It’s hard to believe that the first real-time impressions were bought only a few years ago, disrupting a display market rife with inefficiencies that was ripe for a change. It made sense for everyone involved, smooth workflow, fair pricing and precise targeting. A raft of new companies were born and predictions of stratospheric growth of programmatic media buying ensued. At a glance, the prophecy is coming true with programmatic buying now accounting for up to 20% of display buying in more advanced markets, but actually this hides an interesting picture.

Display has been, and is, growing at a fast pace, 12.4% according to the IAB in 2012, but search has been and still is growing at a faster pace. In a more mature market, double the size of display, search growth still outstrips that of display (which is a number that includes video, without which it would be flat). With the proliferation of inventory now available to buy programmatically, the only conclusion we can come to is we’re simply witnessing a shift in the buying mechanic from phone-based to programmatic. It’s a really significant fact that the market isn’t growing and signals a worrying lack of innovation in execution.

In looking at the sector, there is in fact one stand-out category of business that has increased the size of the display market, generating results for advertisers and increasing display spend, enter the Retargeter. Dynamic, product-level retargeting has changed the perception of display advertising in previously low-spend categories, namely retail, travel and classified, making it a viable channel for investment due to the high returns.

There’s been some talk within the industry about whether we might be reaching a plateau for programmatic media buying. Other seemingly comparable sectors have actually seen this; within finance, High-Frequency Trading (HFT) has fallen from it’s peak and settled at about 40% of trading volume. We don’t think this will be the case for the display industry, however, as there are two core areas of gain, only one of which has been fulfilled to date.

The first and most obvious is the huge workflow benefit. The trading and campaign execution process was costly to run and riddled with inefficiencies on both demand and supply side, buying programmatically has revolutionised this. The second key benefit is the ability to use data to inform both buying and creative decisioning – the ability to create something completely new, Real-Time Advertising (RTA). The realisation of RTA is the key to moving the market on and creating value for advertisers. Retargeting is the best and most obvious example of this, as advertisers' first-party data both selects the audience and generates relevant creative.

This is still a nascent market; the technology within it is immature and in constant development. Over the last few years we’ve already witnessed a number of USPs emerging for demand-side technology. Firstly, just the ability to buy was a big deal, then it became queries per second, then integration of other tech and inventory partners and, most recently, which platform has the best trading algorithm. However, the next phase of innovation is upon us and it’s about customisation. The reason we haven’t realised the potential is that the technology simply hasn’t been ready to facilitate this. Inflexible platforms with limited ability to integrate first-party data, powered by black box algorithms and with only the most basic reporting haven’t allowed us to do anything different.

Access to programmatic is fast becoming a commodity and the biggest players realised this a long time ago. AppNexus have always had extensive APIs and their Marketplace to allow customisation. Google have taken this a step further with the announcement of Google Open Bidder in May of this year. The point of both of these initiatives is to enable innovation in the data management and decisioning layer, the most critical piece of the puzzle for unlocking differentiated performance for advertisers, and something that has been lacking to date.

We started Infectious Media five years ago with a vision that display would become platform-traded and data-driven, opening up new possibilities for advertisers. During this time we’ve worked with many off-the-shelf technology platforms and our experience has always been that we’ve felt constrained by either their lack of flexibility or, ultimately, the black box technology that powers them. This is why we invested early on in building our own proprietary platform, Impression Desk, in order to give our advertisers the customisation that they need to create effective real-time advertising strategies from integrated dynamic creative capabilities to truly customised algorithms through our bidder.

The seeds are starting to be sown in the industry to take advantage of the second and most powerful benefit of programmatic media buying that I mentioned earlier, the ability to use data to drive media and creative decisioning rather than just using it as a trading mechanic. This will excite advertisers and benefit everyone within the display ecosystem, and this should be when we see display start to really grow.