Is Programmattic the future of digital advertising?

I recently attended the first South African Programmatic Summit in Cape Town. The event was organised by ChargeAds, and focused on educating the industry about the important role that programmatic will play in digital advertising.

The audience consisted primarily of members from agencies, advertisers and publishers — and while there’s clearly still more questions than answers at this stage — it looks like programmatic advertising may just be the future of online advertising. Here’s why:

Let’s start at the beginning — what is programmatic advertising?

Programmatic advertising is essentially the automation of the buying and selling of online ads. The process is largely managed by demand-side and supply-side software platforms like ChargeAds, where advertisers, agencies and publishers can book campaigns and monitor performance. No sales person needed. No insertion orders.

To a large extent premium advertising is not performance based. The agency or advertiser books a campaign with the publisher for a set number of impressions at a set CPM, and the campaigns runs until all impressions have been served. The publisher (usually) gets paid in full regardless of how poorly the campaign actually performed. This low risk coupled with very high CPM makes premium the ideal option for publishers.

With programmatic it’s a somewhat different game. CPMs are much lower than premium — a CPM of $1 can be considered good — and is largely determined based on performance. The better a campaign performs, the higher the CPM. This incentivises publishers and agencies to optimise campaigns as the advertiser gets a better return on her investment while the publisher gets to make more money on remnant inventory.

Will Programmatic hurt Premium?

One of the biggest concerns from publishers is whether programmatic advertising will hurt their premium offering. There is a risk that running programmatic advertising may hurt Premium, but I believe that the onus is on the publisher to clearly show the value that their premium option offers to advertisers.

Programmatic advertising has traditionally been seen as a way of filling remnant inventory and there is a fear that advertisers may decide not to book a premium campaign if they know they can get onto a publisher’s site through programmatic advertising networks.

Is Programmatic the future?

It’s still too soon to tell, but I think programmatic is set to change the digital advertising landscape. There is a lot of fear from the different role players involved when it comes to programmatic advertising.

Agencies are scared that robots or machines will replace humans in the ad buying process. Publishers are scared that programmatic advertising will devalue their premium advertising module.

But at the end of the day this is a fast-changing industry and you have to adapt to keep pace with the new technologies. Programmatic advertising may just hold the key to unlocking potentially huge revenue streams in online advertising.