65% of digital media to be programmatic in 2019

65% of all money spent on advertising in digital media in 2019 will be traded programmatically, according to Zenith's Programmatic Marketing Forecasts, published today. Advertisers will spend US$84bn programmatically next year, up from US$70bn this year, which represents 62% of digital media expenditure. We predict that in 2020 advertisers will spend US$98bn on programmatic advertising, representing 68% of their expenditure on digital media advertising. By digital media we mean all forms of paid-for advertising within online content, including online video and social media, but excluding paid search and classified advertising.

The breadth of ad formats available through programmatic trading is improving, with more mobile, video and audio formats coming online all the time, though brands and agencies need to do more to push publishers to improve the quality of their inventory, which needs at minimum to be safe and viewable.

Growth in programmatic advertising is slowing as it cements its position as the most important method of digital trading. We estimate that programmatic adspend will grow 24% in 2018, down from 32% growth in 2017, and forecast 19% growth in 2019, followed by 17% growth in 2020.

In dollar terms, the biggest programmatic market is the US, where we expect US$40.6bn to be spent programmatically in 2018 - 58% of the total. China is in a distant second place, spending US$7.9bn on programmatic advertising this year, followed by the UK, with US$5.6bn of programmatic adspend.

The US is also the market that has most embraced programmatic advertising, trading 83% of all digital media programmatically this year. Canada is in second place, trading 82% of digital media programmatically, followed by the UK, with 76%, and Denmark, with 75%. By 2020, programmatic advertising will account for more than 80% of digital media in all four markets.

Canada will have almost completed the transition to pure programmatic trading, spending 99% of digital media programmatically that year.

We expect all markets to follow Canada and use programmatic trading for all digital media transactions eventually. Indeed, it's only a matter of time before programmatic trading becomes the default method of trading for all media. However, the transition is taking slightly longer than we expected - last year we forecast that 64% of digital media would be programmatic in 2018, and 67% would be programmatic in 2019, so we have pulled back both forecasts by two percentage points. The introduction of privacy legislation such as the EU's GDPR has had some chilling effect by making certain data previously used in programmatic transactions unavailable, and making other data more costly to process. But we think the main reason for the slowdown in spending on programmatic media is that advertisers are investing more in infrastructure and data to make their programmatic activity more effective.

To make the most of their programmatic campaigns, advertisers have to reorganise internally to give programmatic trading the high-level support and understanding it needs. Agencies can only extract maximum effectiveness from their programmatic strategy in a proper partnership with their clients. And a programmatic strategy can only ever be as effective as the data used to execute it.

"Programmatic trading improves efficiency and effectiveness, and is gaining a dominant share of digital media transactions," said Benoit Cacheux, Zenith's Global Head of Digital and Innovation. "The scale of operational restructuring to make the most of it is both extensive and expensive, though, and advertisers are spending more carefully while they invest in infrastructure and data and review the quality of media. All programmatic advertisers need a strategy for acquiring the best and most comprehensive data available, and to treat this data as a vital corporate asset."

The most valuable data is first-party data, either explicitly provided by consumers or gained by tracking their activity on owned websites. It is also becoming more common to use second-party data, by forming data sharing partnerships, between - for example - brands and online retailers. Third-party data is widely available but does not give advertisers a competitive advantage, since all advertising can use it to target the same segments. Advertisers should continually vet and interrogate third-party data to ensure they are truly adding incremental reach. By combining all this data with their own CRM systems, advertisers can model consumer behaviour, and the more advanced are using machine

learning to predict it. Data and new technology is enabling brands to move from tracking cookies to communicating with individuals.

"Technology is making programmatic advertising work harder for brands," said Jonathan Barnard, Zenith's Head of Forecasting and Director of Global Intelligence. "Artificial intelligence promises to unlock new understanding of customers as people, as well as improving the optimisation of the trading process."

About Zenith

Zenith is the ROI agency. We blend data, technology and brilliant specialists to scout out new opportunities, solve complex challenges and grow our client's businesses. Zenith is part of Publicis Media, one of four solution hubs within Publicis Groupe [Euronext Paris FR0000130577, CAC40], and has offices within Publicis One. We have over 6,000 brilliants specialist across 95 markets. We are experts in communications & media planning, content, performance marketing, value optimisation and data analytics. Zenith works with some of the world's leading brands including Aviva, Coty, Daimler, Electrolux, Essity, Kering, Lactalis, Nestle´, Nomad Foods, Oracle, Perrigo, RB, and 21st Century Fox.