Automated Ad Buying Surges Online; Purchases Made by Computerized Systems Are Expected to Rise 56% This Year

October 14, 2013 Leave a comment

Automated Ad Buying Surges Online

Purchases Made by Computerized Systems Are Expected to Rise 56% This Year

SUZANNE VRANICA

Oct. 13, 2013 5:25 p.m. ET

Machines are taking over more of the process of buying online advertising, according to a new study. Automated ad buying, in which marketers use computerized systems to target users based on consumer data and Web-browsing histories, is expected to increase 56% this year in the U.S. to $7.4 billion, according to a study scheduled for release Monday by Magna Global, the research and ad-buying arm of Interpublic Group IPG +1.50% of Cos.Such “programmatic buying” would represent about 53% of the $14 billion U.S. market for display-related ad businesses, the company said.

Automated buying is a major departure from the traditional ad-buying process, which for decades has largely relied on relationships between buyers and sellers.

Programmatic buying began as a way for Web publishers to sell lower-value ad inventory, but it is gaining traction as publishers get comfortable with the idea of using automated systems in the buying and selling of premium inventory.

About $3.9 billion of the expected automated ad spending this year, Magna said, will be through real-time bidding, in which advertisers, through machines, automatically bid for inventory that meets their ad specifications within milliseconds of it becoming available.

“Digital media has reached scale and a level of standardization where you can trade it as a commodity,” said Vincent Letang , executive vice president of global forecasting at Magna.

Automated ad buying is one of the hottest trends in advertising. Marketers are eager to find efficiencies and eliminate waste by having their ads reach the right consumers.

Still, there are concerns among some publishers because real-time bidding has put pressure on prices of display ads.

Last month, AOL Inc. AOL +0.86% hosted an event to woo advertisers to spend money on its automated ad business. It was modeled on the “upfront” pitches TV networks make to advertisers each spring.

Filed under TMT Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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