The Changing State of Programmatic Inventory in the UK

programmatic inventory

Following the launch of their latest whitepaper on the state of programmatic inventory in the UK in the fourth quarter of 2018, James Diba, senior client partner, The Programmatic Advisory, shares the key insights from the report, and what these mean for marketers.

The programmatic inventory landscape has seen a rapid rate of change over the last few years and, incredibly, we’ve seen another huge period of change over the course of the last year. How have these changes impacted the current state of programmatic inventory in the UK, and how can marketers put these insights into practice?

Following our previous analysis on the state of programmatic inventory in the UK in July 2017, the analysis this year looks at some of the key findings from last year, to compare against what we see now, as well as assessing the impact of changes sweeping across the inventory landscape, such as GDPR, ads.txt, header bidding, and first- versus second-price auctions.

The key changes to programmatic inventory in the UK
  1. Smartphone impressions and standard banner format impressions continue to dominate the share of impressions available via the open exchange, at 48.4% and 55.4% of all impressions, respectively. Whilst the dominance of standard banner formats has dropped from 76% of all impressions in the previous analysis, due to the growth of native and expandable formats, we still see this format provides the most scale to marketers, when activating programmatically.
  2. GDPR has impacted the number of impressions available through the open exchange. In the immediate aftermath of GDPR coming into effect, we observed a 26% reduction in impression availability. We now see an overall reduction of 37% in total impression availability, when looking at stats before and after GDPR was introduced.
  3. Header bidding is now utilised by 76% of the top 1,000 sites. Header bidding adoption continues to grow across publishers and formats. We expect to see the use of header bidding proliferate further, as the technology moves to in-app inventory and video inventory, where adoption has previously been slow due to technical challenges.
  4. Viewability and time in-view is improving across devices for both display and video impressions. As advertisers have demanded more from publishers, with regards to viewability over the last year, we have seen a direct impact on viewability rates, with desktop display now at 63.3%, and desktop video at 64.7%; up from 52.5% and 63.7%, respectively, in H2 2017.
  5. Ads.txt has seen fantastic adoption, with 94.5% of all programmatically available web impressions coming from authorised sellers. Buyers are now at a point where they are able to choose to buy only impressions from authorised sellers of inventory, from publishers utilising an ads.txt file, without having a large impact on their overall impression reach. Keep in consideration, however, that impression numbers are skewed by high-traffic sites; when looking at the percentage of domains with ads.txt implemented, this drops to 48.7% of domains. Choosing to only buy from sites utilising ads.txt will mean longer tail sites, not yet utilising ads.txt, will be excluded from targeting – despite the fact they may still bring some value to certain campaign types.
  6. First-price auctions have become far more prevalent, and now account for 50% of web-based auctions in the UK. Whilst overall adoption of first-price auctions stands at 29%, this figure is impacted by in-app inventory, where we see only 3% of auctions being first price. This difference across in-app is caused by header bidding not being as widely adopted for in-app inventory. However, as header bidding technology moves into the app world, we expect to see the share of first-price auctions continue to increase.
  7. Brand safety issues are declining, but ad fraud is increasing. As brand safety hit the mainstream news over the course of the last year, we are now seeing reductions in brand-safety issues. However, ad fraud is continuing to increase, with as many as 9.8% of desktop display impressions being fraudulent, when no ad fraud prevention technology is being utilised. 
What this means for marketers
  1. Consider the availability of formats and devices. Whilst standard formats and mobile impressions are still the most widely accessible for advertisers, it is important to consider how the growth of new formats and channels within programmatic may impact on campaign planning and reach. Although this research focuses on the UK market, this point is particularly prevalent for advertisers operating across less sophisticated programmatic markets.
  2. Account for GDPR when activating campaigns. Despite not having yet seen a high-profile law suit arise from an abuse of GDPR in the UK, its impact on programmatic advertising should not be overlooked when planning and activating campaigns. Marketers should consider the potential changes to both audience and impression availabilities and how this could impact on delivering their business goals.
  3. Ad quality is improving. After what has been a challenging year of negative press surrounding programmatic, marketers can take encouragement from the fact that we are seeing ad quality improving across metrics, such as viewability and brand safety; with incentives, such as ads.txt, further helping to clean up the supply-side industry. Despite these improvements, it remains critically important for advertisers to have a robust approach to brand safety and ad fraud, ensuring that they are working with partners able to effectively mitigate against the risks and protect their brand.
  4. You must be able to manage auction dynamics to deliver the best possible performance. Dynamics are changing from a world dominated by waterfalled, second-price auctions, to one in which we see a much more even split between header-bidding-led first- and second-price auctions. It is essential for advertisers, or those buying on their behalf, to be able to effectively manage the complexities of first- versus second-price auctions via supply-path optimisation (SPO) to deliver optimal performance. Practically, this happens by having strong working relationships with key publishers and/or demand-side technology to customise SPO on the buyer's behalf. 

Given the volume of changes in 2018, it will be interesting to see what the programmatic inventory landscape looks like in 2019, with new formats being sold programmatically, increased data constraints, SaaS-based buying and selling models, as well as the market in general getting more adept with handling the rapid changes that programmatic presents.

The full analysis is available to download here.