i3 - January/February 2019 - 84

Business

By Gary Arlen

C S PAC E

his year, 86.3 percent of digital display advertising - highly
targeted and very responsive - will be placed by automated
"programmatic" buyers, up from 80 percent now, according to a new eMarketer analysis. The growth of ads on connected
TV and over-the-top video channels will divert some spending
from mobile and other platforms, according to eMarketer.
Equally significant is the role
that artificial intelligence (AI)
will play in the automation of
media buying, selling and fulfillment. eMarketer's outlook on
programmatic advertising sees
automated systems handling
nearly $69 billion of media buying in 2020, up from $36.3 billion in 2017.
Programmatic advertising is
present through the media ecosystems, including conventional
broadcasting. In this new world,
an advertiser buys impressions -
not mass audiences. Proponents
deem the process efficient,
transparent and cost effective
since the automated matching of
media availabilities and target
consumers eliminates time-consuming
negotiations.

AI Programmatic Ads

A study by Econsultancy and
MediaMath finds that more than 45
percent of global advertisers use AI to
target audiences to hone in on potential customers. The study also found
that 42 percent of advertisers are
using AI for "dynamic creativity," like
customizing specific messages to
consumers.
"AI gives marketers additional
insights about their consumers," eMarketer explains. It cites data analysis as
"AI's most common use case among
client-side and agency respondents." It
has also identified problems facing
advertisers using AI tools. Nearly a
third of companies are challenged
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JANUARY/FEBRUARY 2019

applying AI to their workflow and
many are confused about what AI is.
Some marketers are still exploring
how programmatic systems differ from
other automated processes, such as
Real-Time Bidding (RTB), the buying
and selling of online ad impressions
through auctions that occur while a
web page is loading. RTB is a type of
programmatic advertising; it represented about 42 percent of programmatic display ad spending last year.
Social advertising is fueling programmatic advertising, as digital video has
increased. eMarketer's study estimates
that 81 percent of digital video ad spending ($23 billion) in 2018 was transacted
programmatically.

Ad Industry Transformation
Despite the efficiencies and cost

savings, programmatic has a dark side.
Some analysts fret about "safe environments" - and the possibility that an
automated system will place ads on an
inappropriate media site that is inconsistent with a brand's image. There are
also trust issues, such as dealing with
fraud, bots and bad
advertisements.
And there's also the challenge of scale. Reeve Benaron,
CEO and chairman of
AudienceX, an ad-tech firm,
recently blogged that middlemarket companies have not
benefitted from programmatic
buying because it's too complex to navigate.
"Programmatic advertising
shouldn't require difficult
choices," Benaron says.
"Whatever the media budget,
smaller companies should have
access to the same cuttingedge tools that the bigger players are using."
Nonetheless, the programmatic matching of messages
and customers is transforming the
advertising business.
In a Forbes interview, Matt Sweeney,
CEO North America of Xaxis, cited the
value of AI and machine learning to
process huge amounts of data crossplatform engagement with customers.
He sees the value of this data-driven
approach in the highly fragmented
media landscape.
"Instead of measuring the clickthrough rate, you let the technology
build multi-metric optimizations and
sequential messages" that allow companies to engage prospective customers "with more content," Sweeney says.
"The new frontier is applying data
to linear media audiences as well as
digital audiences and having it all
connected in a holistic and efficient
way," he adds.
I T I S I N N O VAT I O N

Z_Wei/Getty Images

Programmatic Ad Buying

i3 - January/February 2019

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