Advertising isn't what it used to be. It's more precise than at any other point in history. According to LinkedIn Influencer Tim Cadogan, "programmatic advertising" is expected to "grow tens of billions of dollars" by 2020, but what is it? First there was "paid search" which peaked at the turn of the century and finally became a $58 billion industry--and paid search is still going strong. However, the growth of programmatic is outpacing even that of paid search. Is programmatic advertising set to leave paid search in the dust?
First, let's address what programmatic advertising is and why industries ranging from beauty, to retail, to telcom, to insurance globally are embracing it with such fervor. It's just what it sounds like: The technology allows buyers and sellers to engage in transactions via the programming, or automation, of sophisticated algorithms in a marketplace, or exchange. The "goods" exchanged are digital advertising. It's like the stock market, except ad impressions are getting traded instead of stocks. The sheer size is staggering: this is an industry that operates in trillions of transactions, billions of dollars, and hundreds of milliseconds but what's really interesting is the actual technology behind this movement.
Just how big is the market for programmatic advertising? It involves anyone and everyone who uses digital advertising--in other words, just about every business with an online presence. The market is tremendous. It is also more precise and thus more cost effective than, say, TV advertising, as a result. Programmatic advertising applies on a cross-device level. There's already heavy growth and investment in mobile and rumblings of using programmatic for broadcast advertising are already getting louder.
The birth of programmatic started in 2009 when a number of companies like Google started to dish up a new way of trading advertising space to publishers. It could be done instantly via real-time ad exchange from just about anywhere with internet access. Both sellers and buyers benefited. Buyers could consider every ad impression, figure out its value and then decide on a bid. It was the first time they were able to purchase just what their audiences were after with no waste like with bulk buying. In turn, they were also more likely to pay more since they were getting what they wanted.