October 15, 2013
Automated advertisement buying is used by marketers where computerized systems focus on specific users based on their consumer data and Web browser histories. Machines and automation are handling more of the process of purchasing online advertising. These new methods of ad buying are expected to increase by more than 50 percent, and are becoming a more popular trend among advertisers to target their ads with more efficiency.
The new method is projected to grow by 56 percent this year to $7.4 billion in the U.S., according to a study by Magna Global, the research and ad-buying group of the Interpublic Group of Companies. “Programmatic buying” is thought to be approximately 53 percent of the U.S. market in display related ad business that is worth $14 billion, notes Magna.
“Automated buying is a major departure from the traditional ad-buying process, which for decades has largely relied on relationships between buyers and sellers,” reports The Wall Street Journal. “Programmatic buying began as a way for Web publishers to sell lower-value ad inventory, but it is gaining traction as publishers get comfortable with the idea of using automated systems in the buying and selling of premium inventory.“
This year, approximately $3.9 billion of the likely spending in automated ads will be from real-time bidding by machines that automatically place bids for inventory that meets their ad specifications during the milliseconds they become available, explains Magna. “Digital media has reached scale and a level of standardization where you can trade it as a commodity,” said Vincent Letang, executive vice president of global forecasting at Magna Global.
“For online video formats, programmatic trading has been lagging behind display in recent years,” notes the Magna study. But the report “estimates that this year 25 percent of the inventory will be traded programmatically, and that proportion should climb to 69 percent in 2017.”
Real-time bidding has put pressure on display ad prices, creating concerns among a few publishers. Last month, AOL hosted an event to persuade advertisers to spend on its automated ad operations, similar to the “upfront” pitches TV networks typically make to advertisers every spring.