Global advertisers’ programmatic spend doubles in 2014: WFA

New report focuses on transparency

Global advertisers are now spending 9.5% of their total digital budget on programmatic channels, up from half that last year, according to the World Federation of Advertisers‘ annual member survey.

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The WFA polled 43 members, representing $35 billion annual spend, on their investments in developing programmatic channels like RTB and private exchanges. Although the names of the participating brands were not released, the WFA represents roughly 70 global brands including AB InBev, Coca Cola BP, Intel, and Kellogg’s. The Association of Canadian Advertisers is also a member of the WFA.

The survey found that members have significantly ramped up programmatic spend in the past year, particularly in display, which accounts for 44% of programmatic investment. We can expect that balance to change in the next 12 months — 83% said they will spend more in video and 77% said they will spend more in mobile over the next year.

But while growth is impressive, most advertisers are still in “test-and-learn” phase, said WFA head of marketing Rob Dreblow. “There’s still a lack of understanding among even the most advanced brands,” he said. “There’s an education job that needs to be done.”

Barriers to further investment still remain. The study highlighted challenges like invalid impressions, data ownership, and lack of transparency in advertiser-agency-technology partner relationships. Eighty-five per cent of those polled said they were concerned about ads being misplaced in inappropriate content, while half said they were unhappy with the way that data was captured, stored and utilized by partners in programmatic trading.

The responses showed that advertisers are taking data ownership much more seriously, with 60% saying they now secure their own programmatic trading data (compared to 33% in 2013) and 36% using an automated data management platform (compared to 20% in 2013).

Transparency top-of-mind

Transparency, however, was the primary focus of the report. “There’s still a lot of concern around lack of transparency and clarity in terms of the business models that are being applied [by partners],” said Dreblow. “That seems to be resulting in changing approaches that our member advertisers are taking in terms of who they’re partnering with.”

One way advertisers have chosen to deal with transparency issues is by working directly with third-party technology providers, like DSPs and independent trading desks. The report found that the number of advertisers working directly with technology providers tripled from 2013 to 2014, from 8% to 30% of the sample. Meanwhile the number of advertisers that used agency trading desks fell by 15%, from 81% in 2013 to 69% in 2014.

Notably, few brands surveyed had actually committed to building in-house trading desks – just 2% of respondents had built their own programmatic media buying units.

The report notes that even advertisers that continue to work through agencies can become more involved in the process of selecting technology partners. It recommends that advertisers consider direct contracts at each step of the supply chain to know where their money is going and limit spend on high-margin or arbitrage-focused partners. (For more on the WFA’s detailed recommendations for efficient and effective programmatic trading, check out next Tuesday’s Marketing AD-Vantage newsletter.)

Yet as awareness of transparency challenges grows, advertisers are becoming more dissatisfied with the service they’re getting from partners, whether they’re independent or agency-owned. The survey found that among advertisers that have used third-parties for programmatic trading, overall satisfaction fell from 20% in 2013 to 4% in 2014. Among advertisers that use agencies for programmatic trading, none reported complete satisfaction in either 2013 or 2014.

RTB STILL DOMINANT

Open exchanges remain the primary destination for programmatic dollars, despite recent criticism of the channel from leading industry voices. Sixty-nine per cent of participating WFA members said they’ve been active in open exchanges like Google DoubleClick and the Yahoo Ad Exchange.

Open exchange trading, commonly referred to as RTB or remnant buying, has come under scrutiny since WPP’s GroupM announced plans to cease all trading on open exchanges. GroupM chief digital investment officer Ari Bluman cited lower inventory quality and less opportunity for the agency to leverage its size in media dealmaking as the chief reasons.

Despite these criticisms, advertisers’ participation in open exchange trading remains high, at least for the time being.

A smaller but still significant fraction of those polled said they are active on private, programmatic direct channels. 31%, said they have used private exchanges, such as the Canadian Premium Audience Exchange, to access premium inventory through invite-only auctions. A slightly higher number, 42%, said they have used private programmatic marketplaces that sell media at fixed prices, rather than through real-time auctions.

Dreblow noted that the WFA’s survey did not drill down to national markets, and participation in RTB or programmatic direct may differ substantially by country. In Canada, eMarketer recently found that significantly more inventory is traded through programmatic direct than RTB — though that may not reflect the breadth of advertisers using the channel.

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