Programmatic advertising isn’t new, but in 2016 its popularity skyrocketed. US programmatic display ad spend reached $22.10 billion and programmatic video ad spend has reached $5.51 billion, representing 56.0% of total digital video ad spend.
What is it?
It’s a method of reaching people online at the right moment. Programmatic can reach a highly targeted audience wherever they are, across all devices. Its versatility allows marketers to target competitor’s customers, target fenced geographical areas, use company data to stay top of mind with past customers, and more.
The term “programmatic” itself is used to describe how the ad-buying system works – as an automated and optimized process.
Why is Programmatic Advertising So Popular?
Manually tweaking every little detail in an advertising campaign is hugely wasteful. The time it takes to do so and try to be profitable just isn’t feasible.
But marketing technologies have become more and more refined behind the scenes for years now. Advertising platforms are now so integrated in our applications and lives, reaching people at any moment they’re online is easier than ever.
And finding people when they have actual intent to buy is shown to work. Studies such as the one by Contexxt have shown us why this is.
This particular study concluded that buying ads programmatically often increases ROI by 20% and raises bottom line sales by 5%.
The study analyzed $20 billion in spend across Fortune 500 companies in ten separate verticals. Multivariate data sets were used to determine where the money was made and the impact on sales. The study used measurement tactics such as time decay, reach, frequency and flighting.
The study showed why Programmatic Advertising is a powerful tool for today’s marketers.
Doubling spend on programmatic means higher ROI
As it turns out, the average Fortune 500 brand spends 4% on programmatic advertising; where the study found 8% spend will yield the highest optimal return. Any less than that, the study stated, would mean losing out on sales revenue and ROI.
Programmatic investment is an investment in the future
One thing programmatic does really well: Reaching people on any device wherever they are. One thing young people do really well: Consume media-on-demand over a wide variety of devices. Because of this, many companies allocate a higher percent of their programmatic budget towards younger audiences – the study states 12% is optimal for this segment.
Get traction though mobile and video ads
Getting traction from those on mobile and with people through video content are two still very widely untapped segments. Being in front of someone when they’re looking to buy over mobile at the right time is crucial to getting more sales. The study concludes on a note that brands should optimize to be about 33% of their programmatic spend and video should be 35%.
The study states that that the average brand should double its programmatic spend, and brands should be planning for the future by focusing on young buyers, and keep their sights on mobile and video.