TECHNOLOGY AT WORK

February 2015
Citi GPS: Global Perspectives & Solutions
29
this process through automation, which has resulted in reduced manual input,
higher efficiencies, and greater transparency in how ad dollars are allocated. Over
the last few years, the adoption of programmatic technologies by brands, agencies,
trading desks and other marketers has gained momentum. Citi expects US
programmatic spend to be $5.2 billion in 2014 and $25.6 billion in 2018,
representing 32% of total US Internet advertising in 2018.
Barriers to implementation
Brand and other marketers are concerned that programmatic is resulting in reduced
control over where ads will appear (the right sites and position), whether humans
will actually see them (bot-driven traffic) and how post-campaign performance is
tracked. Publishers (the suppliers of ad inventory) are concerned about controlling
and optimizing the price of their inventory within these programmatic channels,
especially for their premium inventory. Over the summer and throughout the fall of
2014, we have seen the AdTech community respond to these concerns. For
example, both Google and AOL have acquired ad attribution technologies. Also,
TubeMogul and Rocket Fuel announced integrations of third-party protection and
third-party reviews to combat fraudulent traffic and issues surrounding brand safety.
Given its intended benefit of streamlining the buying and selling of media,
programmatic represents a disruptive force in the advertising world. We have
already begun to see a reallocation of labour at ad agencies and at the
advertiser/brands themselves. Figure 15 and Figure 16 illustrate an emerging trend
of brands bringing media buying, via programmatic technology, in-house. Out of the
87% of brands currently without in-house capabilities (Figure 15), 88% of them
expect to implement in-house programmatic buying technology within the next 12
months. A recent survey by Chango also affirms this trend, with approximately 50%
of respondents saying that they will be bringing more of their programmatic buying
in-house, while also depending less on agencies. Ultimately, we see human
resources at agencies, agency-owned trading desks, and firms heavily reliant on
“Direct Sales” as the most exposed to the emergence of programmatic real-time
bidding (RTB) and in-house tech. Given these efficiencies, it is no surprise that a
self-service salesperson is able to generate client spend 9x greater than that of an
assisted-service employee. With brands shifting to in-house programmatic models,
we will likely see leaner agencies/trading desks and Direct Sales firms in the near
future.
Figure 15. Buyers: Have you bought programmatic video buying
technology in-house?
Figure 16. Buyers: Are you planning on bringing programmatic video
in-house within the next 12 months?
46%
Yes
44%
Yes
35%
26%
13%
88%
54%
No
56%
No
65%
74%
87%
12%
0% 20% 40% 60% 80% 100%
Brands Agencies/ Trading Desks Ad Networks
Source: Adap.TV, Citi Research
0% 20% 40% 60% 80% 100%
Brands Agencies/ Trading Desks Ad Networks
Source: Adap.TV, Citi Research
© 2015 Citigroup