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Is the Future of Programmatic Premium?

Programmatic direct, or programmatic premium, vies with RTB

Marketers first turned to programmatic advertising—an automated, technology-driven method of buying digital display advertising—to take advantage of the audience targeting and cost efficiencies afforded via real-time bidding (RTB). But as a new, nonauction-based branch of programmatic advertising, programmatic direct, gains momentum, large brands and premium publishers who once shied away from programmatic advertising are revisiting that decision.

Programmatic direct—or “programmatic premium” to better delineate the quality of impressions from those of a typical RTB-made ad placement—will also advance the larger programmatic advertising category, as publishers and brands alike see a promising method for marrying the audience-specific intelligence and workflow efficiencies of automation with the safety and control of traditional direct-with-publisher transactions. Many believe programmatic direct’s financial contributions will be significant. But given the newness of this purchase method, estimates of just how significant a contribution it will have on total US digital display ad spending are still largely speculative.

MAGNA GLOBAL estimates US programmatic display ad spending will reach $7.5 billion this year. Over the next several years, programmatic display ad spending growth rates will begin to level off—a sign of a market nearing maturity. Still, by 2017, the company predicts the amount of US digital display ad dollars transacted via programmatic channels will total nearly $17 billion. MAGNA GLOBAL’s forecast includes both RTB-based digital display ad spending and non-RTB programmatic ad dollars flowing through such channels as programmatic direct or any other API-enabled means transacting across video, banner, social and mobile. By 2017, the research firm predicts programmatic sales will largely overtake traditional direct-to-publisher transactions in terms of ad spending, with both RTB and non-RTB-based programmatic channels accounting 83% of all US digital display ad spending.

It’s important to note that although RTB and programmatic direct each vie for digital display ad dollars, they are not in competition with one another. RTB is primarily used to purchase impression-level inventory in order to meet a performance-based goal, while advertisers typically use programmatic direct to fulfill branding-based objectives. As such, programmatic direct tends to compete with ad dollars transacted through publisher-direct means, and not with RTB.

Behind MAGNA GLOBAL’s optimistic outlook for programmatic ad spending growth is an expectation that investment in programmatic advertising will be driven by large-scale adoption by publishers and media buyers hoping to gain efficiencies from automating the process of negotiating and fulfilling display ad campaigns, as well as greater audience intelligence from programmatic’s impression-level capabilities.

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