Programmatic advertising is an adtech (advertising technology) element. Essentially, programmatic advertising is a way for marketers to use technology to automate procedures like bidding, requesting, and negotiating when it comes to online ads. According to the statistics below, it has been one of the most rapidly growing segments of modern advertising:
Source: https://www.statista.com/
This tactic uses algorithms and tools to determine, order, and, eventually, purchase some much-needed ad space. It allows marketers to optimize the ad copy, the targeting and, ultimately, create a marketing plan with specific KPIs and target audience that will do the brand’s efforts justice across all marketing platforms.
The main trend of this year is the widespread use of artificial intelligence. It automates ad buying, optimization, and placement based on demographics, behavior, and context. AI is also applied in search advertising, social network advertising, and more. The other big trend affecting the entire market is the transition from third-party cookies to alternative IDs, particularly first-party data. This shift completely changes the entire landscape of the digital advertising market. But what is it that will shape programmatic advertising trends for this year – and beyond?
AI Will Be Golden
Programmatic advertising already uses AI, which makes it a lot more efficient. AI allows programmatic advertising to use data to educate itself and measure and optimize ad performance,
From the ad’s position to the channel, device, copy, and visuals, AI offers valuable data that marketers can use to create a personalized ad message.
Through AI, marketers can study the audience more holistically since AI can distinguish between millions of patterns that marketers—or humans, for that matter—can not see. It can also map the customer journey effectively, pinpoint the optimal course of action, and improve strategy and planning.
Another reason AI will continue to dominate programmatic advertising and the marketing actions that it can help boost is the fact that it can combine and analyze a wide variety of data: from age, educational background, and gender to the preferred device according to gender or age, or purchases per geographic location, AI can create segments updated with real-time data.
AI can also allow marketers to create buyer personas similar to a brand’s ideal customer as the customers themselves.
AI uses data from previous transactions, behavioral data, geo-location, and everything that matters to create buyer personas and generate messages for these personas. Since AI-generated buyer personas can correspond to prospects one-on-one, the ad’s message is spot-on and tailor-made.
By recognizing patterns effectively, AI can allow marketers to create and place ads that will sell while reducing costs like Customer Acquisition Cost (CAC) and increasing metrics like the sought-after ROI.
Amazon, Google, Meta, TikTok, and other big tech companies have already introduced AI technology into their advertising tools. They generate ideas for creatives and even create ready-made visual materials and videos. Besides, AI helps with targeting by processing huge amounts of data and helping to determine customer preferences more accurately.
Despite the existing problems in training neural models (several large media have sued AI developers for illegally using their content to train neural networks), significant progress has been made during the last year. Neural networks have gained legal access to large data platforms, which they now use as training samples, as evidenced by contracts signed between OpenAI and Reddit, Google and News Corp., and others.
Major market players are already setting the basic rules for the fast-growing AI market, laying a strong foundation for further growth, such as the new “Frontier AI Safety Commitments” signed by Anthropic, Amazon, Google, Meta, Microsoft, and OpenAI.
Connected TV Is Here to Stay
Connected TV (CTV) is expected to be widely used in programmatic advertising. CTV can deliver personalized content instead of a classic TV – connecting it to the Internet and accessing apps like Netflix, Apple TV, or even Spotify.
All of the above display ads, seeing as they’re platforms that can deliver tailor-made, optimized content, especially to demographics like Millennials and Gen-Z that enjoy anything personalized far more than their predecessors (Boomers and Gen-X).
As of 2024, all the most demanded streaming services have ad-supported packages. Netflix, Paramount+, and Disney+ presented their offering with ads earlier, while the last big tech to introduce own ad-tier plan was Amazon Prime in January 2024.
Data shows that the amount of subscribers to advertising-inclusive packages has now surpassed the number of subscribers to ad-free streaming across all major platforms.
New ad formats in CTV provide new opportunities for advertisers: “shoppable carousel,” “pause ads,” “Add to Cart,” and “Learn More” on-screen options are now available for advertisers in Prime Video.
Platforms like YouTube deliver specific and personalized ad messages to free plan users that effectively urge them down the sales funnel. According to the following YouTube stats, “YouTube has 2,70 billion users as of March 2024.” Since CTV is a way to access this platform, programmatic advertising can create targeted ads for a broader audience—not to mention the high engagement rates of video ads.
Of course, the above statement is not set in stone. Remember that video ads are a great way to engage, so long as the content is personalized and optimized. After all, no consumer loves the idea of their screen time being interrupted by an ad. Programmatic advertising can help marketers create fewer but more engaging ads that will “speak” to specific audiences through all the right devices.
Switch to Alternative IDs
Finally, the time has come, and third-party cookies will finally become a part of history in 2024. The elimination process has already been started and is to be finished by the end of the year. Due to the huge impact of this technology on the market (more about cookies in the programmatic ecosystem), it takes some time for the market to switch, so both publishers and advertisers are forced to look for alternatives:
- First-party data: data obtained directly from users. This information can be used for targeting.
- Alternative identifiers that are similar in functionality to third-party cookies but comply with current privacy regulations, such as Google’s Privacy Sandbox.
- Contextual targeting is selecting an audience based on user search queries or watching similar site categories. Relevant ads are then shown to this audience.
All alternative identification technologies must not violate the privacy standards prescribed in regulations (GDRP, CCPA, etc.) and must allow the use of effective advertising strategies with targeting.
The cookie apocalypse and transition to alternative targeting technologies have been the biggest trends in programmatic advertising since 2021.
OTT and DOOH
These acronyms may seem confusing, so let’s start with definitions:
- OTT: It stands for Over-The-Top. Through OTT advertising, consumers can access video content on their CTV device through their internet connection.
