Mobile Programmatic: The State of Play

Mobile programmatic technology was meant to be digital advertising’s silver bullet, the tool that made good on the promise of what online could deliver to the marketing industry. But as the technology moves from the Next Big Thing to a standard offering, Tim Maytom asks where it stands today – and what’s next?

Depending on exactly how you classify it, programmatic advertising has been around for somewhere in the region of 20 years. Ever since the first banner ad appeared online in 1994, marketers have been declaring digital the future of advertising, enabling brands to finally ‘close the loop’ and target audiences with pinpoint accuracy.

Today, programmatic technology has evolved into a complex and ever-growing ecosystem that supports an entire industry. According to IAB figures, over 50 per cent of UK marketers are now using programmatic to buy smartphone inventory. The technology, which was once seen as a way to ‘mop up’ unsold inventory, is now the backbone of the digital advertising space.

But as programmatic evolves, does it risk becoming just another buzzword, something that firms simply make a nod towards without truly understanding? And what does the future hold for the technology?

To comprehend where mobile programmatic technology currently stands, we need to break down the increasingly complex ecosystem that utilises it. Only by understanding how each part interacts with the rest can we know where the industry currently stands, and where it might be heading.

Publisher’s clearing house? Not any more
Publishers are the lifeblood of the internet and digital advertising – after all, if there was no content online, there’d be no place to serve ads. Supply-side platforms (SSPs) enable publishers to sell their ad space in an automated fashion using programmatic technology, whether it’s in the form of real-time auctions, guaranteed private marketplaces or anything in between.

By connecting with multiple ad exchanges, publishers can maximise their potential buyers and achieve the highest possible rates for their ads, all while increasing efficiency and eliminating the need for costly salespeople.

“Programmatic trading is growing at a phenomenal rate – it’s predicted that it will account for three quarters of all ad spend in the UK by the end of this year,” says Mike Nicholson, director of business development for mobile at OpenX. “Programmatic advertising provides a complete spectrum of options. While private marketplaces are rising in popularity, remnant impressions are still available on the open marketplace. Programmatic isn’t just about clearing less-desirable inventory anymore, it’s now recognised as a more efficient way of trading.”

“Premium offerings are now the norm,” says Emma Newman, country manager for the UK at PubMatic. “While it’s true that programmatic – specifically real-time bidding – was originally used mainly to monetise publishers’ non-direct-sold inventory, programmatic has moved up the funnel.”

While publishers are now confident enough to sell their most premium mobile inventory programmatically, some figures in the SSP space worry there’s still a significant skill and knowledge gap when it comes to deploying the technology, and understanding the different forms that it takes.

“A study by Circle Research in December 2015 showed that 44 per cent of marketers using programmatic for buying smartphone inventory admitted to having little or no knowledge of the practice,” says Nigel Gilbert, vice president of strategic market development for EMEA at AppNexus. “The statistic highlights that education remains a crucial factor in driving future growth. This is especially important among mobile publishers, who are typically newer to the advertising industry and to the challenges facing digital publishers.”

Newman is more confident. “Programmatic already is the norm across much of the EU, the US and Australia, among others,” she says. “At PubMatic, we began to see publishers and advertisers really being comfortable with programmatic – how it works, how to start to optimise and measure their inventory and campaigns etc – as early as 2014.

“Today, programmatic is table stakes for publishers and advertisers alike. Many of their challenges come from the new, more advanced solutions or as a result of using legacy technology.”

A head start
One of the advanced solutions in question – and one that is currently getting publishers and the industry as a whole very excited – is header bidding. Header bidding aims to move on from the traditional ‘waterfall’ of programmatic trading, where ad space is offered to exchanges one at a time, to a more simultaneous approach that will secure better prices for publishers, and help loosen Google’s stranglehold on the ad industry.

“Without a doubt the advent of header bidding and wrapper tags is one of the most exciting recent developments in the programmatic space,” says PubMatic’s Newman. “In an industry traditionally partial to the needs of advertisers, it’s great to see the widespread adoption of tools that are geared towards helping publishers maintain control over ad decisioning and, ultimately, the future of their businesses.”

