This article was written by Sloan Gaon, CEO of PulsePoint.
The industry continued to adopt programmatic in 2014. A recent BI Intelligence study noted that RTB, a key piece of the programmatic pie, will account forever $18.2 billion in U.S. digital ad revenues in 2018, up from just $3.1 billion in 2013. And thanks to that adoption, industry pros are drowning in an alphabet soup of acronyms from DSPs to PMPs and SSPs. But in 2015 that may change thanks to much needed consolidation and marketplace shifts.
From buzzwords to buying, here is how we can expect the industry to change in the coming year.
Private Marketplaces Will Remain a Pipe Dream, For the Near Future.
While I adamantly support the evolution of the programmatic landscape, today’s Private Marketplaces (PMPs) go against everything the promise of programmatic stands for – namely, the ability to find the right audience in a highly efficiency, highly scalable manner. Remember when ESPN tried to become a service provider and launched its own cell phones? Mobile ESPN. That product didn’t take off in the marketplace because ESPN didn’t fit into the current telecomm landscape. There’s a clear parallel that we can draw to the ad tech landscape. Just as consumers didn’t need a branded phone, the ad tech industry doesn’t need private marketplaces. Why? Private marketplaces rely very heavily on content-based ad buys, but the future of data-driven programmatic will rely more on real-time, data-driven audience-based ad buying. Additionally, the current structure of PMPs, which involves select publishers selling to select advertisers, gives campaigns very limited scale and is extremely cumbersome to set up. While PMPs will be something everyone talks about in next year, they will be something few actually do – and can succeed at in 2015.
High Impact Ad Formats Will Begin to Replace Display.
As programmatic strategy continues to evolve for mid-upper funnel campaign objectives, so will the type of ad formats marketers buy programmatically in the next year. The automated stalwarts like standard display will see serious competition from more custom formats. Big winners will be digital video, sponsored content and custom rich-media display units.
Consolidation in the Ad Tech Industry Will Continue.
The ad tech industry has experienced an increase in funding and investments in 2014. Recently, AlleyWatch took a look at the increase in investment in the industry in New York City alone and found since 2011, $1.4B was invested in ad tech startups in NYC over the last 3 years and 30% of that was during the first half of 2014. Will this continue into 2015? Some of those companies who have secured series A or B rounds recently will need to close their next round and will struggle to do so, leading to many acquisitions and mergers.
DMPs Will Become Obsolete.
As the industry consolidates, DMPs are amongst those getting absorbed. And, other players in the industry will provide crucial data, making DMPs less and less important. Instead, exchanges will be powered by their own DMP function along with brand trading desks that utilize their own data. As we continue to evolve, there will be no need for DMPs in our changing ecosystem.
Finally, Improved Ad Quality Will Drive Ad Industry Growth in 2015.
As more advertisers gain a better understanding of the inventory and audience they’re buying in real-time, all of the time, the quality of brands, messaging and creative delivered programmatically will improve. Improved ad quality will encourage more advertisers to shift budgets towards programmatic buys, increase demand and drive growth.
This year, the ad tech industry continued to quickly transform and grow and that won’t change in 2015. We’ll continue to see new terms, like programmatic TV, become common industry rhetoric. While others, like PMPs, might not yet be realized. In the year ahead, there’s one thing that’s certain, there’s no slowing down the growth of programmatic, so folks on the buy and sell side must be prepared for its adoption and the industry’s continued evolution.
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