Programmatic advertising is undergoing a decisive change as privacy-invasive practices give way to more ethical and effective alternatives. In this blog, we briefly recap the history of programmatic advertising, some of the recent changes, and what the future of programmatic advertising may hold. But first things first, when did programmatic advertising start?
Programmatic advertising started out in the early 2000s. The approach involves using automated systems to buy and sell ad space, relying on algorithms to analyse and reach audiences. The innovation has brought unimaginable efficiency and precision to an industry previously dominated by manual systems.
The advent of Real-Time Bidding (RTB) in 2009 had a major impact on programmatic advertising, enabling advertisers to bid on impressions in real time and based on user data. Concurrently, introduction of Demand-Side Platforms (DSPs) and Supply-Side Platforms (SSPs) streamlined the buying and selling process.
With advances in AI and data analytics, programmatic advertising has grown increasingly sophisticated, enabling personalised ads that have improved ROI for advertisers. In 2022, ads bought programmatically accounted for 84% of global digital advertising spending. The share is forecast to increase to 87% by 2026.
However, the practice now faces criticism over privacy concerns, and global privacy regulations and consumer demand for privacy-conscious approaches are forcing change.
Today, traditional programmatic methods that rely on third-party cookies for user tracking and personalised ad targeting are being phased out due to these regulations and industry changes led by companies like Apple and Google.
As a result, the industry is shifting towards privacy-first strategies like contextual advertising, which targets ads based on the content of a webpage, rather than personal data. It’s also pivoting towards solutions based on first-party data, collected directly from consumers with their consent. This change aims to maintain effective ad personalisation and audience engagement while respecting privacy.
This year and next will likely prove crucial in the evolution of programmatic advertising. Several important changes are taking place that define the market for years to come. These include:
From a privacy perspective, the advertising industry is maturing, and programmatic advertising is the future. The move away from tracking cookies to privacy-first alternatives is to be welcomed. Not only will it help brands comply with privacy laws, but it will mean that consumers can continue to benefit from tailored content and engagements. Without new innovations around programmatic advertising the danger would be that advertising returns to the bad old days of “pay and spray” campaigns.
The global programmatic advertising market grew from $7.31 billion in 2022 to $8.87 billion in 2023 at a compound annual growth rate (CAGR) of 21.4%. What’s more, the market is forecast to continue its impressive growth and reach $19.12 billion by 2027, at a CAGR of 21.2%. These figures reflect an ecosystem that is adapting to change well and is confident of its privacy-first future. The future of the programmatic advertising market looks bright.