Few things in mobile have been hyped quite as much as programmatic, but when you ask OpenX co-founder and chief revenue officer Jason Fairchild for his views on the subject, it’s clear that he feels the hype is justified.
“Let’s start with the basics,” he says. “Advertising dollars follow audiences, and consumers are flocking to mobile. Today, most publishers report that the vast majority of their content is consumed on mobile devices. This has resulted in dollars shifting to mobile, and mobile programmatic in particular. Over 50 per cent of all spend in mobile is programmatic, which is significant considering mobile is expected to be the biggest contributor to global growth in ad spend over the next three years.
“For historical context, if you look at the evolution of paid search or display, the foundational requirement for sustainable growth is building a marketplace that trades based on standard protocols, formats and infrastructure. This also applies to mobile programmatic, and the good news is that most of the infrastructure and standards are finally in place. Compared to desktop, the gap between data and targeting is closing, and buyer confidence in mobile is high.”
Not that the market is without challenges. There are key issues around ad formats and data, says Fairchild, but both are beginning to be addressed. “A good infrastructure is in place for banners and interstitials, but there’s also a growing scepticism as to whether they deliver the best user experience long term,” he says. “There is a school of thought that says the right ad format for mobile has not been invented yet.”
The answer to the format issue, Fairchild believes, lies with video. “To get TV ad dollars flowing to mobile there needs to be innovation, and video is the key to unlocking it,” he says. “The biggest question to answer is whether it is realistic to put a 15- or 30-second video ad before a short-form piece of content? Increasingly, the answer is no. So people are experimenting with 6- and 10-second ads, to see what works best.
“Again, the programmatic infrastructure is there; we just need to innovate around ad formats that deliver an excellent experience for the consumer and an effective one for the advertiser.”
Fairchild is also enthused by native, though he believes it currently suffers from a lack of understanding around what it actually is.
“There’s not a common view of what defines native,” he says. “Asking 10 different people will get you 10 different answers. One of the fastest growing definitions for programmatic native is the chopping of an ad into components – title, description, image – that are then delivered from the buy side programmatically and reassembled within a publisher’s environment in a seamless way, in-stream or not.
“As the industry coalesces around a common definition, the only way to achieve scale will be encouraging the buy side to better understand how it differs from pushing a traditional banner ad through programmatic pipes. Beyond more education, native needs evangelising, and being able to do it outside Facebook is the big challenge for marketers and publishers alike.”
Ah, the F-word. So much mobile spend goes to Facebook and Google that people sometimes wonder if there’s any point in advertisers looking elsewhere. In this respect, Fairchild believes the market is evolving, as data providers step up to the plate and start to replicate the ad formats (see above) and the people-based marketing capabilities of Facebook and Google outside of those channels.
“There are two issues here,” says Fairchild. “First, can you deliver a Facebook-like in-stream ad outside of Facebook? From an ad format point of view, the answer is yes. Second, can you duplicate the type of targeting Facebook offers outside of Facebook? Historically, the answer has been no, but this year we will see alternatives that combine people-based data, aggregated through third parties, with Facebook-like advertising delivered outside of the platform. It will enable advertisers to opt in to multiple third-party data layers, combine it with their own first-party data, and then target against that combination. That’s a significant change. The big data providers have made a lot of progress in the last 12 months.”
Another area where programmatic is moving forward, Fairchild believes, is in the area of predictability and certainty of spend. “An inherent weakness of programmatic in the early days was that buyers had difficulty predicting their spend because they were bidding on every impression,” he says. “If marketers put $100,000 next to a buy, they need to know they can deliver against that buy. To solve this problem, we recently launched a product called Real-time Guaranteed, which helps buyers tie up audience-based targeting deals with publishers on a guaranteed basis through programmatic pipes. It addresses the predictability issue, and will help unlock ad dollars.”
Underpinned by innovation
So where next for mobile programmatic? Fairchild can only envisage things moving in one direction.
“We’re going to see continued growth and innovation,” he says. “Innovation around targeting and the ability to mimic people-based marketing are inevitable. We’ll also see a lot of work around intent marketing, and an evolution of ad formats, from short-form video to derivatives of native that are more effective, and a raft of things that haven’t been invented yet. Importantly, true programmatic advertising at scale will be at the heart of this growth. The infrastructure is in place and as the data-targeting layer becomes increasingly sophisticated, and more innovative ad formats come online, more budgets will move to mobile.”
So as a technology provider working principally on the publishers’ behalf, where, I wonder, will OpenX’s focus be in all this?
“Our reason to exist is to help publishers make more money from advertising, so we are focused on all of it to one degree or another,” says Fairchild. “We’ll continue to get the infrastructure in place, including Real-time Guaranteed for predictability. We’ll work with data providers to leverage third- and first- party data to mirror people-based marketing outside of Facebook; we’ll work with buyers to develop and test new ad formats and, finally, with publishers to get those tested and working at scale. All underpinned by innovation, because that’s what’s going to drive our business, and our clients’ businesses, forward.”