For the first time ever, brands will spend more money buying ads on digital videos this year than on traditional TV, according to a new report from the Interactive Advertising Bureau.
Advertisers are expected to spend $62.9 billion buying digital video ads in 2024, or roughly 52 percent of the total spend going toward all types of video ads, according to analysts at IAB. Traditional TV ads will take the remaining 48 percent of total video ad share, or roughly $58 billion.
The data suggests that advertisers are chasing two things—audience size and audience segmentation.
2024 CTV audience size
The digital video audience is large, and continues to grow. The average American household now spends around 38.5 percent of TV time per month watching streaming video services like YouTube, Netflix, Hulu, and others, according to a March 2024 report from Nielsen.
Americans spend more time watching streaming video than cable TV (28.3 percent of TV share), broadcast TV (22.5 percent of TV share), and a catch-all category that Nielsen calls “other,” which includes video games and physical media, like DVDs (10.7 percent).
Nearly 7 out of 10 American households now have at least one connected TV (CTV) device as home, according to eMarketer.
Digital video can deliver better audience segmentation than traditional TV, and promises to eventually give advertisers the kind of granular targeting more common with display ads.
CTV ads deliver better audience segmentation
This desire for better-performing audience segmentation appears to be reflected in the IAB’s data.
In a survey of 139 advertisers who plan to increase their spending on CTV ads this year, 40 percent said they plan to increase their CTV ad budgets by shifting existing budget from traditional linear TV. Just 26 percent said they planned to shift budget from audience-based linear TV—an ad targeting method where advertisers buy ads attached to specific TV shows.
2024 CTV advertising trends
Digital video ad spend has doubled since 2020, when brands spent just $26.2 billion on the channel. By 2023, that number crossed $54 billion, and is projected to grow another 16 percent this year, according to analysts at IAB.
Digital videos include CTV, social media videos, and online videos. CTV mostly describes long-form streaming content through apps like Netflix and Amazon Prime, social media video includes video from apps like YouTube and Instagram, and online video includes all other short-form video from online publishers.
Roughly 37 percent of digital video ad spend in 2024 is projected to go to social media video ($23.4 billion), 36 percent will go to CTV ($22.7 billion), and the remaining 27 percent will go toward online video ($16.8 billion), according to analysts at IAB.
Consumer packaged goods companies are currently buying the most digital video ads, with roughly 1 out of 5 dollars ($12.6 billion) spent coming from CPG companies like Procter & Gamble and Pepsi. Retail and technology companies take the second and third spots, respectively.
This week, we launched iOS SDK 4.10.3. If you’re a mobile app developer using Start.io’s advertising solutions inside your iOS apps, we recommend installing the latest SDK now.
iOS SDK 4.10.3 contains important updates that will keep your iOS apps in compliance with Apple’s current privacy guidelines.
Apple has taken decisive steps in recent years to give consumers more transparency and control over the data they share with the mobile apps they use. The company rolled out App Tracking Transparency in 2021, followed by Privacy Nutrition Labels in 2022.
When Privacy Nutrition Labels first launched, Apple asked app developers to create an inventory of every time their app gathered consumer data, and whether that data was tied to people’s identities. Developers quickly ran into a challenge—most apps use third-party SDKs, and it’s not always clear how and when a third-party SDK gathers consumer data while running inside an app.
This year, Apple made an important update to help developers solve this challenge, by rolling out Privacy Manifests for third-party SDKs.
The developers of third-party SDKs must now submit a Privacy Manifest that describes the data types that their SDK collects, how each data type is used, whether that data is linked to individual users, and whether that data is used for tracking, as defined by Apple’s App Tracking Transparency framework.
Apple collects these manifests, and builds a privacy report for each mobile app, to help developers fill out their Privacy Nutrition Labels more accurately.
This requirement took effect on May 1, 2024.
Start.io gathers data to help improve our ability to deliver high-performing ads to hundreds of thousands of mobile apps each day. We’ve documented the types of data we collect, and how we use it, in our latest Privacy Manifest.
We urge developers to upgrade to the latest version of our iOS SDK to remain in compliance with Apple’s privacy guidelines. Apple says developers who use third-party SDKs without Privacy Manifests will not be able to update their existing apps in the App Store until they return to compliance.
Read more on Apple’s app developer portal.
The digital advertising market reached a new, all-time high in 2023, generating $225 billion in revenue—roughly 7.3 percent higher than 2022, according to the IAB’s latest Internet Advertising Revenue Report.
The digital advertising market has nearly doubled its revenue over the past 5 years; in 2019, digital advertising pulled in just $124.6 billion.
