The evolution of Programmatic Bidding

One place where this ad spend is going is programmatic – using audience data and technology to tailor your marketing to the right person, at the right moment, in the right context

Unless you’re deep in the ad tech weeds on a daily basis, it’s easy to become overwhelmed by the industry’s perpetual changes. For those who need some catching up, here are a few charts that show how programmatic advertising is evolving.

There has been a big shift in how programmatic platforms price inventory. In March, Getintent analyzed 338 billion ad impressions across 39 US supply-side platforms (SSPs) and found that 43.3% of impressions were sold through first-price auctions, in which the highest bid wins an impression. That figure was significantly higher than in December 2017, when just 5.8% of the 171 billion impressions analyzed were sold the same way.

As vendors change their pricing models, marketers are trying to get a better handle on how they’ll be billed. In a December 2017 survey by the World Federation of Advertisers (WFA) and dataxu, more than 60% of marketers worldwide said better understanding programmatic auction pricing is a priority for 2018.

Advertisers are reducing the number of platforms they use to buy inventory programmatically. Ad tracking firm Pathmatics analyzed the top 100 advertisers on its platform and found that the number of demand-side platforms (DSPs) these advertisers use declined about 40% between January 2016 and April 2018.

Two years ago, advertisers ran at least 1% of their ad spend through about seven different DSPs each month, on average. Now, however, they only use around four DSPs per month, according to the study.

Publishers are increasingly using a mixed approach to sell their ad inventory programmatically. The number of US sites that use browser-side and server-side header bidding in tandem increased by more than 50% between September 2017 and February 2018, according to ServerBid. Among the internet’s most popular 1,000 sites that sell programmatic ads, more than 20% use both server-side and browser-side header bidding to sell their inventory.

Header bidding helps publishers raise CPMs because it allows them to make simultaneous calls to multiple SSPs, which drives up the demand for their inventory. One downside to this influx of bids is that it becomes more difficult for buyers to determine the legitimacy of inventory being sold through ad exchanges.

In response to advertisers’ demands for more transparency, last year the Interactive Advertising Bureau (IAB) Tech Lab launched ads.txt, a text file on publishers’ sites that lists all the vendors that are authorized to sell their inventory. Because domain spoofing and arbitrage have plagued programmatic advertising, ads.txt was created so that ad buyers could have a tool to check whether a vendor’s claim to a piece of inventory was legitimate.

More than half of the top 5,000 websites worldwide that sell programmatic ads have adopted ads.txt, according to Pixalate.