BidMachine - 4 min read  - January 27, 2020

What 2020 Holds for Programmatic Advertising

The BidMachine team gathered some major programmatic trends that we see getting stronger in 2020. Will in-app bidding finally overcome the setbacks of the previous years? Will the latest transparency measures positively affect buyer-seller relationships? The year 2020 will most probably bring to life initiatives that are meant to dominate in the new decade.

In-app Bidding Will Continue to Gain Trust

It’s safe to say that in 2019 in-app header bidding adoption slowed down a bit. This lagger tendency can be attributed to several factors that we have observed at work. 

Mobile ad tech industry has undergone many changes and each time a big change arrives, some companies worry that it might put a strain on teams’ resources. Even though team leaders and innovators within companies understand the emerging need for changes, it takes more time for organizations to make a final decision and stick to it. In other words, there is a gap between constant technical advancement and companies’ ability for a quick organizational change.

For agile companies it is important to close that gap and keep up with the latest tech progress in order to stay competitive. It might be frustrating for talented monetization managers within companies that do not employ in-app bidding to come through with the idea, but combining in-app bidding with legacy monetization could actually boost ad revenues.

Compatibility and implementation issues are another factor—many monetization teams are still catching up to new setups. And with ad waterfalls as safe harbor, some choose to delay in-app bidding implementation for the lack of resources and processes in place. The familiar ad waterfalls continue to entice publishing companies that are not sure yet whether in-app bidding comes with increased revenue. 

However, in-app bidding will inevitably prevail over the traditional waterfall system. Since people are more educated on the topic of in-app bidding, thanks to numerous individual and collective efforts in the industry, it won’t take long for it to be fully embraced.

Transparency: Weeding Out Foul Players

Several important transparency tools were introduced in 2019—app.ads.txt, sellers.json and SChain Object. The last two are actually technical specifications developed by IAB and aimed at increasing trust in the supply chain. The sellers.json file allows DSPs to easily verify the app-ads.txt entries provided by the publisher, and therefore see who is authorized to sell that publisher’s inventory. And SupplyChain Object fully shows the supply path from the publisher to the advertiser with all reseller entities in-between.

From our perspective, the end goal of transparency measures is to decrease the number of obstacles between mobile publisher and advertiser, allowing them to interact with a clear vision. App-ads.txt and similar inventions act not only as fraud risk mitigators, but also help demand partners and app developers gain major confidence when it comes to buying decisions.

The Idea of Ad Tech In-house Will not Be So Daunting Anymore

To stay on the topic of transparency and confidence, we also envision stronger tendencies for companies to move ad tech in-house.  Since increasing transparency obviously threatens and hurts big companies that play the middlemen role, it becomes clear that turning to in-house would be a logical step for publishers who wish to have more control over their programmatic buying and pay less to third parties.

Oftentimes,  the fees that app companies pay—to ad exchanges and ad networks—can amount to anywhere from 25% to 50% off their overall ad revenue. Not to mention that the mechanics behind the fees are completely hidden. In fact, if publishers were able to save up on unfair ad mediation fees, they could have made an easier decision on moving their ad technologies in-house with the revenues they are losing out on.

It is quite frustrating to realize how much publishers share with big middlemen that are not even pioneers of new technologies and tools that move the industry forward. In 2020 companies surely won’t be able to look away anymore: the time for laying the in-house ad stack foundation is now. 

Programmatic TV is on the Horizon

Today almost everyone has a subscription with a video service like Netflix. When you spend a lot of time in a streaming service like that, you give some information about yourself as a viewer — the streaming platform learns your interests and your viewing patterns and can offer you similar shows and films. This is what already happens. Based on that information, streaming apps will subsequently be able to offer personalized ads and thus relevant purchasing experiences. 

Fewer and fewer people care to buy or watch traditional TV. At the moment, web and in-app advertising are in the lead since that’s where most viewers are. However, TV and home video cinema apps have a great potential to become a new space for non-disruptive, personalized ads that can become a legit ad revenue source for many companies. 

Emerging Fad: Smart Wearables

Among smart wearables smartwatches are a rather popular gadget today and maybe you even received one of those this Christmas. Naturally, programmatic advertising is confidently making its way into this new medium. Right now automated banners are already being shown to Sony and Samsung smartwatch owners. As this market continues to grow, programmatic ad tech will have increasing opportunities to work with that audience, using more accurate user data. This medium is definitely meant for personalized ads only. Marketers can capitalize on all kinds of fitness and health ads that might appeal to smartwatch users.

Hybrid auction model: 1st price + 2nd price auctions

The hybrid auction model, that combines the first-price and second-price auctions, will become a more frequent occurrence in programmatic.

First-price auction is a significant step towards transparency in programmatic buying and selling. In a transparent first-price auction, advertisers can finally clearly see the rules of the game and adapt to them, while publishers can move away from situations where consistently low bids in second-price auctions lead to loss of valuable impressions and negatively affect their revenue. However, 2019 proved that the first-price alone turned out to be a bit intimidating for most auction participants. Thus, it will coexist peacefully with second-price auction until one of them tips the balance. 

If you want to learn more about first-price auction, read our article here. Also check out our benefits overview of programmatic ad exchanges and SDK integration.

For more information on in-app bidding with us, visit BidMachine website.

Ekaterina Kupidonova
Product Marketing/Content Manager

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