WARC, the global authority on marketing effectiveness, today released The Future of Programmatic, WARC’s latest strategic report produced in collaboration with ID Comms, covering the key trends shaping programmatic over the next 12 months together to a practical guide for advertisers evolving their ad technology and programmatic skills.
Programmatic advertising, which has been around for over a decade, is digital advertising that is bought, sold and placed using automated technologies and algorithms. According to Dentsu, nearly three-quarters (71%) of digital spend will be programmatically on multiple platforms by 2023, and according to IAB Europe, the majority of advertisers (74%) and agencies (80%) plan to invest in programmatic increases . for the next 12 months.
Report author Paul Stringer, Managing Editor for Research and Advisory, WARC, said: “The effectiveness of programming – automation, real-time measurement and sophisticated targeting – is threatened by the growing drive for data privacy and the disappearance of third party cookie
“While programmatic advertising may not have lived up to its initial promise, change is underway and a new wave of growth and development is on the way. In this report, we explore key changes in the programmatic landscape and how they are impacting advertisers.”
The report highlights key trends in three different areas: finding solutions in the post-cookie era; digital waste in the programmatic supply chain; and the appearance of new addressable channels.
The complete removal of third-party cookies is planned for next year. However, according to research by Credera, 58% of marketers don’t seem to understand how changes in privacy law will affect their systems and tools or their business in general.
As advertisers accelerate their search for alternative forms of targeting and measurement, they are experimenting with a variety of post-cookie alternatives:
- Prioritizing first-party data: Advertisers are placing more emphasis on collecting and using first-party data as a source of insights about their customers.
- Data Partnerships: Advertisers are working with publishers, platforms and technology partners to leverage shared data and insights. According to data from the IAB’s 2022 Programmatic Attitudes Survey, 63% of advertisers now use third-party data, up 23 percentage points from 2021.
- Cookieless targeting: Advertisers are exploring interest-based and contextual targeting methods (e.g. images, audio, content sentiment, location, time, weather), none of which rely on third-party cookies. According to a recent DoubleVerify survey, 94% of advertisers said they plan to rely on contextual advertising for some or most of their purchases by 2023.
- Persistent identifiers: Advertisers are exploring persistent identifiers (deterministic and probabilistic) as an alternative means of tracking users across platforms and devices.
Leah Askew, Senior Vice President, Head of Precision Media, Digitas North America, said: “In a post-third-party cookie world, the biggest challenge for advertisers is that there is no one-size-fits-all answer, I think that many advertisers have a plan. They have components of how it’s going to go forward, but no one is quite clear yet on how it’s all going to play out.”
Despite some improvements, the programmatic ecosystem is still littered with litter. ANA’s analysis revealed that nearly a quarter (23%) of the $88 billion spent annually on programmatic advertising goes to waste.
Advertisers are taking steps to reduce waste through:
- Supply Path Optimization (SPO)– Advertisers are focusing on fewer direct paths to ad inventory by removing unnecessary intermediaries from the delivery path.
- internal capabilities– Some advertisers are incorporating internal features to increase visibility and control over programmatic commerce.
- Sustainability measurement: A minority of advertisers seek to measure and reduce the carbon footprint of their programmatic campaigns.
Prasad Ghag, Global Head of Media, Digital and Strategic Planning at Sanofi, comments: “In the world of programmatic, supply chains are very long and the ecosystem is a bit of a ‘black box’. However, by taking steps to exclude MFA websites from campaigns, we have improved our efficiency and significantly reduced our carbon footprint.”
The expansion of programmatic into emerging channels: 62% of marketers are only moderately confident (or worse) in their systems of data, analytics and insights.
Programmatic media growth is driven by emerging channels including gaming, connected television (CTV), programmatic audio, digital away from home (DOOH), and retail.
The promise of emerging channels like CTV and DOOH lies in their ability to combine the massive reach of linear channels like TV and OOH, with the more sophisticated buying, targeting and measurement capabilities of digital media.
However, with 62% of advertisers having moderate (or worse) confidence in their systems of data, analytics and insights, according to CMO recommendations, growing these channels poses a number of challenges:
- Holistic and standardized data: As media spend continues to fragment, advertisers struggle to standardize data across channels.
- The Challenge of Ad Fraud in Emerging Environments: Fraud is pervasive across the entire programming ecosystem, but there’s a particular concern in new high-demand channels like CTV.
- Balance the open web and walled garden Demand Side Platforms (DSPs).: The expansion of new media types is introducing new walled garden environments into the programmatic ecosystem, creating more transparency and integration challenges for advertisers.
Russell Nuzzo, Global Director of Marketing and Attribution Technologies at Gain Theory, said: “With emerging channels like CTV, a good way to evaluate media partners is how quickly they return delivery data to advertisers. If this isn’t real-time, or near real-time, then that can be a serious red flag.”
Strategies for brands to build their advertising and programmatic capabilities: Marketers allocate a quarter of their budgets to martech, yet use only 42% of their capabilities.
Gartner data shows CMOs report allocating a quarter of all their marketing spend budgets to marketing technologies, yet marketers used just 42% of their martech stack capabilities in 2022, up from 58% in 2020.
To future-proof programmatic activations and improve business capabilities, marketers must:
- Define and be clear about the goals and vision of the business.
- Identify and map current capabilities
- Perform a gap analysis and identify future business use cases
- Review current policy maturity and future areas for progress
- Produce the final roadmap
- Trigger workflows with the right support
Pranay Damji, Ad Technology and Programmatic Consultant at ID Comms, said: “Advertisers can often be excited about the latest programmatic innovation, but often it is the more pragmatic and best-practice operational components that, when addressed first, they can have a positive impact tomorrow .