Search ads grew by 5.2 percent year-over-year in 2023, pulling in $88.8 billion in revenue. Display ads pulled in $66.1 billion—roughly 4 percent higher than 2022.
Video ads and audio ads pulled in another $59.1 billion in revenue, and both grew by more than 10 percent year-over-year. “Other ads,” a catch-all category that includes digital classifieds, generated $11 billion.
Digital advertising remained heavily consolidated in 2023, with nearly 80 percent of revenue—roughly $179.5 billion—going to the 10 biggest companies in the industry.
How do brands prefer to buy their ads?
Excluding search ads, brands spent $114.2 billion buying ads through programmatic channels in 2023, and $22 billion buying ads through non-programmatic channels.
Among all programmatic ads, an estimated 63 percent of ads—representing $71.9 billion in revenue—were bought using the Open RTB protocol, while 37 percent of ads—representing the remaining $42.2 billion—were purchased via programmatic direct channels, such as private marketplaces, preferred deals, and programmatic guaranteed deals, according to the IAB.
Taking a wider look at all advertising mediums, internet advertising, B2B advertising, and cinema advertising grew the most year-over-year, while traditional TV advertising ended the year flat, and newspaper and magazine advertising declined by 5.2 percent.
Looking ahead, analysts at the IAB identified three major trends to watch for in 2024 and beyond: new privacy restrictions, budgets shifting toward CTV, streaming, and retail media, and the rise of generative AI reshaping how ads are bought, sold, and measured.
On the privacy front, the advertising industry is facing pressure from regulators, who want to restrict the amount of data that adtech companies have access to, and give consumers more control over the data they decide to share. The industry is also being pressured by Apple and Google, which have restricted third-party cookies on their browsers, and mobile advertising IDs on iOS and (soon) Android.
As a result, brands shifted their budgets in 2023 toward the industry’s 10 largest companies, whose ecosystems of first-party consumer data have remained intact. Brands are also investing in first-party data, privacy-compliant data collaboration, contextual advertising, and retail media.
Meanwhile, emerging advertising channels continue to grow. CTV is projected to grow by $17.8 billion between 2023 and 2027, according to analysts at eMarketer. Other red-hot growth areas for advertising include live sports broadcasting moving to streaming services, direct-to-consumer sports apps run by sports leagues, user-generated content from micro-influencers, shoppable ads, and retail media networks, according to the IAB.
Finally, generative AI is reshaping the advertising industry in profound ways. Brands are using generative AI to create data-driven campaign concepts, personalized content creation, and real-time optimization of ad campaigns. Publishers are using generative AI to create content, streamline their commercial processes and cut costs.
Check out the full report here.
Brands will spend $8.5 billion running ads inside games this year, inspired by their nearly universal popularity and relative brand safety, according to a new survey from the Interactive Advertising Bureau.
That said, brands still spend more money per person reaching consumers on other advertising channels, suggesting there’s additional room for growth in games-related advertising.
In 2024, the gaming industry is bigger than it’s ever been. Roughly 212 million people in the U.S. play games on a regular basis. Mobile gaming is king, bringing in an estimated $101 billion in total revenue in 2022.
Most of that game revenue still comes directly from players, not advertisers.
But perceptions among advertisers are changing quickly, eMarketer analyst Ethan Cramer-Flood said on a recent episode of the Behind the Numbers podcast.
“That’s changing now because these ads work,” Cramer-Flood said. “Obviously, mobile gaming is unbelievably popular. Everybody [plays mobile games] and now you’re starting to get higher quality ads from higher quality advertisers. The numbers are starting to get really real, to the point where now I think this is something you have to pay attention to.”
Roughly 32 percent of advertisers say game-related ads are “excellent” at driving brand awareness, because they engage people while they’re immersed in a game. Advertisers rank just two other channels—social media and digital display ads—higher, according to the IAB report.
Some 86 percent of advertisers say games represent a brand-safe advertising channel—ranking it the second highest-rated channel for brand safety, behind digital audio, which includes streaming music and podcasts.
So why aren’t brands spending more money running ads alongside games?
One of the leading challenges is access: The majority of game advertising transactions still involve negotiations between the advertiser and the publisher in some form. Nearly one-third of transactions are programmatic guaranteed, where games publishers guarantee a specific number of advertising impressions at a fixed cost. Roughly 30 percent of transactions are direct deals, negotiated with the publisher’s sales representatives.
