning into learning how other signals correlate with improved performance based on their KPIs. 

We’re seeing AI, especially Generative AI, mentioned everywhere right now, and certainly we’ll see more experimentation throughout the industry in how it can support and improve both consumer interactions with brands as well as the back end production of ad campaigns, from creative through to targeting, optimisation and measurement. 

Recent developments in AI have shown that it’s going to revolutionise the customer experience for many brands. It’s worth noting that AI and machine learning (ML) has been utilised in tools like fraud prevention and detection for years and will continue to develop and innovate with new solutions across programmatic advertising. 

CTV is only going to keep growing as more supply becomes available through programmatic channels. The industry will start to align on measurement for this hugely growing sector, which should help to reduce fragmentation and ensure more holistic measurement across channels. 

More brands and agencies will recognise the impact that building in pre-bid solutions for their planning, targeting and measurement has on their ability to truly understand the value of their ad campaigns, ensuring their ads are seen by humans, in premium contextual environments, reducing any wasted spend and ultimately improving ROAS and protecting marketing budgets.”

Azad - “I believe programmatic will evolve into a system of higher quality creative execution and will demonstrate more respect toward audiences.Ad supported gaming, for example, where there is a logical need to create native experiences in a way that can be addressed at scale to attract higher quality advertising budgets will see growing traction.

For the web, audio and CTV, the answer for innovation may be simple - less individual ads in favour of engaging, high quality placements.

In terms of more Industry wide developments, I believe we will see the rise of open source technologies / initiatives that support threat sharing and quality measurement for all.” 

David - “6-12 months is a short period of time, but what lies ahead is the development of CTV, user identity tools and optimising the carbon cap. However, what I find much more interesting is what will happen in say five years time where I believe we are going to see a complete intersection of the offline and online world, where programmatic buying will bring everything under one umbrella.” 

Lisa  - “ The privacy landscape continues to change, marketers face challenges with third-party data and identity-based targeting. While this targeting still leads as the dominant method in targeting, contextual data is expected to surpass cookie-dependent data, we hear. 

More people are pushing into CTV and streaming, so I think the market will have to open up even more to programmatic to fulfil the best revenues they can from their real estate. So, I believe there will be a mix of both, some will close their gates and create a walled garden, and others will open their gates to programmatic enrichment. 

We also see more interest from the buy-side and sell-side to make their programmatic campaigns more sustainable and this trend is here to stay as consumers and governments are pushing for brands to consider environmental factors, and the online space presents brands with numerous opportunities to have a significant impact.” 

 


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