The simplest definition of programmatic advertising is this:
Using data and automation to make smarter ad serving decisions.
Here are some stats for you for US 2020 ad spending by eMarketer:
- Total US Ad Spending: $258.83B
- Total Digital Ad Spending: $151.29B
- Total Display Ad Spending: $80.56B
- Total Search Ad Spending: $55.17B
- Total Programmatic Ad Spending: $68.47B
If you want to go a little further programmatic will be responsible for 85% of all display ad spending in 2020 (via eMarketer), so programmatic is in very real terms the defacto method of transacting on digital display advertising.
Considering these facts programmatic is synonymous with digital advertising.
Search advertising, the other great chunk of digital media has worked on programmatic principles since its inception. The characteristics include:
- Buy media on an auction
- Buy self service through an interface
- Rapid and real time reporting
- Opportunities for fast and exponentially effective optimizations
- Stratification of inventory based on consumer’s relationship with the advertiser
- Specific targeting based on a variety of signals
- The ability for almost infinite customization of consumer targeting
So, if you account for search as a programmatic ad buying component, then programmatic is really the vast majority of digital advertising, accounting for 81.7% of all digital advertising, or $123.64B in ad spend in 2020.
At that point, programmatic is 47.7% of all advertising spend in the US, including TV, print, radio, and out of home.
For further comparison, here is traditional media spending in 2020:
- TV: $71B
- Radio: $13.76B
- Out of Home: $8.87B
- Print: $25.84B
Programmatic (comprising search and display) is bigger than all traditional media. Programmatic, just display, is almost as big as TV.
So, this leads me to the final point. Programmatic is synonymous with digital advertising, which in itself is synonymous with advertising.
The future state of advertising will see more screens that are digitally enabled, with easy entry for any company that wants to connect into the programmatic ecosystem, providing ad inventory solutions that are transactable through the existing modes of ad buying for the demand side. This is to say new entrants will easily plug into demand side platforms and make new advertising opportunities available through programmatic modes of operating. Traditional TV viewership will continue to descend. Connected TV viewership will continue to rise. Traditional TV spending moves to video and connected TV spending. Digital out of home channels rise everywhere. Mobile devices connect to digital screens for easy consumer remarketing from connected TVs, digital out of home, and digital audio.
This further explains why programmatic advertising is, simply put, advertising.