The initial developments for header bidding focused on desktop programmatic but changing consumer habits, which have seen mobile become the preferred device and apps the favoured way of interacting with content, have forced the industry to develop mobile-first solutions that integrate this new form of programmatic trading.

“It’s exciting to see the growing demand from mobile publishers for header bidding-like technology,” says AppNexus’ Gilbert. “Mobile solutions provide all the benefits of desktop header bidding in a mobile environment. This allows publishers to manage multiple partners smoothly and reduce latency, empowering them to maximise their revenue and deliver a seamless user experience.”

“Header bidding is the most exciting development, particularly its evolution into apps, as around 85 per cent of time users spend on smartphones is in-app,” adds Mike Nicholson. “While this may seem a contradiction, as apps have no header, the concept is ultimately the same as the desktop variation. Header bidding-style trading in-app is still in its infancy. It’s clear, however, that flooding the DSPs with up to 10 requests from 10 different ad exchanges for the exact same ad request is a grossly inefficient model.”

For SSPs, and by extension publishers, efficiency and the move towards higher ad rates seem to be the key factors driving the adoption of programmatic. What was initially a tool for dead-end inventory has evolved over the past five years into something that can cope with premium content from the most prestigious publishers, and guarantee them both brand safety and high prices.

Data points the way
One of the prime lessons that the digital age of marketing hammers into us is that you can never have too much data – and that certainly applies to programmatic. Everything from targeting to optimising to reporting requires masses of data. At the centre of it all sit data management platforms (DMPs), absorbing information and sorting it into formats that will prove useful for marketers, publishers and ad exchanges.

While DMPs are deployed on both the demand and supply sides of the ecosystem, many have been integrated into demand-side platforms (DSPs) in order to provide marketers with an easier, more efficient way of managing their ad-buying decisions. However, standalone DMPs still exist, and these enable marketers to be more portable with their data, plugging it into a range of DSPs to ensure they are getting the best deal and the widest reach.

“Data management is crucial to the mobile programmatic ecosystem,” says Meghan Falter, solutions consultant at Adobe. “Without data, we can’t know who is engaging with what content and how to best encourage them to continue their customer journey.

“Moreover, programmatic is synonymous with more data. The more variables and possible permutations there are, the more information you need to action the right ad, as well as populate it. What’s holding it back from being used to its full potential is the same as it’s always been on mobile – cookies not being supported on iOS, challenges in identifying who is using which device for what purpose.”

Jurjen de Wal, product director for mobile solutions at Adform, agrees. “Data management is key to unlocking the full potential of the mobile programmatic ecosystem. Already, the majority of programmatic buying is transacted on mobile, and all industry predictions indicate that this will only increase over time.

“What breaks the existing model for brands trying to collect and manage their data effectively are the ‘walled gardens’. The inability for brands to collect device IDs and cookie information easily, to connect these to their own unique customer database and match their customers cross-device, is somewhat at odds with the acknowledgements and advice of key media owners when it comes to customer data ownership, and the need for ‘people-based’ marketing.”

All this talk of cross-device tracking and attribution, however, raises one of the spectres of mobile programmatic. Constant retargeting for products you no longer want. Ads that chase you from device to device, around browsers and within apps. The misuse of data and the aura of surveillance that has led many consumers to turn to ad blocking. How do data management platforms, and the industry as a whole, avoid fostering these fears in consumers and act responsibly with the wealth of data they now control?

“Technology enables brands to have a more tailored conversation with their customers, but it’s up to brands to determine how far they take this,” says Benjamin Tice, data management platform sales leader for EMEA at Oracle. “Consumer perceptions around privacy could negatively impact a brand’s innocent ambition of providing its customers with a more relevant and enjoyable experience.

“Ad blocking is the blight of our industry. The sooner it is abolished the better. It serves no purpose and we should all take responsibility for educating consumers about the value of targeted advertising.”

