Like the lowly banner, social/native and video ad formats are dependent on programmatic methods for their future growth . Today these channels are growing at 29% and 23% respectively, according to ZenithOptimedia, thanks partly to real-time bidding enablement.
With regard to social, Facebook has the only scaled programmatic sales offering in the digital media ecosystem, but Twitter is getting there with accelerated tests of CRM matching, website retargeting, and third party audience segments, not to mention its acquisition of mobile exchange player MoPub. Other social players, such as Pinterest and LinkedIn, are potentially waiting in the wings.
As all of this social inventory "comes online" for exchange trading, in desktop as well as mobile Salmon expects a resulting trickle-down effect for platform intermediaries like Rocket Fuel (the subject of his research note), Criteo, Dstillery, and other ad network and trading desk players. "As the advertising ecosystem begins to apply [programmatic selling] capabilities to native advertising formats… there are more opportunities for companies like Rocket Fuel to help their clients purchase inventory using real-time bidding," he wrote.
Meanwhile, programmatic video via online platforms and even connected TV systems also has a head of steam. Video demand-side platform TubeMogul and competitors such as AOL’s Adap.TV, Vindico, and Videology are going hard after this opportunity, and seeing significantly higher growth rates than "traditional" video ad networks like Tremor and YuMe.
This represents a mixed blessing for these companies, many of which also have revenue streams based on media margin or other, non-licensing fees that aren't growing as fast. As Pivotal Research analyst Brian Wieser observed in his own research note Monday, "Even TubeMogul’s ad network / managed service business has also slowed down significantly, rising by only 18% during 4Q13, well below the tripling of the DSP business at the same time."
But it's not only pure plays that are rummaging for video supply. For Rocket Fuel and many of its competitors, transacting on sound-and-motion inventory is a key priority for this year and next, as Salmon notes.
And then there's TV. Until the pedal hits the metal with programmatic buying in TV-based viewing environments, traditional buying is likely to remain the world's dominant advertising medium. Last year television drew 40% of ad spend, nearly twice the amount commanded by the Internet, according to Zenith. And its growth is still accelerating; it will grow 5.2% in 2014, up from 4.4% in 2013, thanks to the year's major events (Sochi Olympics, soccer's World Cup and mid-term US elections.)