14 for ’14: The Future of Programmatic Display
Top Predictions from Around the World
2013 was a year of expansion and innovation for Sociomantic Labs. We launched new U.S. offices in San Francisco and Chicago, buffed up our European presence with additional offices in Milan and Stockholm, and reached into new frontiers with our first Asia Pacific operations in Mumbai and Singapore. Today our 15 offices around the world service clients in over 60 markets across six continents, a testament to the power of programmatic advertising technologies to help marketers easily cross borders and time zones.
We are equally proud of the innovations we were able to roll out to our clients over the last twelve months. Late summer, we launched Streaming CRM for Mobile, a programmatic display advertising solution that enables marketers to run personalized retargeting, prospecting and loyalty campaigns across smartphones and tablets. In October, we announced our strategic partnership with Revenue Management Systems, which laid the groundwork for the launch of the industry’s first dedicated solution for travel marketers, Streaming CRM for Travel, which allows airlines, hotels and online travel agencies to better connect their inventory management to their eCommerce systems.
This expansion and innovation has played a role in the tremendous growth that we have seen in the programmatic buying over the last four years. The worldwide programmatic ad spend is estimated to hit $12 billion in 2013. By 2017, this number will have grown to $32.6 billion. Exciting numbers to anyone who is excited about the future of personalized advertising, made possible by this kind of buying. It’s with these projections in mind that we look forward to a very exciting 2014!
Just as we tap the local expertise of our teams around the world to deliver the best display advertising services each and every day, we also wanted to look to these local experts to fine-tune our predictions for next year to each individual market and region.
In the overlap between their predictions you can find the global trends for the year — trends like mobile commerce, user journey convergence, “smart” first-party data and the continued growth of programmatic buying. In the predictions where you find less overlap, you find evidence of each expert’s deep and thorough knowledge of his or her home market.
For your holiday reading pleasure, with out further ado, we proudly present the experts!
1. Germany, Austria and Switzerland
2. Central & Eastern Europe
5. Latin America
7. North America
11. Southeast Asia
14. Emerging Market Focus: Turkey
DACH: Germany, Austria & Switzerland
Robert Härtel, Sales Director DACH
Mobile: In 2014, more German, Austrian and Swiss marketers will extend their desktop marketing logics to mobile devices, ready to capitalize on the additional reach. HTML5-technology will be crucial in making sure that ads reach users across all devices, operating systems, browsers, screen sizes and apps – from Apple’s iOS to Google Android, and every mobile OS in between.
Multi-channel: With the possibility of reaching users on every device they surf and shop on, cross-device and cross–channel tracking has gained center stage in the online marketing world. The new challenge will be to create and maintain a consistent strategy and positive user experience across all channels. As a result, marketers will no longer be willing to deal with different vendors for different channels, but will demand an integrated one-stop-shop solution.
CRM/First-party data: The most successful marketers of 2013 have integrated their CRM- and other first-party data into their online advertising a long time ago. They understood that useful data does not necessarily need to be “big,” but smart. Instead of spending a fortune untangling big data, they leverage the structured, easily accessible data they have right at their fingertips. This trend will continue in 2014.
Central & Eastern Europe
Maciej Wyszynski, Managing Director CEE
First and foremost in CEE, we expect to see continued strong growth for the eCommerce sector, with the eCommerce market value prediction for 2013 in Poland alone set at €6.2 billion.
There are two major trends in particular we expect to see arrive in full force on the Polish market: programmatic buying and mobile. In Q4 of this year alone there were two major “big data” themed conferences in this market, showing that data-driven advertising finally has a strong foothold here. Second to that, mobile is picking up in Poland tremendously, with YoY growth in spend at 81 percent (Q1+Q2 2012 to 2013), according to research published by the IAB. In two more years, they predict that nearly 10 percent of the online transactions will take place over mobile devices.
In general, we expect to see 2014 will be the year of consolidation in the Polish display market. Currently, many local players offer real-time bidding via third-party bidders, with no proprietary technology or specialized insights to optimize on behalf of their clients. In light of this situation, we have taken a proactive education role in the market this year, heading the RTB Workgroup with the local chapter of the IAB and co-authoring the Polish RTB Guide. Still, we know there is more work ahead in educating marketers, agencies and vendors alike in 2014.
In the Czech Republic, programmatic buying and RTB are entering early maturity stage, and we expect that by the end of this year all premium publishers in this market will offer biddable inventory. Meanwhile, in the rest of the CEE region, there is still limited info in the markets about RTB and programmatic; therefore we will continue to work with local conferences and publications in places like Ukraine, Slovakia and Romania in 2014 to bring this great technology to the CEE marketers.
