At a global level programmatic growth is slowing as it becomes the digital dominant method of trading digital advertising, according to a new report. 

Sixty-five per cent of all money spent on advertising in digital media in 2019 will be traded programmatically, according to Zenith’s Programmatic Marketing Forecasts, published today.

Globally, Zenith estimates that global programmatic ad spend will grow 24 per cent in 2018, down from 32 per cent growth in 2017, and forecast 19 per cent growth in 2019, followed by 17 per cent growth in 2020.

Nickie Scriven, CEO, Zenith Australia

In Australia Zenith estimates that local programmatic ad spend will grow 59 per cent in 2018, up from 54 per cent growth in 2017, and forecasts 29 per cent growth in 2019, and 30 per cent in 2020.

Between 2012 and 2018 programmatic spend in Australia has grown from AU$83.7 million to AU$1.74 billion.  By 2020, Zenith predicts it will rise to AU$2.92 billion, representing 67 per cent growth between 2018 and 2020.

Globally, Zenith predicts advertisers will spend US$84 billion programmatically next year, up from US$70 billion this year.

The growth is aided by the expansion of ad formats which can now be traded programmatically with more mobile, video and audio formats coming online. However the report argues brands and agencies need to do more to push publishers to improve the quality of their inventory, which needs at minimum to be safe and viewable.

“In Australia we anticipate that a number of new channels will be transacted programmatically, such as audio (music and podcast), radio and addressable TV, which is why we are seeing continued programmatic growth,” Zenith Australia CEO, Nickie Scriven, said.

“The biggest change we will see in 2019 will be in the video space. The TV networks have been actively promoting addressable TV and Catch Up TV (CTV) and, coupled with the launch of VOZ next year, we predict that a number of large TV advertisers will transact more of their online video programmatically. As TV and CTV become more connected, and first and second party data becomes more important and more widely used, the effectiveness of targeting will offset any technology and data costs. Programmatic will become the most efficient and effective way to buy media in the future.”

The report argues programmatic is on its way to becoming the default way to trade media, but the transition is taking longer than expected.

The introduction of privacy legislation such as the EU’s GDPR has had some chilling effect by making certain data previously used in programmatic transactions unavailable, and making other data more costly to process. But Zenith thinks the main reason for the slowdown in spending on programmatic media is that advertisers are investing more in infrastructure and data to make their programmatic activity more effective.

The report recommends advertisers reorganise internally to give programmatic trading the high-level support and understanding it needs. Agencies can only extract maximum effectiveness from their programmatic strategy in a proper partnership with their clients. And a programmatic strategy can only ever be as effective as the data used to execute it, the report said.

Previous post

Fairfax shareholders vote in favour of Nine buy out

Next post

Chemist Warehouse tests machine learning tool to support buying and planning

Join the digital transformation discussion and sign up for the Which-50 Irregular Insights newsletter.