Programmatic Adtech Industry

November 22, 2018

Geographical Scope
Business Need Global
 Marketing Sizing for Programmatic Adtech Industry
Delivery Format
 Key Market Segments MS PPT
 Key Players
 Trends ( Business/Technology/Shifts)
 Opportunity for Analytics offering for the Ad-tech market.

Deliverables
 Why Programmatic Is Different: From Mass
Advertising To Rich, Strategic Targeting
 Programmatic Maturity across Markets
 Six Trends That Will Shape Adtech in 2019
 The hunt for data, analytics and real-time
technology
 Key Players
Programmatic Is Different: From Mass Advertising To Rich,
Strategic Targeting
• Programmatic ad buying is using software to buy digital advertising. It differs from traditional methods with their requests for
proposals, tenders, quotes and human negotiation: with programmatic buying, machines and algorithms purchase display space on
client’s behalf.
Programmatic is extremely efficient and unparalleled in its ability to pair rich audience data with ad inventory
and targeting. One of the main reasons for this is that programmatic is about decision-making based on the
Service Offerings intelligent use of data. It’s the beginning of a quantitative skill set that will soon be necessary .effective
advertising and to keep up with the increasingly-irritated and demanding consumer thanks to its ability to
produce results with fewer impressions
A media agency recently launched an automated trading desk that allows advertisers to purchase digital out-of-
home (DOOH) advertising programmatically. Historically, DOOH buyers have always bought advertising manually
Examples and had the opportunity to purchase adds from a 27,000 dataset route. The new programmatic system allows
brands to reach an audience with more flexibility, and takes insights from around 55 million data points,
including geolocation.
AI, the world’s first audience management tool that allows clients to automatically manage their ad budget over
Use of AI 20 demographic groups per ad and performs more than 480 daily adjustments to each of the ads
across Facebook Ads, Google AdWords and Instagram.
With programmatic ad buying, advertisers no longer have to worry about the number of ads that are going out.
To ensure quality, and thanks to the abundance of audience and campaign insights that programmatic buying
Attribution now provides, brands can make smarter decisions than ever before. They include added capabilities like
Analysis viewability, digital gross rating point (digital GRP), organic search lift and attribution modeling. These can all
provide insights into what target audiences did after viewing an ad, perception changes and what performed at
what cost, as well as what did not.
In an omnichannel, multi-touchpoint reality, it would be easy to use adtech to mindlessly retarget prospects or
lose prospects by drowning them in a sea of irrelevant messaging.
Digital Storytelling But advertisers with experience in programmatic are leveraging the forgotten art of storytelling, intelligent
placement, and each medium’s strengths to best tell a different part of the story across channels and formats.
Once they have gathered exciting insights on their user behavior, they can think out of the box to engage them
at various points of their journey for personalization at scale.

Source: blog.adext.com, BIIntelligencec

Activity: The first phase of development in As the market matures programmatic In mature markets the mutual benefit
programmatic is characterized by a expands to more channels (esp. mobile of programmatic is firmly
disorderly market with very low CPMs. and video). A greater variety of established. Offerings across all
Multinationals enter as one of the first measurement tools becomes available channels are developed and
players and companies with quantitative and volumes of premium inventory programmatic is leading in non-
offerings develop fast. Publishers hesitate traded programmatically grow customized content. Players can
primarily as they fear cannibalization of significantly. Programmatic Direct may execute campaigns across platforms
existing products. Private exchanges are also act as a temporary arrangement. and also carry out brand advertising.
just starting to develop and thus have low
liquidity

Market Size: Two thirds of the world’s digital display advertising will be traded programmatically by 2019 and advertising sold
programmatically will increase from $57.5 billion to $84.9 billion over the next two years, growing at an average rate of 21 per cent a
year.