Christopher Caussin, Managing Director Southern Europe
Attribution & Investment Optimization: In France, we see that the last-click vision is still very prevalent, which doesn’t allow the advertiser to measure the concrete value of each online marketing channel. Marketers will chase more transparency and may start considering new attribution models that give them better insights about the channels that generate revenue, not only after the first order, but also from a CLV standpoint.
Multi-device: No doubt about it — 2014 will be the year of mobile and nomad shopping. The audience is ready and overall, the technology is, too. Customers will begin to expect a true cross-device experience and mCommerce will no more be a contrary of eCommerce, but one and the same. The vision will be individual-user-oriented: No matter on which device or through which channel, the marketer will reach the right person at the most appropriate time and with the most appropriate message.
Hyper-personalization: Shoppers will expect ever-more personalized offers and will become more demanding for real-time offers that really fit their needs. Marketers will need to take advantage of all the data they have in order to create relevant offers for each user.
Loyalty: As 2013 was a year of maturity for the French eCommerce, marketers are starting to look beyond the acquisition of new clients and work just as hard on retention of their existing clients. E-mail is not the only channel that can respond to the client retention strategy: programmatic display, through customer-behavior-driven personalization, can also be a great complementary channel, as long as the messages are coordinated between the different channels.
Bas Drogtop, Managing Director Benelux
Today’s advertising technologies enable connecting consumer behaviors and intent data across multiple devices. Due to an increasingly high tablet penetration and easier mobile payments methods, more conversions are finally happening on mobile devices. In light of this, online shops are now more often optimized to leverage all kinds of mobile traffic, whether with a dedicated mobile site, a responsive website design, and/or a mobile app.
In general, we see that marketers are getting smart about how to spend their media budgets, making more decisions based on proprietary data and research, rather than the spray-and-pray methods of the early days. Furthermore, in the industry we see the marketers coming together to share data, knowledge, budgets, results and investment strategies, to help push the entire industry forward.
Finally, in 2014 we expect to see the further integration of offline and online selling. Pure online players will go bricks, and traditional retailers will use offline data advantages like legacy CRM data to increase their online efficiency.
Francisco Morales, Managing Director LATAM
Reflecting on business development and predictions for 2014 in LATAM, there are three key trends we would like to emphasize:
Strong growth forecast in Hispanic LATAM: Overall, digital ad spending is expected to continue growing in the region, driven by Brazil, Mexico and Argentina. The forecast for 2014 is a 165 percent increase, especially in Mexico, which will keep rising faster than any other country in Latin America. For instance, investments in mobile advertising in Mexico will reach 68.5 million in 2013, according to eMarketer, and will double next year.
Increase in cross-device advertising: As reported by comScore, the media landscape has been fragmented across devices. The page views are increasing in Brazil for mobile devices (smartphones or tablets) due to an increasing penetration rate of devices with Internet access, which in turn generates a demand for cross-platform advertising.
Importance of the agency role for e-retailers and brands: The agencies will contribute to the growth in LATAM: As RTB and DSPs become more prominent (pushed massively by Facebook Exchange and transactional customers), LATAM agencies will make these new technologies work in their favor. As a result, CPMs will continue to grow due to increasing demand, most notably in Brazil, one of the top three markets worldwide for Facebook.
In this context, the brands come into play. After the wide adoption of exchange-based buying by online retailers in LATAM, it is time for the brands to resort to the programmatic media as part of their long-term plan to build awareness. What we have seen in the region is an increasing interest of popular brands in starting to use this technology as a means to higher consumer engagement and brand affinity — not only sales leads.
To sum up, LATAM is still in an outstanding position with a huge growth potential for programmatic buying in 2014 and beyond.
Michael Balakin, Managing Director Russia
Forecasts show that 2014 is going to be a difficult year for the Russian economy. There will be no such growth as we have had in previous years. Therefore cutting costs and budget efficiency will become a priority for many Russian companies, including eCommerce. To improve efficiency, marketers will reconsider their current marketing tactics and concentrate on performance, choosing the most effective and transparent advertising channels available to continue to support their businesses. That means no more burning money on pure branding campaigns, and no more chasing new buyers at any cost. Next year eCommerce advertisers will be looking for intelligent ways to leverage their CRM data to grow client retention, loyalty, average order value (AOV) and customer lifetime value (CLV). And Sociomantic will be here to offer the most advanced CRM-driven display technology on the market.
Mobile will become another hot trend in 2014 . The share of mobile users growing rapidly in Russia, but only a few eCommerce players took advantage of it in 2013. In 2014, it will be impossible to ignore mobile users anymore. By the end of 2014 every notable eCommerce player will have a mobile strategy.
As for the supply-side of the industry, we don’t expect any big surprises in this market. All of the big players have already made their moves into programmatic display. For sure the total available RTB-buyable inventory will be growing, but it’s unlikely that we will see Vkontakte or Mail.ru impressions on auctions next year.