Another 20 percent of transactions occur on private marketplaces, which are invitation-only platforms where games publishers invite specific advertisers to bid on their inventory. Just 17 percent of games advertising transactions today occur on open exchanges, where any advertiser can bid on available advertising inventory, according to the IAB report.
By comparison, 91 percent of all digital display ads worldwide are purchased today on programmatic platforms, with fewer than 10 percent of advertising deals happening directly, according to analysts at eMarketer.
Another big challenge is inventory: Mobile games are the most popular medium for games-related advertising because consumers expect to see ads inside free-to-play games. As a result, there are millions of available ad units each day inside mobile games.
Consumers haven’t been conditioned to see ads on PC and console games, so there are fewer available ad units there. Roughly 3 out of 4 advertisers surveyed said they bought ads on mobile games, while just 1 out of 4 said they bought ads on all three gaming media platforms—mobile, PC, and console.
The final challenge is financial: Mobile games have one of the highest 30-day churn rates among mobile apps. If 100 people download a mobile game on the same day, just 2 people from the group will still be playing that game 30 days later, on average.
Looking at Android games specifically, it costs an average of $1.10 to acquire a new customer, which means publishers have a short window to make $1.10 or more in revenue per customer, so they generate enough money to fuel new downloads, and pay for ongoing operational costs.
As a result, game publishers prefer rewarded video ads, which pay high CPMs. The challenge is that rewarded video ads are largely used by other app developers, who are trying to generate mobile downloads themselves.
In 2024, traditional brands still believe that buying ads on digital games takes too much effort to plan and buy.
Asked to rank the ease of buying ads across six different media channels, digital games ranked close to last, with digital display, social media, digital audio, and CTV ranked higher for perceived ease of use, according to the IAB report.
For years, major brands and advertisers have relied on Start.io to provide them with high-quality audience segmentation.
For example, if your next ad campaign is targeting high-income families in the New York City metro area who are interested in vacationing in Europe, we can help, by building an audience based on income, location, and interests.
In total, we offer marketers more than 800 distinct audience segments, which they can activate on virtually every major ad-buying platform.
Start.io uses artificial intelligence to build its audience segments at scale, by studying more than 20 mobile signals that we routinely gather from roughly 2.5 billion mobile devices each month. These privacy-compliant mobile signals include things like the user’s location, their mobile app preferences, device type, mobile keyboard language, and others.
For the past year, Start.io’s R&D team has been training our artificial intelligence models to analyze additional signals embedded in the data, to achieve even greater accuracy.
We’ve experienced significant breakthroughs in this work, resulting in some of our most popular audience segments doubling or tripling in size. Here’s how:
Our original AI models built audience segments based on deterministic data—defined as information that is concrete and observable, such as a user’s current location, device type, or the mobile app they’re using.
Start.io’s first-party data is robust and contains enough contextual information for our original AI models to build audience segments with a high degree of confidence.
Our new AI models find additional patterns in the data using neural networks, a subset of machine learning that processes information like a human brain. We’ve initially focused on improving predictions around a consumer’s age and gender.
We train our neural networks using a multi-stage approach, involving several layers of processing to refine a prediction’s accuracy.
In the first stage, raw data from different mobile apps and data sources is collected and pre-processed to extract relevant demographic attributes. Once the data is pre-processed, it is fed into a neural network that helps us convert any mobile app into a vector of numbers. That information is then fed into machine learning models that have been trained to classify the user’s age and gender.
After a year of R&D, training, and testing, Start.io is confident in its ability to predict age and gender at greater scale. This breakthrough is immediately valuable for our customers because we’re now able to double, and in some cases triple, the size of our age- and gender-related audience segments in the market today.
Neural networks continuously learn and adapt to evolving trends in user behavior. Neural networks are trained to incorporate new datasets into existing models, ensuring that demographic predictions always remain fresh and relevant.
Unlock new levels of precision in audience segmentation with Start.io. Contact us to learn more.
Have you binged anything good lately?
The average American spends a little over 2 hours per day watching videos on connected TV (CTV) apps like Netflix, Amazon Prime, Disney+ and others. That’s roughly double the amount of time spent on CTV apps just 5 years ago.
And yet, despite its maturity (Netflix launched its streaming service 17 years ago) CTV is still relatively early in its journey as an advertising medium.
Start.io executives recently attended CTV Connect; here’s a recap of their five biggest takeaways from the conference:
#5: CTV is big and growing (duh)
Virtually everyone in America is watching CTV. It’s now estimated that 93 percent of internet-connected American households have at least one CTV app they watch on a regular basis.
