CMOs boost programmatic advertising spending as budgets fall

What is programmatic advertising and why is it growing in popularity?

Advertisers are assigning more spending to programmatic advertising even as marketing budgets fall overall, according to two reports published this month.

Programmatic advertising is the automatic buying and selling of advertising space. Brands and agencies use demand side platforms (DSPs) to purchase impressions while publishers use supply side platforms (SSPs) to sell the ad space. The market includes standalone end-to-end platforms like Amobee or MediaMath, solutions within cloud platforms such as Adobe, or specific programmatic platforms for particular sites such as Facebook and Amazon.

The advertiser can specify the number of impressions they want and what their target market is and be assigned ad space accordingly on suitable websites. For example, an article advertising car insurance could be automatically placed next to an article offering motoring tips.

The area is attracting more interest even in a world of falling marketing budgets. The Gartner CMO Spend Survey 2021 found that budgets have fallen on average from 11% of revenue in 2020 to 6.4% in 2021, the lowest figure since 2014. In financial services, this figure dropped from 10.7% to 7.4%.

Pure-play digital channels, including owned, paid and earned, dominate budgets, accounting for 72.2% of the total. CMOs reported that more spending was going on digital commerce (12.3%) compared to brand marketing (11.3%), and 68% expected increases in martech spending.

This was supported by a new report by Alfi (26 July), which found that 49% of senior advertising professionals expect programmatic advertising spending to increase dramatically over the next three years. 43% expect there will be a “slight” increase in expenditure.

The report, which interviewed 100 senior advertising professionals in multiple countries including the UK, found that the ability to automate was the most popular benefit of programmatic advertising, cited by 94% of people.

The ability to measure efforts in real time and perform sophisticated targeting followed at 72% and 67% respectively.