JB Brokaw, President North America
I expect 2014 to be the year when marketers invest in utilizing and maximizing their first-party data. This means bringing dormant databases forward to try and understand every possible angle of customer behavior and customer lifetime value. Marketers are starting to understand the wealth of data within their own enterprises and the opportunity to create a competitive advantage by mining that data to use across platforms and devices.
Additionally, I think we will see global expansion for many brands. From a U.S. point of view, we work with many brands that are trying to figure out the best way to take advantage of the globalization and convergence that is readily apparent. With a global focus, mobile has become a more important factor than ever before and I expect eCommerce to be seamless across devices in 2014. While there is a lot of lip service paid to mobile commerce, most brands have not made the appropriate investments in user experience to make this a reality.
Gavin Wilson, Managing Director UK
Last year I predicted the UK would see a rise in multi- and weighted attribution as RTB became more prevalent across more devices, including mobile. 2014 sees this attribution piece still high on the priority list for most marketers, as they move from the somewhat archaic last-click model and begin to recognise more so the halo effect many tech vendors have on their performance marketing.
The year will continue to see the emergence of mobile RTB as advertisers commercialise their mobile traffic and start to convert vast volumes of users now looking to transact via their smartphones and tablets. The additional technology capabilities of cross-device matching that companies like Sociomantic and Google offer will also become more prevalent, offering further intelligence to targeting customers across their total journey. This “end-to-end” perspective ensures marketers’ budgets have a closer synergy across channels, with more and more CRM data being used to deliver superior decision making. It also ensures the customer experience of the brand and its messaging is an extremely positive one based on a more joined-up means of intelligent targeting.
2014 will also see further focus on incrementality, and the justification of channels will become more the norm as a result of the above cross channel matching. Tech companies will continually have to demonstrate effective and efficient additional results in a market where only the advanced businesses, with superior proprietary technology, will prevail.
Miguel Ochoa, Managing Director Spain
We have seen RTB and programmatic display gaining huge popularity in our market in 2013, as not only advertisers but also the other market players have shown huge interest in this model, also reflected in the media and in industry events. This is why 2014 should be a year with continuity in the growth of RTB budgets that leads to the model establishment, but not less important to the better knowledge of RTB capabilities and to a natural selection of efficient technologies.
Studying 2013 market statistics it looks like finally mobile figures have gotten off the ground and research shows that users are adopting mobile devices as part of a more complete navigation experience. In 2014, advertisers working with suitable cross-device solutions will be able to define user-centric strategies that will be consistent and measurable among different devices. Companies will have the opportunity to communicate individually with their clients, with a unique and personalized message wherever he/she is.
Also, metric methodologies and analysis of investments will become more complex (not complicated) during 2014. Available technologies will make it easy for marketers to focus their efforts in the analysis of their investments by offering a transparent and universal overview of their activities, enabling them to apply more developed marketing policies focused in customer lifetime value.
Mahesh Narayanan, Managing Director India
14 Indian Digital Trends to look out for in 2014:
1. Online Indians: The number of Indian internet users will cross 200 million
2. Mobile > Desktop: The number of mobile internet users will exceed desktop internet users
3. 4G Launch: 4g services will be launched for the first time
4. Digital Video: YouTube will have over 100 million users
5. India likes Facebook: India will become the #1 market for Facebook globally, overtaking the US in terms of monthly active users
6. Tweet it: Twitter will grow to over 50 million users
7. The Newest Verb: Whatsapp user base will grow 1.5-2 times, YoY
8. Click, Buy, Love: Number of online shoppers will grow to ~30 million
9. Programmatic: Programmatic display buying using real-time bidding (RTB) will continue to grow aggressively
10. CRM Data –> Marketing: Marketers will explore the immense possibilities using streaming CRM and audience-level data for personalized offers via RTB
11. Engaging Mobile experiences: Immersive mobile experiences through mobile rich media ads and location-based targeting will be created
12. Multi-Platform Lives: Cross-device conversion tracking will become key for marketers and the players who will be able to provide this solution effectively will be a constant in the marketer’s channel mix
13. Driving Mobile App Usage: Marketers will start evaluating life time value (LTV) of the mobile app user and will run product dynamic creatives deep-linking users into specific product pages within the app
14. From “Spends” to “Investments”: Digital marketing conversations in India will move from “advertising spends” to “digital investments”
Rohit Kumar, Managing Director SEA
Programmatic Disruption. 2014 will see the continued growth in adoption of programmatic by advertisers in the SEA region in general and Singapore/Indonesia in particular, especially among pure online players. Savvy advertisers will switch to more advanced strategies including optimising to customer lifetime value and will consider the channel not merely as a marketing investment but as a cost of sale.
