Only a couple of years ago, hardly anybody knew what the term "programmatic" even meant. Today, you probably know that marketers and agencies are suddenly piling into this automated method of buying and selling online display and other ads to reach target audiences more efficiently. But did you know how much they're piling in?
Some 86% of agency executives and 76% of brand marketer execs say their companies are using programmatic buying for display ads, according to a new survey of 177 large advertiser, agency, and publisher clients of AOL. Programmatic buying was also cited by 60% of agencies for both mobile and video ads, while 56% of marketers said they're using it for mobile and 48% for video. In short, a lot.
According to the survey, released today, programmatic trading is still used far less for social ads (which Facebook no doubt dominates, so finding audiences across sites is moot), search ads (though you can argue they're inherently programmatic), and television (which is doing just fine as is, thank you). Only 8% of marketers and 9% of agency execs admitted to not using programmatic for any media. "It's evolved into an integral part of an overall media strategy," says Doug Boccia, senior vice president of revenue and strategy for AOL's Advertising.com division. "It has permeated every media type."
What's more, the use of programmatic looks to continue its rapid pace of growth. Almost 90% of brands and agencies plan to up their use of programmatic buying of display, video and mobile ads by more than half in the next six months.
The survey comes a day after AOL announced on Monday that it's raising $345 million from selling convertible notes in a round of funding intended to help it expand its increasingly programmatic-oriented advertising business. Last week, the company reported better-than-expected second-quarter earnings thanks in large part to rapid growth of programmatic ad buying on its network of outside publishers.
The report essentially provides support for AOL's strategy of providing a one-stop shop for automated ad buying, so take it in that context. What's more, given AOL's recent emphasis on ad tech, with three acquisitions in the past year alone, its clients no doubt skew more toward the programmatic-savvy than marketers and agencies overall.
But the survey, conducted mostly in June, polled a reasonable number of high-ranking executives at large U.S. marketers, most of the top 50 agencies, and publishers. So it's a telling snapshot of how far programmatic has come.
And how far it has to go. For one thing, publishers are lagging, at least in terms of their understanding of programmatic. Only half said they're confident they understand it.
Another big issue is that programmatic advertising retains a somewhat shady reputation. Thanks to all the arcane, acronym-riddled technologies of demand-side platforms (DSPs), supply-side platforms (SSPs), and more, it has become too easy for ad tech companies and their customers to run ads on dodgy sites to pad their numbers,and even worse to claim ad impressions that no human being actually saw. As a result, inventory quality and transparency (or lack thereof) are the top concerns of brands and agencies, with more than 60% of execs in both camps concerned about those two issues.
Not least, for all the claim that programmatic trading means more efficient advertising, it remains too complex and time-consuming to do. Despite hundreds of acquisition in ad tech in recent years, with many startups purchased by Google, Yahoo, Microsoft, AOL, and each other, some 73% of ad buyers are still working with as many as 20 suppliers. Nearly 60% of both ad buyers and sellers surveyed said it's too time-consuming to buy digital media--one reason that television remains king of advertising overall.
Even TV is starting to see the use of programmatic techniques, though. Some 13% of marketers and 7% of agencies said they're already buying some TV programmatically, and 12% of both say they plan to do more in the next six months. "We are extremely close to being able to pull data from settop boxes and other sources to make linear TV programmatic," says Boccia.
AOL's shares closed down 1.7% Monday, to $42.33, about midway between its 52-week high and low.