Adobe’s Falter, meanwhile, advocates a more measured approach to tackling ad blocking and changing consumer perceptions of advertising. “Consumers want two things: firstly, to feel a sense of security about their data and how it’s used, and secondly, to have relevant and seamless experiences with the brands they engage with.

“Brands and agencies have to think very carefully about how they leverage and combine their data for targeting, asking questions like: Is it legal? Is it supported by the tech? Is it adding value for the consumer? It also means the way we think about audience segments has to shift. Instead of a black-and-white cross-sell or up-sell strategy, brands and agencies need to think about the experience they want their customers to have, then build their targeting strategies and segments from that point of inspiration.”

This evolving relationship between consumers, brands and data forms one of the key debates of mobile programmatic. Anyone making use of the technology needs to consider their approach, and the perspective of their chosen audience, whenever they deploy it. Mobile programmatic provides brands with tremendous reach, flexibility and targeting capabilities, but innovation often provides us with tools that, if used irresponsibly, can do more harm than good.

Making demands
DSPs, which manage brand and marketer requests to ad exchanges, have perhaps benefited the most from the growing dominance of mobile programmatic. With the increasing availability of data and targeting options, DSPs can offer increasing amounts of flexibility for agencies and marketers looking to fine-tune how they approach their audience.

“The demand for mobile programmatic has evolved over the past few years in the sense that brands and agencies have realised that it can be used for specific targeting, and are willing to pay more for that capability,” says Tom Cummings, vice president of new market strategy at Fiksu. “Where programmatic inventory used to be fairly low quality, agencies and brands are realising they can use mobile user data to reach granular audiences, hyper-targeting exactly the right people at the right time.

“Especially now, as targeted mobile ads on walled gardens like Facebook are becoming increasingly expensive, programmatic is filling brands’ and agencies’ need to reach specific audiences on mobile, today’s dominant media platform.”

The improved targeting that comes from the addition of mobile data is a huge selling point for both publishers and marketers. This enhanced targeting capability enables publishers to provide more data on their audience and marketers to segment with better accuracy.

“As with any digital ad, brands and agencies on mobile are aiming to reach their ideal audiences on a highly targeted level with both precision and accuracy,” says Cummings. “By using programmatic, the expectation is that the ad-buying system will be more efficient and will better target those specific consumers.

“From the DSP perspective, the most exciting recent developments in mobile programmatic have been a general increase in high quality publishers, which in turn provide a better inventory of ad formats available.”

The increase in the complexity and flexibility that programmatic can offer marketers has led to another concern, however – that the ecosystem has simply become too complex and baroque for anyone to actually understand. As agencies and brands continue to undergo digital transformations, shifting from traditional models of business to online to mobile, can anyone be expected to keep pace with the ever-evolving technology available?

“Technically speaking, the industry itself is more than prepared for programmatic,” says Cummings. “However, ad buyers don’t yet fully understand what exactly the different players do. Data and algorithms tend to lack transparency, so marketers are challenged with fully understanding how exactly different ad formats perform.

“Understanding how it works and who all the various players are can help a lot. The drive and interest are there; the knowledge just needs to catch up. Eventually, when RTB programmatic becomes the standard for ad buying, marketers and developers will be able to spend more time working on creative and more sophisticated ad content.”

That vision of a completely automated ecosystem, where tasks like optimisation and segmentation are taken care of by machine learning algorithms, is part of the reason why there has been an increased drive towards integrating AI into programmatic trading. But if we do succeed in transforming the ad buying and selling process into a truly self-optimising smart network, are we prepared to take advantage of those benefits from a creative standpoint?

Creative approach
The use of programmatic to inform creative is still a developing area, and has been held back by the technology’s roots as a clearing house, but that has started to change.

“Programmatic is much more the norm now, and this has been driven by brands and agencies,” says Rob Brown, head of business development at Weve. “The use of smart data, by which I mean intelligent targeting of the right consumer with the right creative message, is much more accepted and a regular feature in many of the campaign briefs we receive.”

