Indepth: Exploring the current state of Programmatic Advertising in India

Programmatic advertising has revolutionised the Indian advertising landscape, driven by the widespread use of smartphones and Internet access.

Programmatic advertising has transformed the approach of businesses in reaching their desired audiences amidst the rapidly evolving digital advertising landscape. Through the utilisation of data insights and sophisticated algorithms, programmatic advertising guarantees precise ad delivery to targeted users at optimal moments and locations, thereby enhancing engagement and conversion rates. From display ads and video ads to native ads, audio ads, mobile ads, social ads, connected TV, and digital out-of-home ads, programmatic advertising empowers advertisers with a multitude of options to create personalised and impactful connections with their audiences.

By analysing user behaviour and preferences data, brands can deliver highly targeted ads that are more likely to result in a purchase, resulting in increased sales and revenue. Here are some examples to understand programmatic advertising better:

BMW: In November 2018, BMW implemented programmatic advertising in their “X2 Launch” campaign to specifically target different demographics. They became the first to utilise Snapchat's Snap Ad with an augmented reality (AR) ad unit, allowing users to experience a 3D version of the car, replicating a showroom visit. By leveraging data on consumer preferences and behaviours, BMW effectively delivered ads to the appropriate audience at the optimal moment, leading to increased sales and revenue.

Coca-Cola: During the 2018 World Cup, Coca-Cola employed programmatic advertising to deliver personalised advertisements to users. By analysing data on user behaviour and preferences, Coca-Cola successfully delivered highly targeted ads to users in various regions and languages, resulting in heightened engagement and improved brand awareness.

Spotify: Spotify utilises programmatic advertising to deliver tailored ads to its users based on their listening patterns and preferences. By harnessing data on user behaviour and music tastes, Spotify can deliver precisely targeted and relevant ads to its users, resulting in higher rates of engagement and improved returns on investment.

Amazon: Amazon has utilised programmatic advertising extensively to promote its products and services. Through programmatic campaigns, they can target users based on their browsing and purchase history, delivering personalised recommendations and offers to drive conversions and enhance the shopping experience.

Netflix: Netflix has leveraged programmatic advertising to promote its original content and engage with potential subscribers. They employ sophisticated targeting capabilities to reach audiences interested in specific genres or shows, delivering tailored ads to drive viewership and subscriptions.

Targeting in Programmatic Advertising

Targeting lies at the heart of programmatic advertising, enabling advertisers to identify and reach specific audiences based on various criteria. According to Gandharv Sachdeva, Country Head - India and Thailand, Hybrid, programmatic advertising platforms leverage data, algorithms, and technology to achieve precise audience targeting.

“Advertisers can combine multiple targeting options to create sophisticated targeting strategies and reach specific audiences with precision. Programmatic advertising platforms offer powerful tools and algorithms to optimise targeting and maximise campaign performance, ensuring that ads are delivered to the right people at the right time,” said Sachdeva.

Rajiv Dhingra, Founder & CEO, ReBid, noted that programmatic advertising targeting options include demographic targeting, geographic targeting, behavioural targeting, contextual targeting, device targeting, interest targeting, dayparting, and retargeting.

Dhingra emphasised, “Each of these targeting options can be used individually or in combination, depending on the specifics of the campaign and the intended audience. The goal is to present users with ads that are so relevant and appealing that they feel personalised. This increases the chances of engagement and conversion, helping brands get the most out of their advertising budget.”

Ashok Shinde, Vice President - Media, PivotRoots, highlighted the significance of combining demographic, psychographic, geographic, and behavioural inputs to target desired audiences. Shinde cited the example of a brand selling air purifiers targeting users aged 25-44, who are working professionals, likely to be parents, interested in home décor, and living in areas with high Air Quality Index. This level of granular targeting allows brands to maximise the relevance of their ads and reach audiences most likely to convert.

Santosh Ghosh, Head - Digital Strategy, Investment & Advisory at Tencom Ventures, emphasised the extraordinary micro-level targeting capabilities of programmatic advertising. He said, “The programmatic advertising model’s triumph can be attributed to its unparalleled micro level targeting capabilities. With the ability to create audience cohorts based on a wide range of factors, the possibilities are virtually limitless. In addition to standard demographics and location targeting, the programmatic model offers options to target specific mobile operators, handset models, user language, and more. This targeting precision extends even further, allowing advertisers to delve into user behaviour, such as content consumption over the past month, frequency of online shopping, or the number of food orders placed. The programmatic model presents an extraordinary opportunity to understand and engage users in ways that were once unimaginable.”

Programmatic Ad Formats

Programmatic advertising offers a diverse range of ad formats that can be dynamically delivered and optimised based on audience targeting and real-time data.

Ashok Shinde added here that programmatic advertising platforms provide interactive, dynamic, and customisable ad formats that enable brands to express their messages effectively. He said, “Programmatic advertising platforms provide a wide range of interactive, dynamic, and customizable ad formats for brands to express their message. They unlock the potential for brands to reach their target audience in a meaningfully micro-segmented form, resulting in better response rates. For example, a brand could potentially serve a dynamic display or video ad customised for language, visuals (landmark or attire), copy subtly customised to dominant interest (shopping, sports, fashion, technology) of the user. Programmatic platforms also support traditional digital ads that are standard static, rich media, or video creatives that typically don't support personalisation and real time data integration.”