Source: Deloitte
The German market is behind the US/UK markets by two to
three years
Programmatic share of display advertising across Programmatic advertising market across selected regions
selected markets

Shift to Mobile advertising: Looking over to the US the market is significantly ahead in the development of the mobile advertising
landscape. Programmatic already dominates display advertising buying and with regard to mobile, the programmatic share is already at
almost 70 %.
The situation is quite similar in the UK. Digital mobile advertising spending is expected to overtake online soon. Compared to those
impressive numbers, both mobile and programmatic are still behind in Germany (mobile accounting for 31 % of digital advertising
spending in 2015) but potentially catching up. The German programmatic market is expected to grow by 39 % p.a. by 2019, to EUR 2.8 bn
and thus catching up with the US and UK markets, creating significant opportunities for all players the share of mobile could increase
significantly, reading ~37-59 %.
Significant Consolidation in this industry

The programmatic market is highly dynamic and many players (traditional Media Houses and new entrants) see their chance by
engaging in programmatic and securing their portion of the above-described opportunity. However, as the market matures, players will
have to reap economies of scale to stay profitable and a consolidation process will set in. Possessing unique data assets such as log-ins
is decisive in such an environment as it enables players to occupy niche markets in the ecosystem. The mere accumulation of inventory
on its own is not as critical for building complete and universal data sets around customers and audiences.
Six Trends That Will Shape Adtech in 2019 (1/2)

Media Houses consolidate inventory -Axel Springer for example significantly increased its digital reach
via acquisitions. Key rationale was to manage the transition from traditional media towards digital. Ströer
Industry followed a similar path and by acquiring OMS and Interactive Media brought together the largest German
Consolidation: online reach. The T-online acquisition was beneficial for Ströer especially with regard to acquiring
Can't Stop, Won't additional Inventory. Media houses have thus significantly enhanced their inventory base. They will have
Stop to navigate further challenges in programmatic, however, as the winning business models in the
ecosystem will be based on identifying and communicating with specific, advertiser requested audience
segments

The emergence of several players along the programmatic value chain led to smaller profits on the media
house side. In traditional media, Media Houses received approximately 70 cents in the euro spent on
Media Houses
advertising. In programmatic days, their profit decreased to 40 cents . Media Houses want to recapture
expand upstream
some of the lost value and move up the value chain. RTL for example acquired video SSP SpotXchange.
into AdTech
Sky recently acquired a significant stake in DataXu, one of the large international DSPs to prepare for
businesses
programmatic in TV. ProSiebenSat aims to develop an integrated AdTech stack and invest in players in the
ecosystem via their subsidiary Virtual Minds (together with United Internet).

Agencies on the other side of the table move down the value chain by building their own DSPs
Agencies move
(trading desks). Recently, they also moved towards data by acquiring or setting up DMPs. Some
downstream into
examples (to name but a few): GroupM, who launched Xaxis as a trading desk, acquired exchangelab
AdTech models
Meta-DSP and launched Turbine DMP. Omnicom launched Accuen (DSP) and annalect (DMP). Vivaki
acquired RUN (DSP/DMP).
Six Trends That Will Shape Adtech in 2019 (2/2)

Players of the first programmatic hour, namely DSPs and SSPs, are starting to struggle and consolidate
horizontally. Some US players are already reconsidering their sales approach in Europe and streamlining
Programmatic operations in order to increase profitability. Additionally, some DSPs saw acquisitions as a way to build
players consolidate the relevant capabilities and position for cross-device and multichannel. Sizmek, for example, acquired
or add cross- StrikeAd to acquire mobile capabilities. Consolidation, especially on DSP side, will further accelerate and
channel capabilities assume that there is room for only three to five large global players in the field. Only real integrated
AdTech stacks are expected to survive.

SAP, for example, has expanded its enterprise software solutions towards a full-scale integrated end-to-
end advertising stack under the SAP XM (eXchange Media) brand. The idea is to enable a new digital
New entrants enter advertising buying model that connects buyers and sellers directly, while reducing the role of
the programmatic intermediaries. Adobe has also announced it will integrate advertising technology into their Adobe
field Marketing Cloud. Other technology companies have already climbed the advertising Olympus. IBM IX is
already considered the largest online agency.

AI and Machine- For the ad tech industry, making money revolves around a user's clicking on an ad; predicting ad clicks
Learning Will Push using AI, machine-learning, or deep-learning techniques can be highly beneficial to improve
the Boundaries of efficiencies and increase revenue. We've only scratched the surface of the importance of predicting
Possibilities user interest behavior and its benefits, but those who can make accurate estimates will forever
change how companies interact and engage with consumers.
The hunt for data, analytics and real-time technology

Data as a prerequisite for the

Analytics capabilities (“Data +”) to

Emergence of Analytics and real

Technical integration and

Inventory as a lever for increased

Key takeaway: The consolidation patterns described follow a simple logic. Players want to combine capabilities in order to create a
picture of their specific customer or audience that is as complete as possible.
Key Holding Companies/Trade Desks
Key Buy Side Players