Seventy-two percent of the US display market will be programmatic by 2017.
It may seem unusual for some to talk about social networks like Facebook and Instagram when programmatic advertising is typically associated with demand-side platforms or open exchanges, but the way Adobe looks at programmatic advertising centers around three key attributes - it's automated, it's transparent, and it's data-driven.
Looking at programmatic from this lens, it's easy to see why Facebook is a huge force in the digital-advertising ecosystem.
So, where does social fit into the programmatic-advertising world? With automated buying, selling, and the ability to reach a precise audience with highly relevant ads, programmatic advertising on social helps marketers run more impactful campaigns. The growth of programmatic advertising is attributed to two factors: efficiency in ad buying and relevancy in ad targeting.
Facebook: A Force Behind Programmatic Advertising
US digital display-ad spend is estimated to top $27 billion in 2017, with 72% coming from programmatic. That's astronomical. That means nearly three out of every four display-ad dollars is spent programmatically.
Programmatic advertising can be complex, but it's easier to understand when broken down into two components: Real Time Bidding (RTB) and Programmatic Direct.
Real Time Bidding consists of auction-based ads that are transacted in real time at the impression level, mainly comprising of the open marketplace and private marketplaces.
Programmatic Direct is the purchase of display ads via an application-program interface (API), whether it's publisher-owned (like Facebook and Twitter) or facilitated using preexisting RTB technology like a demand-side platform (DSP). Here, buyers typically agree to a set pricing model (CPM) and may or may not agree to a fixed amount of inventory.
Next year, more than half of all programmatic display will be purchased by Programmatic Direct. Even more interesting is that a majority of Programmatic Direct will be driven by the likes of Facebook. Facebook is positioned to represent almost 30% of the US digital-display market by 2017.
Why Are Social-Media Marketers Apprehensive About Instagram?
Facebook wasted no time expanding into advertising. By the end of 2014, Facebook had already branched out to create the Facebook Audience Network, giving marketers access to third-party inventory as well as the mobile web.
Last year, it launched the Instagram ads API. Obviously, Instagram's hot right now and marketers are excited, but many are scrambling to learn how to use it as an ad platform, particularly for direct response.
Despite that excitement, there's still some apprehension. Advertisers often wonder why, if they're running ads on Facebook, they need to buy on Instagram to reach potentially the same audience. There's also the perception that the content strategy across the two platforms should be vastly different - marketers often assume that they need to spend more time and money creating different assets.
Future Challenges and Opportunities
Digital advertising moves quickly, and the rapid adoption of Facebook in programmatic makes it clear that social advertising is maturing. But, at the same time, it continues to evolve, and better measurement will be the key to proving business value. As gaps in measurement are identified, accessing more robust data and more advanced bidding and optimization across different platforms will likely be a major theme into the future.
In fact, Facebook has been making some progress already on the measurement side with the recent announcement that advertisers are able to run the same ad set across Facebook, Instagram, and the Audience Network. This new feature allows advertisers to reach their target audiences and optimize performances in real time, improve performances for a number of campaign objectives, and provide incremental and efficient reach. Early results to date show positive signs to this new approach to buying and optimization, and I'm looking forward to future whitepapers and case studies from the Facebook and Instagram measurement team.
Today, Instagram and Facebook are destinations where marketers can reach huge audiences on mobile and elsewhere. They're actually leading the pack in the programmatic space, turning digital advertising on its head.
With the continual growth of programmatic on social, social advertising really is a "must-do".
If you're not currently playing in the social-advertising realm, consider its value and growth as you take a hard look at how it could help your advertising.