Meanwhile, cable TV subscriptions have declined sharply, from a high of 105 million American households in 2010 to an estimated 53 million households by 2028, according to analysts at Digital TV Research.
Despite that growth, CTV subscribers generate a fraction of the revenue cable TV subscribers do. Cable TV viewers watch an estimated 15 minutes of ads per hour. CTV subscribers watch far fewer ads—ranging from 3 minutes to 9 minutes of ads per hour, according to eMarketer.
And despite the recent launch of ad-supported versions of most major CTV apps, ad-free subscriptions remain more popular, at least for now.
#4: People don’t hate ad-supported CTV
CTV publishers monetize by offering:
- A monthly subscription plan without ads
- A free service with ads
- A lower-cost monthly subscription with occasional ads
An estimated 80 percent of consumers subscribe to one or more ad-supported CTV services, according to a 2022 survey by LG Ads Solutions.
Given the choice, more than 60 percent of people say they’d choose an ad-supported CTV app to save money, rather paying for the more expensive, ad-free version of the same app.
That’s music to publishers’ ears, as they can generate more revenue per month from ad-supported subscribers than ad-free subscribers.
Free, ad-supported streaming TV (FAST) is growing rapidly, with free services like the Roku Channel, Amazon Freevee, Viacom’s Pluto TV, Xumo, and Tubi.
Ad-supported streaming services have room to improve their revenue mix, by running more ads per hour and/or by targeting households more effectively to increase CPMs. Consumers seem to receive changes to ads more positively than when monthly subscription rates increase.
#3: CTV subscribers are fickle
Chances are, you’ve subscribed to a streaming service, later canceled it—and maybe even returned to that same service later.
CTV streaming apps lose an average of 3 percent to 12 percent of their subscribers each month, according to analysts at Antenna.
The five biggest reasons?
- People want to saving money
- They finished watching the shows they liked
- They couldn’t find new content to watch
- The service’s promotional pricing offer ended
- The service raised its subscription price
Content discovery remains a persistent pain point for CTV subscribers. Unlike short-form videos, starting a new show on a CTV service involves a heavy commitment of time and attention.
CTV services promote a fraction of their catalog to subscribers, and streaming recommendations can start to feel stale over time.
In December 2023, Netflix revealed it had around 4,500 globally available titles on its platform at the time (with another 13,700 titles available in select regions only). Most people will only ever see a few hundred titles through Netflix’s recommendation engine.
The average person spends 6 minutes trying to figure out what to watch when they land on a CTV app, according to LG Ad Solutions. This 6-minute window could be a prime place to serve ads, several people told us at CTV Connect.
#2: CTV ads aren’t like other ads
CTV subscribers expect a lot from the CTV ads they watch. They want to see visually interesting, TV-quality ads that make good use of the real estate on their big screen TVs. TV-quality ads can cost $10,000 to produce on the low end, and many tens of thousands of dollars on the high end.
Advertisers need to aim their messaging at a household level, rather than an individual level—an estimated 88 percent of people say they watch CTV with at least one other person in the room with them.
That isn’t a problem for the big, national brands that spend hundreds of millions of dollars each year on linear TV ads. Big brands are comfortable with nebulous measurements of advertising success, and don’t have the same expectations for consumer targeting and performance as smaller, sales conversion-focused brands.
#1: Squishy performance metrics have smaller brands wary of CTV
In 2024, brands are increasingly demanding CTV apps give them measurable performance metrics, so they can calculate return on ad spend (ROAS).
Calculating ROAS is far easier with mobile and desktop ads—advertisers can instantly measure clicks and conversions, allowing them to optimize an ad campaign on the fly.
Performance measurement is harder on CTV. Some advertisers have tried to measure attribution by showing QR codes during their CTV ads, encouraging people to take out their smartphones to navigate to a webpage to sign up for a service, or buy something.
Other advertisers have instead relied on IP addresses for attribution. A quick primer on IP addresses: Every Wi-Fi router has a unique IP address that it shares with the devices that connect to the internet through that router. People periodically reset their Wi-Fi routers; when they do, their router will come back online with a new IP address.
CTV apps gather IP addresses where it’s permissible by local privacy laws and pass that data on to advertisers, who can use it to see if a smartphone or laptop computer with the same IP address later logged onto their website.
IP address-based attribution is increasingly under pressure—IP addresses are considered protected personal information under privacy regulations in Europe, California, and a handful of other U.S. states.
Local companies and smaller brands need to see precise targeting capabilities, audience segmentation tools, and more robust performance metrics before committing to spending money on CTV ads.
What does your company know about me?
