Jan 30, 2017 - Economy & Business

Programmatic advertising to increase 26% in 2017

A new eMarketer study predicts programmatic display advertising will grow by more than 26% in 2017, even though most publishers admit they don't make that much money on it.

What is programmatic advertising? Have you ever been followed by an ad as you move from site to site that shows a pair of boots you almost bought on eBay? That's a programmatic ad. They are ads that can be targeted very specifically at scale, and are priced very low through an automatic bidding system.

Why is it growing? Major technology platforms, like Google and Facebook, have created an environment in which scale is a commodity. To keep up with those platforms, publishers have increased the amount of content they are creating, and they need an automated system to sell ads against all of that new inventory.

Why aren't they making much money? Profit margins can be low for this type of advertising because its extremely complicated to manage and takes a lot of infrastructure to monetize.

Why it matters: An increase in programmatic advertising suggests that scale will continue to dictate market needs in 2017. However, low profit margins, stemming from uncertainty in how to manage the platform, has led buyers to feel less confident in the platform. eMarketer predicts that when industry-wide quality and implementation standards are put in place, we can expect to see prices and revenues increase.

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