Mobile Retargeting. Marketers know and understand the power of dynamically personalised messaging – in 2014 advertisers will expect the same from their mobile campaigns. Many markets in the SEA region are “mobile first” with some of the larger eCommerce players seeing up to half of their visits (and up to 20 percent of transactions) coming from a mobile device.
Cross-Platform. In the near future we expect every campaign to be device and screen agnostic with performance being optimised at a user level across multiple devices using technologies like HTML5 for personalisation to match what until now has only been possible on a desktop.
From Big to Actionable Data. If selfie was the word of the year 2013, then Big Data would win the similar honour for the ad tech industry. In 2014 more advertisers will begin to unlock the real value in their CRM and data assets and realise that the “big opportunity” of big data is in using it to drive actionable insights and power intelligent advertising.
People will matter – more than ever. Contrary to what words like “programmatic” and “automated trading” suggest, people will matter more than ever in this business. The pace of change and the unprecedented levels of innovation all mean that it’s a great time to work in Ad Technology regardless of whether it’s on the demand, supply or advertiser side.
Greta Barsanti, Managing Director Italy
RTB in Italy has been the talk of the town for the last two years, and due to the huge number of players that offer it in different ways, along with interest and curiosity, confusion has grown as well. We expect 2014 to be a year of better understanding of the potentials of programmatic display, which now counts for about 3 percent of total display investment in Italy.
A deeper comprehension will lead to better definition of strategies and to the allocation of budgets that are more coherent to the potential of the channel. On the other end, thanks to an improved perception of the potential of programmatic, finally publishers have begun and will continue to give access to more premium inventories. Meanwhile, a growing number of online merchants will appreciate the one-to-one, performance-based relationship that they can develop with their audiences, and will be testing this communication channel with more continuity.
2014 is expected to be the year of consolidation for programmatic in Italy, and being able to offer a solution that is capable of combining real-time purchasing with multi-channel and -device strategies (after all, mCommerce is growing triple digits in Italy), plus CRM and revenue management data, global scale, full transparency and a client-oriented managed service can ultimately play a decisive role.
Frederic Saigne, Managing Director Nordics
Since the first ATS in Stockholm in 2012, programmatic display and RTB have developed as a new gold rush on the Nordic market. Programmatic display is more than just a buzz word: According to IAB Sweden, a large majority of the leading media houses in the Nordics are planning to sell their inventory through RTB in the coming six months – from just a few in 2013. The world’s largest SSPs have initiated strategic partnerships with Nordic media houses. Many Nordic eCommerce marketers focusing on optimizing their ROI have already jumped on the opportunity to efficiently reach their customers through programmatic buying.
In 2014, the growth of programmatic display and RTB will be explosive. Advertisers understand the possibilities to reach their audience in a personal way, at the right price, through the right device, regardless of whether it’s on desktop, mobile or Facebook. Many advertisers will even make the difference by enabling the usage of their CRM and other first-party data.
By opening the office in Stockholm, Sociomantic will from 2014 on actively contribute to the rapid development of the Nordic markets, helping marketers turn real-time data into real-time ROI.
Emerging Market Focus: Turkey
Lothar Krause, VP Sales
Of the 60 markets in which we serve personalized display campaigns, one of the most exciting, fascinating and challenging markets for us during 2013 has been Turkey. It’s a major emerging market to watch when it comes to all things online marketing, data and tech. Here’s why:
Population growth rate: The Turkish population will continue to grow rapidly over the next years. Cities like Istanbul are vibrant tech hubs filled with young and affluent digital natives offering great potential for eCommerce. A quarter of Turkey’s 74 million people are less than 15 years old.
Internet penetration: Internet penetration in Turkey — the fifth largest online population in Europe according to the ITU — has been growing rapidly over the last years and will continue doing so in 2014, enabling even more individuals to surf and shop the web.
High credit card penetration: Right after UK, Turkey has the second highest credit card penetration in Europe at 60 percent — ten percent higher than the European average — which makes the country an El Dorado for online retailers.
Social media usage: According to Internet World Stats, Turkey hosts the second-largest Facebook population in Europe. According to the Turkish Association of Advertising Agencies, people in Turkey spend more time online than any other European nation except the U.K.
Mobile: In Turkey, the mobile market is still not as established as in other European countries, but it’s growing rapidly with more marketers rolling out mobile websites and apps.
In light of these developments and the eCommerce friendly market environment, we predict one of the highest growth rates in programmatic ad spending for this market.
Want more local market insights? Stay tuned for 2014, when we’ll be going deep on our local operations to bring you the scoop on the unique aspects of each digital market.
Happy new year to all from Sociomantic!