I’ve bought a lot of baby products over the past two years, and I like watching action movies in the evenings. My phone and computer know that I’m usually home during normal business hours, and I’ve been doing a lot of research recently on table saws.
Combining these clues, you might guess I’m a dad with a young toddler, I work from home, and I’m planning to buy some expensive woodworking equipment soon.
There has always been a massive business opportunity for companies that can (a) successfully gather consumer data from different sources, (b) combine the data to build an accurate consumer profile, and (c) use the data to send people targeted ads based on their interests.
In a post-cookie world, the solution to this challenge will likely be “hedged gardens,” where technology platforms, publishers, and brands add their respective slices of consumer data, combine it in a data clean room, and build a more open alternative to the “walled gardens” owned by Amazon, Google, Apple, Meta, and other tech giants.
Hedged gardens were a big theme at RampUp 2024, the annual conference organized by the data collaboration platform LiveRamp. We attended the conference, and had great conversations with our partners about the future of privacy-compliant consumer identity—here are our big takeaways:
Privacy and the death of third-party cookies remains top-of-mind for advertisers and the ad tech platforms that serve them. But at RampUp 2024, people seemed confident that the industry would come together to build an alternative to the walled gardens that currently dominate the advertising landscape.
This will require everyone bringing their slices of consumer data, combining them in a data clean room environment, and tying them to an alternative identifier, such as LiveRamp’s RampID. The goal is to build robust, privacy-compliant, anonymized consumer profiles that can achieve accurate ad targeting for cross-device use cases.
Anecdotally, we spoke to publishers at RampUp who said they’ve seen 30- to 100 percent higher CPMs from users who are tied to an alternative identifier.
The brands we talked to seemed more pragmatic about identity—they said they’ll use the identity platform that works the best. They’re happy using a platform that relies on mobile advertising IDs and third-party cookies if it delivers the best results today, even if the identifiers the platform relies on will eventually disappear.
Overall, there was optimism that the ad tech industry would come up with a privacy-compliant solution for alternative IDs that would meet the performance and regulatory benchmarks set today by cookie-based identities.
And while ad tech platforms rapidly test, refine, and launch their own hedged gardens, advertisers said they are content to take a wait-and-see approach, confident that they would be able to continue targeting consumers based on their interests after the death of the third-party cookie.
The big takeaway? Post-cookie, Google’s Privacy Sandbox initiative will be one solution among many—and early tests of hedged gardens suggest that great alternatives exist.
If you’re a large publisher, there can be significant benefits to building a direct relationship with Start.io for mobile app monetization.
The Singapore-based software developer Guru Network found that it was able to generate 3x higher ad revenue from Start.io by building a direct relationship with us for premium ad supply. Let’s explore how.
Guru Network was founded in 2015 and makes more than two dozen popular puzzle games for Android and iOS, such as Jigsaw Puzzles, Sudoku Puzzle, the Find Difference series, and Find it Out, among other leading titles. Collectively, their games have been downloaded by tens of millions of people worldwide.
In late 2022, Start.io began placing ads on Guru Network apps through its integration with an industry-leading programmatic advertising platform, which connects many publishers with many ad platforms. Seeing the volume of ads that Guru Network was requesting, we proactively reached out to explore building a direct relationship with Start.io, giving them access to premium demand and dedicated account management.
Together, Start.io and Guru Network built a head-to-head test of ad performance between the programmatic advertising platform and a direct relationship, comparing how much revenue Start.io could generate for the company through both solutions.
The test was a success, with Start.io generating nearly 65 percent more revenue over a three-month period for Guru Network with its direct integration, compared to its own performance through the programmatic advertising platform.
“Start.io has been a great monetization partner,” said Hao Li, Monetization Lead at Guru Network. “The team has really worked hard to deliver the highest quality ads possible. We’re looking forward to a long and successful partnership.”
Download the full case study, and reach out to explore whether building a direct relationship with Start.io can help your business grow.
Advertising IDs will soon disappear, sparking the biggest shakeup in the multibillion-dollar advertising industry since the advent of the banner ad. The good news is that publishers (and their first-party data) will find themselves at the center of this new advertising ecosystem, in charge of their own success.
Here’s how.
Today, every time a publisher asks for a digital ad, they bundle their requests with some very basic information: The type of ad unit they want, the user’s advertising ID, their location, device type, operating system, and app name, in the case of mobile apps.
A series of powerful marketplace algorithms take over and choose the best possible ad for that person. In the milliseconds it takes for someone to load a webpage or mobile app, that ad has been selected, paid for, and delivered.
