Wherever you stand on the value of programmatic, there is little denying that this form of advertising is on the rise in APAC. In 2017 programmatic spend in the region reached $56bn, surpassing North America’s. The tech’s increasing presence looks set to grow further, as the top five countries with the fastest growing programmatic adoption rates are all Asian: India, Indonesia, South Korea, Malaysia and Taiwan, albeit off a relatively low base.
It’s been a decade since the advent of programmatic trading. Ten years in media is a long time and we have seen the organic fluctuation of the tech product lifecycle. From the early days when it seemed to offer all the answers to the disillusionment caused by fraud and transparency issues. However, the past year has seen the industry starting to mature, with an increased focus on transparency and combatting fraud. Despite the challenges outlined, many marketers are convinced by the benefits and programmatic is growing at 20% annually according to the World Federation of Advertisers (WFA).
In 2017, a global study by Adobe predicted that 62% of brands will take programmatic in-house by 2022 with the remaining 38% claiming they would still take it partially in-house. The WFA reported that 90% of advertisers are reviewing their contracts with advertisers, with 47% citing transparency as the main priority. However, despite this dissatisfaction with outsourcing, NewBase’s 2018 survey, The Evolving Marketer, found that 43% of CMOs still entirely outsourced programmatic, and 27% have only partially brought it in-house.
While it is easy to say that more programmatic will be done brand side, the evidence implies that until now doing so has not been the easy option. The barriers to entry have been steep in terms of expertise required, training needs and technology cost. Bringing programmatic in-house requires significant transformation and companies need the right talent internally to do this. 68% of CMOs from the Evolving Marketer study strongly agree ‘it is essential to have the right people with the right skills to evolve with changing tech’. Tellingly 55% claim their team does not have the right capabilities, and only 3% claim they have the perfect skill set within their team.
Brands have woken up to the fact that due to the convoluted and confusing supply chain they have been losing up to 80c on every dollar spent on programmatic advertising. When this leakage is coupled with the way advertisers have been kept in the dark regarding basics such as where an ad is shown, who has seen it and even the price paid the time is ripe to both simplify and quantify the media supply chain.
If you throw in the fact that marketers worldwide find the media buying process too complex (the latest Marketing Priorities report from NewBase), the drivers for taking programmatic in-house relate to having better control of data and improved value for money. All this has acted as an impetus for brands to invest in the technology needed to do programmatic on their own turf.
It is clear that brands want to take back control
For some, this will mean completely insourcing programmatic and media buying. For others, this will take the form of direct billing relationship with media and tech vendors. For almost all brands we are seeing a closer scrutiny of where their dollars are going.
The ad tech space is overcrowded with too many middlemen struggling to justify their value to brands. As marketers start to understand this space properly they are looking for fewer, deeper relationships with tech partners that deliver tangible business results.
For agencies, the days of undisclosed margins are coming to an end. Agencies offer real value in digital strategy, implementation and optimization, but many have lost credibility by using marketers’ lack of knowledge as a way to inflate margins.
If a brand wants digital thought leadership this costs money. For agencies to regain trust, they need to act and charge for their services like any other professional services industry. The problem with transparency is many brand marketers don’t like the idea of paying for something they perceived to be ‘free’ before.
By using services that allow brands to monitor their programmatic campaigns more closely and accurately than before, it goes some way to alleviate their concerns and allows them to start realizing the benefits programmatic can offer.