Consumers have long accepted that marketers are collecting data from their online lives to learn their interests and preferences, and many now expect ads geared specifically to them. So it makes sense that programmatic buying – with the fast, audience-centric approach it fosters – is completely dominating the digital display ad industry.
This year, 73% of display ad spending will be programmatic, and the number will rise to 82% by 2018, according to eMarketer. The research firm has also named the key factor driving the growth: mobile. Why? Advertisers want to reach people where they are, and where they are is on their mobile devices.
According to the Cisco VNI report published in June, traffic from smartphones will surpass PC traffic by 2020. Further, the 2016 “Internet Trends” report by KPCB’s Mary Meeker indicated global mobile users are spending four hours a day on their phones, and the number jumps to five hours a day for U.S. users. The more time people spend on their phones, the greater incentive for advertisers to reach them there. At Equinix, we enable the mobile ecosystem to deliver low-latency connectivity for our Ad-IX advertising ecosystem to help advertisers streamline the bidding process. That means this trend is right in our wheelhouse.
Programmatic ads are automated ads delivered to a destination ad server based on predefined campaign parameters. Maybe the most talked about type of programmatic advertising is real-time bidding (RTB), which uses near real-time systems and algorithms to present data-driven, targeted offers to individual consumers in the time it takes the webpage they’re viewing to load.
The programmatic approach improves efficiency and reduces human error, and in the case of RTB enables ads to be personalized to specific audiences, increasing the chances of success. With advertisers feeling constant pressure to get the highest return on investment possible in their marketing campaigns, programmatic advertising makes obvious sense.
According to eMarketer, programmatic display ad spending will continue to grow at double-digit rates for the next several years, hitting $25.23 billion this year and $37.88 billion by 2018. And eMarketer says mobile will be the major driver of programmatic growth through then. It estimates mobile programmatic ad spending with grow 65.7% in 2016 to $17.70 billion, far exceeding spending on desktop programmatic advertising (involving laptops, desktop computers). And it projects that by next year, mobile will account for about three-quarters of all programmatic ad spending.
Lingering Concerns and a Solution
Concerns linger amid the impressive growth of programmatic advertising, and mobile’s critical role in sustaining that expansion. In AdRoll’s 2016 “State of the Industry” survey of 1,000 U.S. marketing professionals, 37% of respondents named “users/consumers don’t convert on mobile” as among the biggest challenges in mobile advertising. And fraud remains a huge issue across the online advertising industry. Adweek estimates that last year, nearly 15% of the digital advertising industry ($6.3 billion of it) was based on fraudulent activity.
But the Equinix Ad-IX ecosystem is a place where participants can not only give themselves the best chance to win ad bids on mobile or any other platform, they can also more easily spot the fraudulent ad impressions that are skewing industry numbers.
Our Ad-IX ecosystem brings together all the industry participants (ad exchange, demand side platforms, ad networks, etc.) to directly connect on Equinix’s global interconnection platform. That reduces latency during the real-time bidding process to single digit milliseconds, so there’s more time for analysis of Internet user profiles and other data that can produce more informed bids, and more successful bids. Reduced latency also provides more time for anti-fraud analytics, so the odds increase that advertisers can spot fake ad impressions. In short, participants in the Ad-IX ecosystem have a greater chance of successful bids and rooting out fraud. That’s a good combination as the mobile-driven programmatic advertising trend continues to take hold.
Watch this video on how our Ad-IX ecosystem helps real-time bidding participants. And read an Equinix white paper on an approach to reducing online ad fraud.
- Keep up with the latest on digital advertising fraud on the Equinix Forum Anti-Fraud Spotlight
- Learn about the Interconnection Oriented Architecture™ and how an interconnection-first strategy will optimize digital advertising capabilities. Download the IOA™ Playbook here