Vincent Potier, Captify, COO, explains how the trend towards programmatic buying is unlikely to replicate the ‘buyer-led’ Transatlantic model established in the UK and North America.  

Within the next five years, programmatic buying will conquer the advertising world. The question is not whether it will, but how.

First and foremost, the US market dominance will subside, Western European markets will grow faster, and emerging markets will experience extraordinary growth rates. These market changes will allow the rest of the planet to leapfrog the intermediary digital stages and transition directly to programmatic.

All media will be traded programmatically. Sweeping changes like this will know no borders. Remember ‘The internet will change everything’? We’ll see the same phenomenon here. Programmatic will change all media.

You might think you’ve heard this all before, but  programmatic will conquer the advertising world because it will adapt to the wide diversity of the media markets.

There won’t however, be one programmatic marketplace model which all media markets will end up adopting. Distinct programmatic marketplaces will prosper in different geographies.

Why programmatic market places won’t look the same

The model responsible for the stellar growth of programmatic in the US and the UK was founded on an atomised publisher environment, auctions, open exchange, powerful algorithms fed with plentiful third-party data, availability of premium and lower tier publisher inventory, transparency of inventory and a lack of transparency on margins.

But that model will not work “as is” in the other markets. As programmatic is no longer a high-growth niche and integrates the mainstream, it will  adapt to the local media market idiosyncrasies.

For example, in some markets, publishers are not yet ready to embrace programmatic nor to share their data. This explains huge geographic variations in the availability of first- and third-party data. Competition also varies enormously between markets with strong foreign players.

Others still have home-grown independent trading desks competing with agency trading desks for clients’ money and premium inventory is still not available transparently in many others.

In some markets, the ‘auction-based open marketplace’ closest to the remotes of programmatic will transform media buying habits beyond digital.

In others, a new equilibrium will be reached between the transformational nature of programmatic and the historical ‘old boys club’ media mentality. The dynamics are hard to predict, but the variables which will determine the future shape of each programmatic market are clear.

What will those different models look like?

• The Transatlantic model (US, Canada, UK): This will be more of a ‘buyers’ market’, characterised by the resilient strength of the open exchange. It will sit at the heart of a very rich and diverse ecosystem, with widespread data availability, a good balance between ITDs, independent DSPs, ad tech players, agencies and ATDs

• The Continental model (France, Germany, Spain, Italy): This will be more of a balanced market between buyers and sellers. It will be characterised by coalitions of publishers, and also, by the importance of private deals. This model will see the fastest development of the CTDs as a feedback loop versus slower ‘open’ adoption of programmatic

• The Northern model (Netherlands, Norway, Denmark, Sweden): This model will be typical of small and technologically-advanced markets. There will be good equilibrium across the ecosystem between buyers and sellers, different stakeholders. There will be full adoption of programmatic, but less reliance on third-party data compared to the transatlantic model

• The Asian model: This will be the closest model to the continental one, but with a twist. We will see numerous acquisitions of digital companies (it’s already started with Singtel or Alibaba). The mobile focus will be stronger and the initial take-off will mainly be led by the efficiencies allowed by programmatic buying

Naturally, these distinct programmatic marketplace models will evolve too, and the distinctions will tend to be increasingly blurred as the global adoption of programmatic progresses by leaps and bounds. Still these distinctions will remain operative at least for the foreseeable future. Finally these four models do not pretend to match the characteristics of all programmatic markets (some markets will resist categorisation) but these four models should be the main ones.

In conclusion, there is no ‘one-size fits all model’ in programmatic buying. It has the potential to transform everything, including, eventually, the way offline media will be traded.

The closest parallel to the programmatic buying revolution probably is the financial markets ‘big bang’ of the mid-80s. But media has more local, cultural, and idiosyncratic components than the financial markets.

Therefore, we will end up with different marketplace models, all bound by some common characteristics, which will mirror the pre-existing market conditions.