• by Seth Ulinski , Op-Ed Contributor, September 3, 2014

Multiple reports indicate the global digital advertising market is on pace to exceed $120 billion in 2014, growing roughly 16% year-to-year.  While this is a great topline industry number, I have not seen many reports of revenue captured by advertising technology (ad tech) platforms.  Typically estimates aggregate keyword search, digital media, and technology into a single number.

To simplify and keep matters realistic, let’s assume search advertising (which comprises half of overall digital spend) is removed, as Google continues to command the lion’s share and this isn’t likely to change soon.  For the remaining digital spend, let’s factor in the fact that ad tech “tax” can reach 50% or more, depending on the number of touch points in the digital food chain, including: ad servers, agency trading desks/demand side platforms, data management platforms, verification, attribution, analytics, supply-side platforms, etc.   Of course not all campaigns touch each ad tech component listed above, so with that in mind I whittled down associated fees.
In estimating 2014 global revenues for the Ad Tech sector, consider: 

• $120 billion total digital spend – $60 billion search spend = $60 billion
• $60 billion x 20% platform or managed services fees (ATD/DSP/DMP) = $12 billion
• $60 billion x 5% misc. fees (ad serving, campaign analytics) = $3 billion
  Total Global Ad Tech Market = $15 billion

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  We can expect the ad tech market to significantly outpace 17% growth of the overall digital market estimates as more dollars flow into digital platforms, particularly programmatic technologies.  On that note, agency trading desks (ATDs), demand-side platforms (DSPs), and sell-side platforms (SSPs) are each seeing anywhere from 50% to 100% or more revenue growth year-over-year.  Ad tech’s slice of the pie will only increase as TV ad dollars shift to digital platforms (instead of borrowing from print and other media formats).

  If 2013 marked the first year digital ad spend surpassed TV domestically ($42 billion vs. $40 billion), then ad tech should move from below-the-radar to prime time in 2014.  I’ll be working on a 2015 global addressable market forecast for ad tech that I look forward to discussing.