Programmatic, Video, Mobile Driving U.S. Display Ad Growth To $37B in 2019

Online display advertising in the United States will grow from $19.8 billion in 2014 to $37.6 billion in 2019 at a compound annual growth (CAGR) rate of 13.7%, fueled by advancements in programmatic, video advertising and mobile media, per a study released Monday.

Brands will follow the shift by U.S. consumers to online video with about 82% of 18-34s watching online video monthly, and 67% of 35-54s, per the Forrester Research North American Online Display Advertising Forecast, 2014 to 2019. The study highlights trends such as programmatic, video and mobile driving the most growth in online display advertising during the next five years.

Video will claim about half of all online display advertising revenue during the next five years. In fact, video advertising on desktops will grow by 21% annually through 2019, contributing 54.6% of total PC online display advertising revenue. In comparison, rich media will grow at 4.1% CAGR until 2019, representing 31.9% of the amount marketers will spend to advertise on desktops. The growth will primarily cannibalize static image budgets, which will drop from $1,541 million in 2014 to $157 million in 2019.



Nearly 213 million U.S. consumers use smartphones, and nearly 110 million use tablets, per Forrester. By 2017, smartphone subscribers will reach 257 million; and tablet users, 150 million. As a result, mobile display advertising will grow at 24.5% CAGR between 2014 and 2019 -- more than twice as quickly as desktop display advertisements.

Mobile devices will play a greater role in sales influenced by Web marketing and ecommerce, representing 52% combined in U.S. retail this year. Tablets will comprise a larger portion of online display ads. In 2019, mobile display will represent 38.6% of total online display advertising, up from 24.4% in 2014. The report estimates that by 2019, smartphone display will attract 15% of total online display advertising spend, while tablets will represent 23% in 2019.

The report also points to the display market shifting toward programmatic exchange-based trading at a rate of 11.4% annually between 2014 and 2019, gaining greater efficiencies in media trading and advertising. More premium publishers are willing to open inventory to programmatic trading after initial fears subsided that it would become a race to the bottom. In fact, it had the opposite effect. This year, 90% of publishers saw their cost-per-thousand rates (CPMs) increase since working with an exchange or supply-side platform.

Forrester estimates the offline ad market will reach $239 billion in 2019, increasing a CAGR of 1%. Cable TV at 4.8% will experience the fastest growth, while other offline channels -- radio, newspapers, magazines, and Yellow Pages--will decline. 

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