Programmatic ad-buying has issues, but it’s growing rapidly around the globe.
According to a just-released study from IPG Mediabrands’ Magna Global, programmatic ad spend will account for about a third of display and video expenditures this year, or about $14.2 billion,
up 49% compared to 2014.
According to the report, programmatic ad spend will reach $37 billion by 2019, accounting for half of display and video expenditures. That’s an average annual
growth rate of 31% over the next four years.
The U.S. is leading the global adoption of programmatic with $7.7 billion of transactions expected in 2015, per the Magna study. The U.S.
represents 54% of the global programmatic market. Programmatic transactions will represent 43% of total display and video dollars this year in the U.S., growing to 62% by 2019.
Real-time programmatic will represent 81% of total programmatic this year, per the study, with most transactions occurring on open exchanges or through invite-only exchanges with
additional constraints but ultimately auction-based pricing.
In its latest report, Magna is defining “programmatic” trading as advertising transactions that are based on automated
platforms and that are driven by consumer data. This definition includes real-time bidding (RTB) as well as automated transactions, where some aspects in the transaction (e.g. price) are pre-defined
instead of being discovered in real-time (Non-RTB), such as fixed price automated guaranteed transactions and fixed rate preferred transactions.
The largest markets in programmatic dollars are
the U.S., UK, Japan, China and Germany. Germany, Japan and China, however, are currently lagging behind in terms of adoption--below 25% of display and video dollars. In the U.S. and UK, by contrast,
programmatic spend already represents nearly half of total banner display and video dollars spent.
Programmatic markets are developing in significantly different ways. In North America,
Western Europe and Australia, established premium digital sales channels were already in existence when programmatic trading was introduced. As a result, publishers in these markets typically
introduce premium inventory through their own controlled environments such as publisher cooperatives, a concept that originated in France.
According to the study, in Asia-Pacific, global tech
solutions that dominate elsewhere have competition from local ad-tech platforms. “In combination with the entrenched incumbent transaction methods and relationship-focused sales channels,
programmatic development has been comparatively slow.”
By format, programmatic is still dominated by display. In 2015, display formats will represent 74% of total programmatic spend. By
2019, however, video dollars will represent 55% of total programmatic dollars, up from today’s 26% share.
Not only is the size of total video spend increasing, but programmatic platforms
are gaining access to an increasing share of premium video content. The report notes that in the U.S., Hulu is launching a new programmatic solution for marketers that makes Hulu’s premium video
inventory available across all platforms (desktop, mobile, connected TVs) for the first time. Similar moves are expected to happen across the globe as an increasing share of total available inventory
is sold through programmatic platforms.
By device, programmatic is still dominated by desktop formats. In 2015, Magna expects 72% of programmatic dollars to be spent on desktop platforms. By
2019, however, desktop and mobile will be evenly split, each claiming half of the total programmatic spending pie.