Programmatic advertising was introduced in 1994 and was a game changer for brands. As it evolved, the technology meant that advertisers could serve content to the right audiences, at a huge scale, and with measurable results. However, the future of programmatic advertising is less certain than it has been for a while. Programmatic advertising challenges associated with the underlying technology now mean that the advertising ecosystem must adapt, and relatively quickly.
What is programmatic advertising?
Programmatic advertising automates the process of media buying using advanced algorithms and data-driven insights. As an automated and scalable process, programmatic media buying enables advertisers to secure exactly the right inventory to serve advertisements to the right audiences, at the right time, and at the best price.
Programmatic media buying happens in one of three ways:
- Real-time bidding (RTB) is a virtual auction of inventory, which is open to all. RTB usually delivers the best price points for reaching specific audiences at scale
- Programmatic direct is when a publisher sells inventory to an advertiser directly using programmatic channels
- Private marketplaces operate in a similar way to RTB auctions, but participation is limited by invitation.
The technology used to enable programmatic advertising includes Demand Side Platforms (DSPs) and Supply Side Platforms (SSPs) or multiple ad exchanges, to buy and sell advertising space and to activate campaigns. Concurrently, Data Management Platforms (DMPs)/ Customer Data Platforms (CDPs) collect user data such as third-party cookies and Mobile Advertising IDs (MAIDs) to enable advertisers to target the right audiences across devices with customised content, and to measure the performance of their campaigns.
Programmatic advertising challenges
The programmatic model is now having to evolve. This is because the lifeblood of programmatic – third party cookies and MAIDS – are on their way out. Many internet browser owners are already restricting the use of third-party cookies, and Google, which owns the lion share of the browser market, is preparing to end the use of third-party cookies by 2023. Google is also following the lead set by Apple in the smartphone OS space, and giving Android users the opportunity to delete their advertising IDs. When Apple made its Identifier for Advertisers opt-in in 2021, $315 billion in market value was erased from companies that rely heavily on advertising, such as Meta, Pinterest, and Snap.
The loss of third-party cookies and MAIDs is so significant because the programmatic industry has relied on them to identify users as they move around the web and mobile apps, allowing them to be served with content that is relevant to their lives.
However, while consumers love personalised content, many also care deeply about their privacy and have grown wary of advertisers tracking them online. Without a simple consent mechanism with a clear value exchange, some consumers have even found personalized advertising to be more creepy than compelling.
This, therefore, is the reconciliation challenge facing advertisers: balancing the need to continue leveraging the power of programmatic advertising, with their need to respect the privacy of web users.
The future of programmatic advertising
Fortunately, a new, privacy-first approach to programmatic is possible. This model will give consumers the meaningful engagements they demand in an open way that is compliant with privacy regulations. And importantly for advertisers this new approach will deliver relevant audiences at scale.
The future of programmatic lies in new approaches to online verification. Innovations like the Novatiq Fusion and associated Zenith and Hyper IDs are at the forefront of the new programmatic industry emerging today.
The Zenith ID enables publishers and advertisers to verify their digital audiences, using telco network intelligence to stitch together consented first-party cookies to enable an absolute view of each user. Verification takes place behind telco firewalls against obfuscated IDs that are not personally identifiable information.
Meanwhile, the Hyper ID protects first-party data for each advertising transaction. Generated for each individual ad request, the Hyper ID is used by the buy-side to exchange for an audience segment in real-time. This enables first-party targeted audiences to power programmatic advertising campaigns safely and securely.
We believe the future of programmatic will be defined by these and similar privacy-first IDs working together in an interoperable system that plugs-in to the existing programmatic infrastructure. As a result, advertisers will be able to reach the perfect audiences every time without having to resort to tracking people. That’s a better outcome for brands and for the customers they serve.