Privacy and leaky supply chains hamper programmatic growth
Growth in programmatic advertising continues to rise, however its adspend growth is slowing due to concerns over privacy and supply-chain challenges, according to a new report from Zenith.
In 2020, 69% of all digital media will trade programmatically, up from 65% this year, according to the Programmatic Marketing Forecasts 2019, published today.
The total amount spent programmatically will exceed US$100bn for the first time in 2019, reaching US$106bn by the end of the year, and will rise to US$127bn in 2020 and US$147bn in 2021, when 72% of digital media will be programmatic.
The UK and the US are the most advanced programmatic markets in share of digital media, where respectively, 87% and 82% of digital media will trade programmatically in 2019.
However, expansion of programmatic adspend is slowing, falling from 35% in 2018 to 22% in 2019, and forecast at 19% in 2020 and 16% in 2021.
Zenith said the industry faces challenges that need resolution before marketers, publishers and consumers realise "its true potential".
“The ongoing death of the cookie means that the industry needs to rethink the way we design targeting and personalisation while respecting consumers’ privacy rights,” said Matt James, Zenith’s global brand president.
“High-quality, first-party data is more vital to the success of programmatic marketing than ever before.”
The Zenith report also suggests that the digital ad supply chain - long accused of leaking value - needs cleaning up.
Opaque fees and providing unknown value between the booking and delivery of an ad were sited as the key barriers worrying advertisers.
“Brands and buyers should review every platform they contract with, to ensure they contribute to campaign goals transparently and effectively,” said Benoit Cacheux, global chief digital officer at Zenith.
“They should end their relationship with platforms that do not.”
The report also touches upon the need to balance privacy and personalisation, and suggests new technology and processes should be developed that better balance consumers’ need for privacy with the benefits of targeting and personalisation.
GDPR in the EU has made some forms of personal data unavailable, and the Information Commissioner's Office (ICO) has given a Christmas deadline for the adtech industry to make itself compliant with the regulation.
As part of that brief, last week the ICO hosted a closed door meeting to discuss the issues. Sources in attendance told Mediatel News that as the spotlight is being placed on the open programmatic market, there seemed acceptance by industry that there needs to be "quite a bit of change" to be more compliant with GDPR.
This is likely to reduce the value of the open market "significantly" as much less data will be passed to buyers in the bidding process. Consequently, this will have "big implications" for publishers, who already feel under-valued and a further devaluing could be a step too far.
It will constitute "an even bigger change" for marketers who have "engaged the least in regulatory discussions thus far" and will need to shift where budgets are spent to ensure they are compliant in who they work with.
The most affected will be independent adtech companies who are already changing their business models to adapt to a new world.
The California Consumer Privacy Act, which comes into force in January, is likely to further these issues.
Meanwhile, some browsers are blocking the third-party cookies that programmatic advertising traditionally relied upon for measurement, insights, targeting and retargeting.