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Programmatic is Maturing – It’s Time for Publishers To Stop Fearing It

The results are in for the Adform RTB Trend Report Europe Q4 2013 and they spell good news for programmatic: Advertiser spending continues its upward trajectory, and there seems to be no end in sight.

 

RTB spending increased 32% from Q3 to Q4; and is 366% higher than it was this time last year. Anyone who thought programmatic was a passing fad must now be convinced of its staying power.

 

Mobile and tablet inventory grew at an astounding 518% in 2013, and today account for over 13% of all RTB impressions sold in Europe. In this respect, programmatic seems to be doing a better job in following the consumer to the mobile web than the direct channel. Advertisers are clearly eager to engage their customers in the channel, and have seized the opportunity that programmatic provides.

 

More significant is an interesting shift in programmatic campaign types. Just 18 months ago, programmatic was used primarily for performance and retargeting campaigns. Today we see a greater number of more personalised, awareness-raising brand campaigns, as evidenced by very strong demand for rich-media and escalating engagement metrics.

 

And escalate they did! From Q3 to Q4, the average engagement rate in Europe was up 5%, while engagement time jumped an impressive 42%. Consider this; the average engagement time in Q4 was 15 seconds.

 

But it’s not just advertisers who’ve benefited; 2013 was very kind to publishers. CPMs continued their ascent, growing 67% for the year and achieving an all-time high in the fourth quarter. And gone are the sharp price spikes that plague early-stage industries. As more advertisers and publishers build programmatic into their yearly plans, we can expect to see continued price stabilisation.

 

Why then, with rising prices, steady demand and high quality brands, do publishers still fear the RTB? From our perspective, we see plenty of reasons for them to embrace programmatic. To begin, higher CPMs – recorded quarter after quarter – should erase publisher fears that programmatic is a ‘race to the bottom.’

 

Second, programmatic sales models are expanding and let a publisher structure deals that are more to its liking. Publishers can choose to sell in open ad exchanges, via private marketplaces, or even at fixed prices. Programmatic isn’t just about trading inventory anymore; advertisers are using it for audience intelligence, content optimisation, and better engaging with the consumers – all activities that can help publishers earn even more money.

 

Third, the higher CPMs should prompt publishers to integrate programmatic activities into their direct channel, with sales teams speaking to clients about their direct and programmatic budgets (and you know they have them). It’s time to view revenue more holistically; your clients are your clients, whether they buy your inventory directly, or though RTB pipes.

 

But if publishers want even more assurance, they can find lots of ways to increase CPMs by looking at the trends we’ve seen over the past year.

 

For instance, we know that brand marketers are going programmatic, and they have impressively large budgets to spend. You can increase your programmatic revenues by offering a plethora of rich-media ad formats brand marketers prefer (and consider using standardised formats such as the IAB Rising Stars to ensure a seamless brand experience across publications).

 

And by the way, offering rich-media formats programmatically may also be a good way to attract premium brands to your site that your direct teams haven’t had the time to nurture. A positive programmatic experience just may lead to exclusive deals later on.

 

Moreover, the advertiser’s willingness to pay a premium for top performing banners has remained constant throughout 2013. Each quarter has seen a steady rise in mega-format CPMs; and video banners, with their exceptional CTR performance, are in the stratosphere. Publishers eager to improve the eCPM of their programmatic inventory would be wise to offer more of these banner formats to the real-time markets. Further, high performance justifies charging even higher CPMs.

 

All in all, publishers should be good about jumping into programmatic with both feet. Numerous trends point to continued stellar growth in 2014. Rich Media inventory is becoming widely available in the global ad exchanges, making digital advertising an attractive option for brand managers. Moreover, programmatic is proving an effective means to scale mobile and video campaigns. To all publishers I say come join the party!

 

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