The latest survey processed by the Interactive Advertising Bureau Italy, entitled “Programmatic Advertising in Italy: the Current scenario and Future Trends”, involving 98 actors belonging to Ad Networks, Media Agencies, Tech Media Agencies, Demand Side Platforms and Supply Side Platforms, focused on the current situation of digital adv and the related investments value chain in our country.
Let’s give a look to figures first: according to the analysis of the sector conducted by Technavio, globally speaking, programmatic adv should reach 84 billion dollars in 2019, to further increase up to 210 billions in 2022.
Currently, the most used digital adv sales model is Real Time Bidding. According to such automated system both advertisers and web pages owners take part in auctions. The system turns on when a user “lands” on the website. At that point, the owner notifies that a user with a given set of characteristics is inside its space and the auction begins involving different advertisers (or media agencies acting on their behalf) who want their ads to be displayed. Each bidder enter the maximum amount they are willing to pay, and once a winner has been identified, the Ad Server sends to the user’s browser the winning ad. All this in just a few seconds.
Based on the current figures, this system seems to work and to be highly appreciated. To the point that, 30% of the 204 billion dollars invested globally in the digital advertising business, i.e. 57 billion dollars, was actually invested into programmatic adv.
This year, in our country, investments in the digital adv have reached about 3 billion Euros, 16% of which have been devoted to programmatic adv. Forecast say that 102 billion Euros will be spent by 2020, with an increase of +80%. Of course, nothing to do with the US, where, in 2016, investments reached 24 billions, however, programmatic adv has turned out to be one of the most dynamic drivers of the sector.
We may then wonder which is the problem, in such a positive scenario. If you are interested in finding out more either about the dark side of this issue, or the margin of improvement, you may read “Programmatic adv: higher investments, less advertisers. Here is why”; with reference to the Italian scenario, instead, I will sum it up in just one word:money.
Out of 100 Euros invested, indeed, 60 Euros are literally “swallowed” by all the players involved, and only 40 Euros are left for publishers. It is quite obvious that such dispersion of funds is excessive and definitely not sustainable in the long term.
Bear in mind that, in our country, this is not the only problem connected to programmatic adv. There are still several issues to be solved concerning both the demand and the offer, such as the duopoly (“Facebook and Google, the duopoly advertisers are worried about ”) oppressing the sector, the lack of metrics transparency, frauds, and the complexity of a technology not everybody can actually use. Still, money is the sore subject.
According to IAB a possible solution may be developing an evolved certification, based on the Blockchain, which could provide investors real data about how much money gets dispersed and how much ADV space they are actually purchasing.
As a matter of fact, the new Blockchain based platforms for programmatic adv will allow users to control the whole value chain and ADV campaigns, thus leading to a higher optimization of sales strategies.
The next generation programmatic adv platforms boast several strengths: from the level of security of auctions, which stakeholders will be able to check directly, to the protection of both data and privacy; from the transparency of contracts to the possibility to blacklist fraudolent users, and reducing botnets activity; from the removal of hidden costs, to the reduction of operating costs, the creation of credit lines, the opportunity for faster payments and even instant payments.
It seems more than enough to hope the new technology will be introduced very soon with regard to programmatic adv. And not only.
Which are the aspects of programmatic adv that make you wonder the most? Tweet @agostinellialdo.
To find out more about the digital world, you may want to read my latest book entitled: “People Are Media”
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