Today, sophisticated ad tech software supplements these basic ad requests with additional demographic details: The consumer’s age, gender, interests, what they’ve recently shopped for online, and so on.
Starting in 2024, the ad tech industry’s ability to gather consumer data and use it for audience segmentation and ad targeting will be dramatically cut back. Google began the year by permanently turning off third-party cookies for 30 million Chrome users, and says it plans to turn off third-party cookies for everyone by the end of the year. The company plans to kill Android mobile advertising IDs in tandem, or shortly thereafter.
At Start.io, we believe publishers will step in to help close the gap when cookies and mobile advertising IDs disappear.
In practice, what that means is that publishers will need to gather this demographic data in a privacy-compliant way and share it with the ad tech ecosystem. This could be by asking people to sign into a gated service, or by using first-party data-gathering software that builds consumer profiles tied to alternative IDs.
Every publisher, no matter their size, will need to get comfortable with the idea that they’re now in the first-party data business. We think that this shift toward publisher-defined audiences and first-party data is inevitable, even if Google were to delay killing cookies and mobile advertising IDs.
Publishers should welcome this shift, as it gives them back the power that they had ceded to the adtech industry.
In 1994, the very first banner ad appeared on the internet. Thirty years later, there are billions of digital ads served online every day. More than 80% of them are programmatic display ads.
‘Programmatic’ is a term describing the complex process of computerized, algorithmic ad buying that fuels the digital ecosystem. Programmatic ad technology is the preferred method advertisers use to buy display ads, mobile ads, in-app ads, digital out-of-home ads, audio ads, and connected TV ads.
Advertisers spent an estimated $558 billion on programmatic advertising in 2023. By the year 2026, industry experts expect advertisers to spend $700 billion on programmatic ads.
Source – Statista
Programmatic advertising is growing quickly because it solves significant pain points for both sides of the transaction: Advertisers and content publishers.
Join us for a deep dive into the programmatic advertising ecosystem, how programmatic advertising works, the benefits, latest programmatic trends, and more.
What is programmatic advertising?
Programmatic advertising is the automated process of buying and selling ad placements in the digital ecosystem. Programmatic media buying connects content publishers and advertisers in real-time auctions for ad space on websites, apps, and any other digital screen where ads are placed.
Unlike traditional media buying, which involves a lot of complex and time-consuming manual work, programmatic buying enables centralized, automated, algorithm-based bidding on multiple publishers’ sites, so advertisers can win the best ad impressions at the best possible price for their target audience and campaign goals. For publishers, programmatic advertising helps drive website and mobile monetization by filling ad inventory automatically and in real time with the most suitable ads, with far less effort.
How does programmatic advertising work?
Every day, billions of ads are served on desktop, mobile and digital TV screens all over the world. Programmatic advertising automates the complex process of connecting thousands of advertisers and publishers in real-time auctions for available ad space, filling the space and serving ads instantly to the user.
Programmatic advertising relies on several online systems that connect with one another to make the media buying process happen. Let’s look at those systems and how they work together.
- An advertiser is looking to purchase ad space to promote their product or brand, so they turn to a trade desk or programmatic ad agency. These programmatic advertising companies use a demand side platform, or DSP, which automates the bidding and buying process on behalf of the advertiser.
- The DSP connects the ad agency to multiple publishers at once, bringing a wide range of options for where the ad might be placed. With the help of a data management platform, or DMP, the DSP analyzes audience data based on a range of parameters, such as geographic area, user behavior, and demographics, to decide which ad placement to bid for, and at what price.
- On the publisher side, there is the supply side platform, or SSP. Via this platform, publishers can supply ad inventory for DSPs to bid on. When a user lands on a website, the website sends a request to the SSP, the SSP connects to the DSP, and a micro-auction begins. The DSP bids on behalf of advertisers, using the DMP to decide which ads are best suited to the publisher’s visitor, and the ad placement is filled by the most suitable ad at the highest bid.
This entire process happens within the seconds it takes for the user’s website page or mobile app to load. For both sides of the transaction, programmatic advertising takes the manual work out of digital media buying and selling, while making it more optimized and efficient. In a complicated and constantly dynamic marketplace, programmatic advertising is a win-win for publishers and advertisers alike.
What are the 4 main types of programmatic advertising?
Programmatic advertising comes in several variations. Here are the 4 most common types of programmatic advertising used in the industry today:
Real-Time Bidding (RTB)
Real-time bidding is a type of programmatic advertising where advertisers compete for ad inventory in auctions conducted in real time. RTB operates with the CPM (cost per mille) model, meaning that advertisers set their bid and pay publishers for the ad space per 1,000 impressions.