- DOOH: This stands for Digital-Out-Of-Home advertising, essentially combining Digital and Out-Of-Home offline advertising.
Let’s see why these two will be essential components of programmatic advertising in 2024 and beyond.
OTT services that can be accessed by CTV are top-rated. They are expected to replace regular TV as we know it. To put this statement into numbers, “88% of households are reachable by Connected TV advertising“. That is in the US alone. OTT streaming services (Amazon Prime, Disney/Hulu, Netflix, HBO MAX, etc.) offer programmatic advertising the opportunity to grow with their market. OTT advertising is available through more means than OTT streaming services, though. This segment grows not only in the countries of North America and Western Europe but also in other regions. In particular, the OTT revenue in the countries of Eastern Europe OTT will be almost doubled by 2029.
Gaming consoles like PlayStation or Xbox also run to receive and display CTV Video and Display ads.
But while OTT keeps people indoors, programmatic advertising will be significantly influenced by what can be advertised outdoors. DOOH could be like the products placed near the counter that make the perfect impulse purchase.
Marketers that use DOOH for their programmatic advertising can combine location data with their ads, allowing them to write tailor-made content. This content’s reach can be immense, as brands can display their DOOH ads in train or bus stations or shopping malls. GSTV (Gas Station TV) shows video content with ads at more than 27,000 gas stations around the U.S. according to Comscore, it has approximately 115 million unique viewers each month.
Think of Times Square, for example. It is a hotspot for DOOH content that can reach more consumers. Programmatic advertising can refine DOOH using real-time behavioral data, eventually displaying a highly personalized and targeted ad.
DOOH advertising is available in Google Display & Video 360. With its simple tools, one can easily start an ad campaign in railway stations, ports and airports, sports arenas, and other places.
DOOH is so prominent in programmatic advertising and will be a must-have in 2024 for another reason: It allows marketers to utilize creative content and even UGC through their brand’s social media. Moreover, DOOH can help create an omnichannel experience through targeted advertising, location data, and redirecting prospects to each brand’s closest salespoints.
Podcasts And Voice Assistants
Podcasts are to Millenials and Gen-Z what radio was to Boomers and Gen-X. There are as many platforms for podcast hosting as there are podcasts covering all tastes and interests. This means that they can penetrate a broader audience spectrum and allow more people to engage with a brand’s ads.
Programmatic advertising allows brands to find ad space and create and execute targeted ads for podcast listeners. Podcast ads can either be in the form of copy to be read by the host, responsible for incorporating the ad copy into the podcast’s content, or a dynamic, personalized, and tailor-made ad.
The first method is effective since it is seamless and non-invasive. The second method is effective due to how its content can be hyper-personalized.
Finally, never forget the data goldmine that is a voice assistant in programmatic advertising. Siri, Alexa, and other voice assistants can help marketers identify trends that would be impossible without using programmatic advertising.
Like podcasts, voice assistants can “display” an ad or a brand’s message by merely responding to a user’s query.
According to Deloitte’s forecast, in 2024, the world’s audio content consumers will exceed 1.7 billion (audiobooks—270 million, music streaming—750 million, radio listeners—4 billion). The annual revenue from these formats is also mostly increasing: the total increase compared to last year is approximately 7%.
On May 2, 2024, IAB Tech Lab published its Technical Measurement Guidelines. The document is intended to increase consumer confidence in the podcast market, and this has already been achieved.
Brands that use cross-platform audio (online radio, live audio broadcasts, and podcasts) as part of their media strategy achieve superior campaign performance, better marketing performance, and, as a result, more revenue.
Reasons To Use Programmatic Advertising
Programmatic advertising encompasses a toolset that can help brands improve many components of their marketing plans, such as targeting, key metrics, marketing attribution, and reporting.
The Multichannel and Metrics Benefits
Marketers can use programmatic advertising across various channels and ad networks, making it a more efficient choice than AdWords or YouTube, which share ads with their own network.
Programmatic advertising can also use all devices. Nothing is out of bounds, as you can display your ad on tablets, mobile devices, and desktops, as well as the CTV and smart billboards mentioned above.
Because of its nature, programmatic advertising uses AI. Marketers know how beneficial this can be for key marketing metrics, offering better segmentation and hyper-personalization options.
Better Targeting
Programmatic advertising allows for better targeting as well, again because it is based on AI technology.
Programmatic advertising is one tool that can help brands laser-target their audience with similar content that offers real-time data for the brand to utilize, with new segmentation options that match the user’s needs at that specific time.
This type of targeting can boost the campaigns and create similar audiences that brands can target second, expanding their reach.
Reporting
The insights brands get while using programmatic advertising are among the most valuable in the business. They’re real-time and filled with big data that can benefit all campaigns on all devices and platforms.
Tailor-made ads and laser-targeting allow marketers to look at their audience both as a group and individually. How each prospect responds to a programmatic ad can reveal a lot about their preferences, allowing marketers to analyze each customer’s behavior and see their individual responses to each marketing stimulus and their response’s impact on their demographic.
The Takeaway
Nowadays, consumers have a wide variety of platforms, content, and devices, and they’re free to pick and choose what suits them best.
Microsoft runs ads in their Chatbot ‘Copilot’, Spotify offers free and premium versions, Netflix, Amazon, and Disney offer an ad tier for viewers, and YouTube is still free and up and about. Users are agile and can use all devices to tailor an experience best suited for them.
The real-time experience of programmatic advertising and its ability to automate and support multi-network ad space purchases are bound to change the way marketers create, place, and optimize ads.