Daniel Surmacz: The automatic future of digital advertising

It’s been 21 years since the first banner ad appeared on the web. It ran on a site called HotWired.com, the original website of Wired Magazine. It asked “Have you ever clicked your mouse right HERE?”. An arrow pointed to an ominous-sounding prediction, which was spelled out in all caps, and read: “YOU WILL.”

It was part of a campaign aimed at visualizing the digital future as thought by AT&T. The vignettes were prescient, except of course, for the much-parodied TV spot that asked “Have you ever sent a fax from the beach? YOU WILL.” Thankfully this future never came to pass.

Today, the marketing industry is experiencing rapid change at an even faster pace than it has in the last 15 years. As digital devices and internet connectivity continue to grow among users, ads served up by software systems are now able to target via any digital device – from the smartphones and TVs of today, to the dashboards of automated cars and smart thermostats tomorrow. Soon, every display will be an addressable medium – that is, each screen be individually targetable, down to a specific user. Interactive displays will not only deliver ad messages but also track consumer response. The result is a new era of marketing accountability, in which advertising “budgets” will have turned into marketing “investments.” Changing mindsets from “mass marketing” to “getting closer to users” will transform digital marketing forever.

Marketers will look for sophisticated scenarios

Media buying and digital ad models have evolved from upfront buys and guess-and-check optimization, to real-time programmatic campaigns that leverage machine learning to improve ROI. Retargeting was at the center of this shift and continues to thrive as a breakout tactic by solving a clear problem for marketers: how to stay engaged with potential customers who demonstrated purchase intent. Additionally, thanks to automation and cutting out complex ad-operation tasks, the transactions become more efficient. Thus programmatic means lower costs and higher efficiency.

As marketing strategies are becoming more complex and marketers more familiar with programmatic advertising, the top question is no longer whether or not to use automation, but how to extract its full potential to support not only short-, but also mid- and long-term goals.

Programmatic campaigns are a new way for marketers to attract buyers, such as launching additional campaigns focused at users who had not “visited the store’s website for a long period of time (e.g. 14 days)” or customer segmentation based on users who had “bought a TV set within the last three months.” These kinds of tactics will be key for advanced performance managers to exploit in the nearest future.

Digital will lead global ad spending

Today, Internet advertising is the main driver of global ad spend growth and is expected to grow at more than three times the global average rate in upcoming years. This rate is slowing down into a more sustained growth as digital saturation matures (it was 21.1% in 2014), but is expected to remain in double digits for this year and 2017. Combined with downgrades to television activation rates in Brazil and China, the ad research agency forecasts Internet advertising to overtake television advertising globally in 2017, a year earlier than it forecast back in December.

The great majority of new Internet advertising is targeted at mobile devices, thanks to their widespread adoption and their tightening integration into consumers’ daily lives. ZenithOptimedia forecasts that mobile advertising expenditure will increase by $64 billion between 2015 and 2018, growing by 128% and accounting for 92% of new advertising dollars added to the global market. Digital ad spending is growing and expected to surpass TV spending in almost every global market in a few years.  According to eMarketer, in 2017, TV ad spending will total $72.01b, or 35.8% of total media ad spending in the US, while total digital ad spending in 2017 will equal $77.37b, or 38.4% of total ad spending.

The future of RTB and programmatic

Though markets differ in terms of maturity, one thing is absolutely clear – programmatic will likely continue its significant growth as more and more ads are to be bought and sold through automatic buying channels. The real power of programmatic advertising lies in the data, which is a marketer’s best tool to achieve and reach a complex segmentation of their audience. Retargeting activities of various kinds will continue to rise as they contribute to new complex strategies that involve a long-term, customer retention approach.

In the nearest future, buyers are expected to become more comfortable with making a purchase from their mobile device, making it an up-and-coming sales and marketing channel.

During this year, trends have shown that advertisers are looking for advanced campaign results with retargeting strategies on multiple providers. Multiple retargeting strategies are now being developed and deployed to expand access to selected users. Today, it is commonplace that marketers will optimize their performance across multiple retargeters. Running 2 to 3 retargeting campaigns from various providers can yield much better results without additional costs.

What about long-term perspective?

There is no reason to restrict RTB technology only to the Internet. RTB could also successfully test itself as mechanism integrated with sales systems in the traditional shops. In the future, it could very well be possible to profile information about customer’s shopping preferences, behaviours and interests thanks to automated data collecting. This will help in accurate targeting advertising banners to the audience. For example, a customer looking for athletic shoes online goes to a traditional brick-and-mortar shop and sees banners of the same category – shoes and fitness outfits as well.

The future of bridging digital-only retargeting and translating it to real-life, Internet of Things technologies is just a matter of time for the future advertising.

Daniel Surmacz, COO RTB House, focuses on creating a long-term development strategy and working out key guidelines for foreign expansion of RTB House. He has been planning and coordinating all business activities since the company was founded.

RTB House specializes in targeted display advertising that delivers personalized messages to its users in real time. RTB House operates globally with offices in Warsaw, Prague, Moscow and São Paulo and currently runs campaigns for global brands in Europe, APAC and LATAM.