Private Marketplace (PMP)
Private marketplace, or PMP, is a type of programmatic advertising that takes place in a closed auction, where a set of exclusive advertising partners participate. It provides advertisers with access to unique ad inventory that is not available on open exchanges. PMP enables publishers to tailor their inventory and provide specialty offerings to advertisers, giving them the opportunity to build relationships with advertiser partners.
Preferred Deals
A preferred deal is a programmatic buying method where the publisher and advertiser negotiate a price to purchase ad space. The media buyer gets preferential treatment, in that they are offered the opportunity to bid at the agreed-upon price. However, preferred deals are not guaranteed–the publisher does not need to hold the ad space at that price for the advertiser, and the advertiser is not obligated to bid for the space.
Programmatic Guaranteed
Programmatic guaranteed is when a publisher and advertiser negotiate the cost and terms of a particular ad inventory, and that inventory is reserved for the specific advertiser at the agreed-upon price.
What are the most common programmatic ad formats?
Programmatic advertising is used to buy and sell digital ad space for a wide range of formats and channels. Here is a quick overview of the ad formats that are available programmatically:
Display ads
Display ads, or banner ads, are ads that appear on desktop and mobile websites. They typically appear at the top or sides of a web page. Programmatic display is one of the most common types of digital advertising, as it offers an affordable and accessible way to reach large audiences. Despite their widespread adoption across the industry (or perhaps because of), display ads typically have relatively low clickthrough rates.
Video ads
Programmatic video advertising is a popular method for buying and selling video ad space, particularly for apps, connected TV and social media. Video is an effective advertising tool, generating higher engagement among audiences than simple display ads.
For example, a user completes a level on a gaming app and is about to move to the next level. The app publisher might provide a video ad here, during this transition between levels. Advertisers selling a product that is relevant to the user demographic can bid programmatically for this ad space and show a video ad that is likely to pique the user’s curiosity at this prime moment, when the user is enthused and engaged.
Social ads
An estimated 62% of the world’s population is on social media. Social programmatic advertising is a powerful tool to reach a vast audience efficiently and target them using their social graph and interests. Advertisers use DSPs to bid programmatically for ad space on social networks such as Facebook, Instagram, X (formerly Twitter), LinkedIn, Snapchat, TikTok, Reddit and more.
Native ads
Native ads are designed to fit the form and feel of the web page they appear on. Native ads are less disruptive than display ads, and users tend to “see” them more than other ad types. By partnering with a programmatic trade desk, advertisers can access native ad inventory programmatically, taking advantage of the more advanced targeting options that native ad exchanges typically offer, such as contextual targeting.
Audio ads
The digital audio industry has experienced rapid growth in recent years. Roughly 42% of Americans aged 12+ report they listened to a podcast in the last 30 days, according to a survey from Edison Research. An estimated 90 million Americans—or roughly 1 out of 4 people—now pay for a streaming music subscription, Forbes reports. Advertisers can bid programmatically for digital audio ad space on platforms such as podcasts, music streaming apps and digital radio.
Digital out-of-home (DOOH)
Digital-out-of-home advertising includes digital billboards and screens positioned in public spaces. DOOH is an important part of an omnichannel advertising campaign, as it enables brands to reach customers when they are out and about, and not on their phones or computers. With programmatic advertising for DOOH, advertisers can bid automatically for this important ad space at the most effective times and locations.
In-app programmatic advertising
In the U.S., people spend an average of 4 hours and 25 minutes a day on their phones, making in-app advertising an attractive option for advertisers. Mobile programmatic advertising works the same way as programmatic advertising on the web, however in-app ads have unique formats and sizing to fit the smaller mobile screen. The main ad formats for in-app advertising include interstitial ads, banner ads, splash ads, rewarded ads, playable ads and rich media ads.
What are the benefits of programmatic advertising?
Programmatic advertising has benefits for both advertisers and publishers. Here’s why:
Reach
Programmatic advertising connects advertisers with tens of thousands of publishers at once, so the potential audience reach across platforms is far larger. For publishers, the programmatic method makes their ad inventory available to an enormous pool of advertisers, increasing the competition for placements and boosting revenue. This is a good tactic for web and app monetization.
Omnichannel targeting
One of the biggest challenges for marketers today is generating audience awareness across several touchpoints, including desktop web, mobile web, apps, digital-out-of-home, and connected TV. Programmatic advertising enables advertisers to bid for optimal placements on all platforms in real time and build an effective multi-channel advertising strategy.
