Programmatic Buying Expected to Increase

22% of marketers plan to raise budgets; video is seen as opportunity
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Programmatic advertising is expected to grow significantly, according to a new study by RBC Capital Markets.

In the study, 22% of the marketers said they plan to significantly increase the percentage of their budget allocated to programmatic. Just 2% plan to decrease programmatic buying modestly.

Mobile and video advertising present the highest opportunity for programmatic, according to the survey.

Programmatic advertising involves the use of data to target audiences and some degree of automation to select appropriate inventory and execute the buy. With the promise of greater efficiency and effectiveness, agencies are pushing programmatic. Major media companies have begun to at least experiment with a new way of buying and selling TV advertising in particular but have concerns that it could commoditize their inventory and push prices lower.

“Advertisers have finally decided to follow, as the initial proof of concept phase associated with selling ‘remnant’ or ‘low-value’ inventory appears to have passed, and now, we see incremental evidence of 'premium’ or ‘high-value’ inventory flowing through Programmatic channels. We expect this to continue as Programmatic moves up the stack,” RBC analyst Rohit Kulkarni says in the report.

The RBC survey of more than 1,200 marketers, agency execs, marketing consultants and media companies, found that programmatic is still in its early days, with 8% saying they spend more than 20% of their marketing budgets via programmatic channels. Another 15% say they spend between 10% and 20% programmatically while 34% say they have yet to use programmatic.

Respondents also think programmatic advertising is becoming more effective. RBC says 13% of respondents indicated that ROI from programmatic spend has “dramatically improved” in the past 6 months vs. the 2% who indicated that ROI has “somewhat” or “dramatically” deteriorated. In addition, roughly half of advertisers thought their programmatic ROI had improved over the last 6 months, with a relatively small percentage of respondents—less than 2%—thinking that their programmatic ROI had deteriorated over the last 6 months.

“All in, we believe overall awareness and adoption of Programmatic Advertising will continue to rise. As incremental dollars start flowing through this channel, we think technological and cultural improvement will lead to structural changes in the ecosystem,” says Kulkarni.

RBC worked with Ad Age on the study.

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