“Advertisers are beginning to recognise that the content of their mobile ad can be adapted to fit where the viewer is and the context in which they are seeing it – on the train to work, for example, or relaxing at the weekend,” says Chris Childs, UK managing director at TabMo. “The result is dynamic creative, in which tools linked to the advertising platform select the most relevant ad content based on factors such as location, time of day, the price of goods, even the weather.”

In many ways, the rise of programmatic has mirrored the rise of mobile. Just as brands, marketers and publishers are all aware of the need to tailor their ad formats for a mobile audience, most now know that programmatic offers a vast array of options when it comes to creative.

“Client demand will always drive adoption,” says Brown. “However, there are naturally varying levels of understanding inside and outside of digital marketing. The use of programmatic will continue to rise as increasing numbers of clients become familiar with its benefits and, more importantly, the value it adds to the media plan. We’ve seen a significant rise in interest from clients around programmatic-based initiatives over the past 12 months, which we see as a great reflection of its progress as a viable mechanic.”

So what’s the problem?
Let’s review. Mobile programmatic is now dominating the industry. Private marketplaces and other ad exchange innovations mean that premium publishers can sell their best inventory using the technology. The exponential growth of data means targeting, optimisation and reporting will grow ever more accurate and in-depth. AI and machine learning innovations are powering the growth of automation and efficiency. Creative is finally catching up with the potential of programmatic targeting. And header bidding promises to overhaul the existing hierarchies that exist, to create a more competitive, vibrant market. So surely there are no problems left for programmatic to tackle?

Sadly, that’s not the case. Talk to anyone in the industry, and they’ll give you a different pain point that needs to be addressed, often directly contradicting what another person has said. Ad creative needs to be more innovative and take advantage of audience data, but it also needs to be less intrusive or it risks driving users to ad blocking. Marketers needs more education on how to get the best out of programmatic, but publishers also need to adapt their practices and ensure they are mobile-friendly. Better segmentation and targeting will drive up engagement, but it will also result in self-cannibalisation and consumers feeling surveilled.

The truth lies in none of these and all of them. Even though programmatic has now become the standard across the mobile marketing industry, we have yet to find the limits of what the technology is capable of, particularly on mobile. And the only way we will discover those limits is by continually reaching for the next level of efficiency and reach.

“The programmatic landscape is complex, and we are all aware of the many flavours of limitations this complexity brings,” says Adobe’s Falter. “However, it’s not an excuse to wait. Rather, it makes it imperative for us to experiment and share our learnings with the industry.”

Despite the wealth of opinions on how programmatic should continue to evolve, there are some common threads among advice for the future. A continued push for education and training among every stakeholder in the ecosystem is one. Another is a consistent drive towards improvements to the infrastructure that underlies the whole digital marketing space.

“Programmatic can often appear daunting due to the overuse of jargon and acronyms,” says Weve’s Brown. “However, it’s important to remember that the premise of programmatic is to facilitate a simplified, automated buying mechanic. As an industry, we need to be much better at adopting language that is more readily understood by those who aren’t working with programmatic on a daily basis.”

“The biggest challenge is the inability of legacy technology like traditional ad servers to allow programmatic and direct-sold inventory to compete side-by-side and to provide cross-channel or cross-screen measurement and attribution,” says PubMatic’s Newman. “As publishers become even more savvy about programmatic, we believe that they will begin to demand unified ad serving solutions.”

Mobile programmatic may no longer be the exciting new technology on the block – if anything, the rise of header bidding shows that it’s in need of a shake-up – but that doesn’t mean marketers should become complacent in their approach to the technology. Now, more than ever, a firm knowledge of where the industry stands and where it’s going is essential to keeping pace with your competitors. And an enterprising, experimental approach to mobile programmatic could be the thing that edges you ahead. One thing’s for sure – there’s much more to come from the technology.

This article first appeared in the February 2017 print edition of Mobile Marketing. You can read the whole issue here.