2016 Review: Reasons to be Cheerful, Reasons to be Fearful
By Netric CEO Daniel Ahlbert
More than 70% of US digital ad spend was transacted programmatically this year. A similar number to the UK, with France also close behind on 64%. Sadly, eMarketer doesn’t yet do Nordic Programmatic market stats. But if they did, we still think the picture would be pretty different – more around the 25% mark across the board.
Of course, we could argue all day about the reasons why, but the fact is, whether we are smart or foolish to be late adopters, it represents a real opportunity. First, to keep an eye on other markets and learn. But also, quite simply because there’s still an awful lot of programmatic growth to come on these shores. In fact, we expect in the region of 40 to 50% growth next year, across all of our markets. And with that, the potential for lots more creative, smart and more real-time cross-media campaigns.
In other words, we at Netric believe there are plenty of reasons to be cheerful as we near the end of the year.
In 2016, the ad market as a whole was a fascinating one to watch unfold in the Nordics. In the following lines, we look at some of the major trends, developments, and numbers behind the successes (as well as failures) – all with a view to summarising the year, and what we can learn from it, as we look ahead to 2017.
From the start of the year, we’ve seen tremendous growth in mobile spend. Hardly a surprise I guess, with consumers now firmly glued to their smartphones, and publisher mobile traffic well past the 50% mark. Still, looking back to January, at about 10% mobile revenues, I don’t think even we would have forecast a Q4 where that had shot up to around 45% of total revenue.
But what about the benefit to publishers? Well, the best news of all here is that, contrary to reports in some other markets, mobile yields are actually proving higher than desktop in the Nordics. In some cases, up to three times higher.
Increasingly, that mobile spend is split between open and private marketplace deals, and we expect more video - vertical, out-stream and interstitial - activity next year, across both desktop and mobile. We also expect more talk of programmatic across all media – from out of home, to email.
There was less talk around programmatic guaranteed this year than last, as header bidding took centre stage (more on that later). But for our own purposes, and looking across the Nordic markets, guaranteed still makes a lot of sense – especially for publishers, who can secure yields, but also add planned, future bookings through programmatic, saving time and effort versus the old email and Excel methods of trading direct.
Likewise, for buyers the promise of a faster, easier way of booking guaranteed delivery on campaigns seems like a win-win. All the more so if a data element is also brought into the equation.
But perhaps there’s a clue here as to why guaranteed hasn’t taken off quite as expected: maybe it’s buy-side adoption, and buyers’ ability to buy future inventory in the way they wish – through their own choice of DSP – that has held us back. As we look ahead, perhaps guaranteed private marketplaces, launched in Q3, provide a way forward here: choice for buyers, as well as an interface and setup publishers are comfortable with. If you like, a sweet spot between guaranteed and private marketplaces, which themselves have proved so popular across the Nordic markets.
And what of header bidding? One of the most discussed topics this year in the UK and US trade press, expect more talk of it across the Nordics next year. We covered it at our September event, but essentially, header bidding involves moving from waterfalling between direct and programmatic to having them all compete in real-time – a big step forward for publishers’ sales efforts.
In practice, though many sing its praises (with good reason), it has also brought a new level of complication to the market. There are also teething issues to face like latency if you don’t pick the right partner, or set up your adserver in a less optimal way. Finally, not everyone on the buy-side is convinced of the benefits, yet.
That said, there are already important revenue opportunities waiting to be captured by activating Rubicon Project’s header bidding solution, FastLane. At the lower end, we are seeing uplifts of 20 to 30% on revenue and some are seeing even higher returns. Crucially, implementing FastLane doesn’t have to mean making sacrifices on latency. And it could even alleviate some issues around passbacks and improve viewability scores. And on the plus side for buyers, it should also mean incremental reach and inventory choice.
Work in Progress?
Of course, as well as big advancements, this year brought constant reminders of how advertising still needs to evolve. And ad blocking was a subject never far from the news. Just as the internet has democratised content creation, in future more consumers may very well vote with their feet against latency, intrusive targeting or invasive formats.
We don’t claim to have all the answers, but this is a call for us all to work even better, and smarter in 2017, paying closer attention to the user experience.
With print advertising apparently slipping faster than ever, and consolidation on the cards for the ad tech sector, it looks set to be another eventful year ahead, not least in the world of programmatic.