Automated tasks
Automation takes most of the legwork out of the online advertising process, making it simpler and easier to manage. More importantly, by eliminating most of the rote tasks of ad bidding, buying and placement, programmatic advertising frees up advertisers to focus their resources on audience research and strategic optimization to get more from their campaigns.
Real-time results and optimization
Data transparency is a huge benefit of programmatic ads. By tracking campaign results in real time, advertisers are better positioned to optimize ads effectively and get better results from their campaigns faster. Furthermore, the transparency afforded by programmatic platforms enable advertisers to assess publishers in real time based on ad performance and avoid low-quality and fraudulent placements.
Better ROI
Automation, data-based insights, and enhanced optimization capability in real time all add up to higher return on investment for advertisers. Programmatic advertising enables advertisers to keep a finger on the pulse of multiple campaigns running on several platforms in one centralized operation, so they can make optimization decisions faster, and get better return on ad spend.
Improve ROI by following programmatic advertising best practices
By keeping up with programmatic best practices and mastering the latest hacks and tools, advertisers can maximize their campaign potential and ROAS. Let’s look at the programmatic advertising best practices you should follow today:
Align your goals to ad type and channel
All digital campaigns should be based on specific goals and KPIs, and this is no different for programmatic ads. To achieve the best possible performance, make sure to define and align the objective of your ad campaign to the programmatic channel and ad type. For example, the campaigns for programmatic display and in-app ads will have very different creatives and KPIs, even as they promote the same product or service.
Segment your audience
By grouping your audience into user segments based on their location, online behavior, interests, or marketing funnel stage (awareness, consideration, conversion), it will be easier to target them with programmatic ads that offer the right message at the right time. Explore your web and mobile audiences to understand them better, identify their pain points and segment them accordingly. Then you can use programmatic methods to target and optimize ad campaigns in real time to the best potential segments.
Use data to drive decisions
With programmatic, advertisers have access to a broad set of real-time data across all campaigns and channels, to understand which ads are performing best and why. Advertisers should take full advantage of this information to make smart and accurate decisions about campaign targeting and optimization, to get better ROI for their ad spend.
Test and optimize
Programmatic advertising is the ideal platform to test and optimize campaigns to drive better performance over time. Use the fast-moving pace of programmatic to your advantage by frequently A/B testing campaigns and optimizing in real time according to the results.
Use an omnichannel approach
Programmatic advertising works best with a multi-channel approach, targeting audiences on different channels at different times. By reaching out to audiences across multiple touchpoints and media, such as mobile web, video, apps, out-of-home, connected TV, retargeting, and more, you can access a larger pool of data that can be used to test campaigns and scale them for the best results.
Programmatic advertising trends for 2024
The programmatic advertising ecosystem is developing exponentially, supporting scale and performance potential that was unheard of in the early days of RTB auctions. Let’s explore some of the programmatic advertising trends that have the industry buzzing now:
Contextual signals > cookies
Digital advertising has traditionally relied on third-party cookies to identify and target suitable audiences. With cookie depreciation on the horizon, this will soon no longer be an option. Programmatic advertising is trending toward contextual targeting of first-party data, in which audiences are grouped according to interests and shown relevant ads. Contextual signals, such as content topics, page categories and lookalike audiences, will be the future of programmatic targeting.
The rise of omnichannel ads
The shift towards an omnichannel programmatic advertising strategy is already happening and will only accelerate in the future. Brands are operating in a highly competitive marketplace where grabbing consumer attention is tougher than ever before. Programmatic ad technology enables advertisers to better craft, promote and optimize campaigns across all channels, automatically, and in real time.
AI in programmatic advertising
Artificial intelligence and machine learning are rapidly advancing, and will be increasingly adopted in programmatic advertising to support even better ad targeting and optimization. Predictive AI will enable advertisers to pinpoint high-potential users with better accuracy and serve personalized ad experiences at a more granular level. Combined with the dynamic speed of programmatic advertising, advertisers will ramp up their performance at unprecedented precision and scale.
Check out our Programmatic Curation Guide for Advertisers and Publishers to learn how machine learning can drive personalization and better campaign performance.
How to get started with programmatic advertising?
There are numerous programmatic advertising examples and platforms for web, mobile, DOOH and CTV. Although similar, each has its own features, tools, and processes. Start.io supports mobile programmatic advertising, with more than 500,000 integrated apps and vast global reach of mobile audiences.
Download the Start.io advertising SDK today to monetize your mobile app.