Highlighting the exceptional targeting capabilities of programmatic advertising, Tencom Ventures’ Santosh Ghosh said, “When it comes to ad formats, there isn’t much of a difference between regular formats and programmatic formats such as display, video, connected TV, or out-of-home (OOH). The true allure of programmatic advertising lies in its exceptional targeting capabilities.”

Current Trends and Advancements in Programmatic Advertising

Programmatic advertising is a dynamic industry that constantly evolves with new trends and advancements.

Gandharv Sachdeva shared some developments that have significant implications for the industry:

• Increased Efficiency: Automation and AI-driven optimizations streamline campaign management, targeting, and performance, enhancing efficiency for advertisers.
• Improved Relevance and Personalisation: Advanced targeting capabilities and dynamic creative optimisations enable advertisers to deliver highly relevant and personalised ad experiences to their audiences, fostering better engagement and brand-consumer connections.
• Enhanced Transparency and Brand Safety: Advertisers can leverage technologies and strategies to ensure brand safety, protect against ad fraud, and maintain transparency in the programmatic ecosystem, fostering trust and accountability.
• Data-Driven Insights: The abundance of data generated in programmatic advertising provides valuable insights into audience behaviour, preferences, and campaign performance, enabling data-driven decision-making and optimisation.

“Overall, these trends and advancements in programmatic advertising drive greater efficiency, relevance, and accountability, shaping the industry and enabling advertisers to deliver more impactful and targeted ad experiences to their audiences,” he added.

Rajiv Dhingra cited additional trends, including the integration of generative AI and machine learning into programmatic platforms, the focus on data privacy and consent, the growth of programmatic advertising in connected TV and OTT, the rise of programmatic audio, the in-housing trend where businesses bring programmatic capabilities in-house, and the importance of real-time measurement and optimisation.

“These developments have significant implications for the industry. They’re driving innovation, enhancing campaign performance, and changing how advertisers and agencies operate. However, they also pose challenges, such as the need for new skills, increased complexity, and the ongoing adaptation to privacy regulations,” Dhingra noted.

Ashok Shinde identified several trends to watch out for, including programmatic becoming more omnipresent, the adoption of unified planning, readiness for the cookie apocalypse, and brands demanding higher accountability.

He shared, “Programmatic is constantly evolving. Some trends and advancements worth watching out for will be it becoming more omnipresent, unified planning adoption, cookie apocalypse readiness, and brand expecting higher accountability, as explained below:

• Programmatic advertising will continue to expand its reach by adding more connected personal or household devices, such as connected TVs, smart speakers, connected cars, and many more. Additionally, there will be an increase in public environment inventory through Digital Out Of Home (DOOH) screens.
• The multitude of devices, environments, channels, platforms, and targeting options available in programmatic advertising poses an interesting challenge of selecting and spreading budgets effectively. Unified planning across connected devices and channels, such as across OTTs, will continue to evolve and gain adoption.
• The rapid advancement in AI and ML has the potential to make programmatic advertising investments more effective and drive desired outcomes.
• The cookie apocalypse is expected to be a defining moment for programmatic advertising and digital marketing as a whole. Industry collaboration among publishers, platforms, and advertisers is crucial to develop privacy-preserving standards and frameworks that enable effective targeting and measurement in a cookieless world. Contextual advertising, in the form of audio, video, and text-based content-led buys, is likely to gain interest in the midst of the cookie apocalypse.
• Brands are increasingly demanding higher accountability from programmatic platforms, including brand safety, transparency, and genuine reach. These demands may lead to the emergence of open, collaborative, and low (or no) cost ad verification solutions in the future.”

Santosh Ghosh highlighted trends such as the rise of connected TV (CTV), the integration of AI and ML, the focus on privacy-focused solutions, the growing significance of data, and the increased demand for transparency.

Ghosh further said, “Programmatic advertising is an ever-evolving industry, and will continue to witness noteworthy trends and advancements in 2023. Here are some key developments:

Connected TV (CTV) on the rise: CTV is experiencing rapid growth, with programmatic advertising playing a pivotal role in its adoption. Reports indicate that approximately 25 million Indian households currently possess internet-enabled CTVs. Moreover, brands are projected to increase their CTV advertising expenditure and the estimated growth is projected at 350% between 2023 and 2027.

Embracing AI and ML: Programmatic advertising leverages artificial intelligence (AI) and machine learning (ML) to enhance targeting, measurement, and optimisation. AI can analyse vast data sets, enabling advertisers to identify and target the most suitable customers for specific products or services.

Privacy-focused solutions gain traction: The decline of third-party cookies necessitates innovative approaches for targeting and measuring ads without relying on personal data. Consequently, privacy-focused solutions like contextual targeting and interest-based targeting are emerging to address these concerns.

Data’s growing significance: Data is assuming an increasingly crucial role in programmatic advertising. Advertisers utilise data to gain deeper insights into their target audiences, allowing them to create more personalised and impactful ad campaigns.

Demand for transparency on the rise: Advertisers and publishers are seeking heightened transparency from programmatic advertising platforms. They aspire to understand how their ads are served and how their data is utilised, highlighting the growing importance of transparency in the industry.”