Online publication The Drum and the Trade Desk have partnered to analyze the state of programmatic video in 2016, releasing a report showing rapidly increasing adoption of programmatic video by digital marketers.
Almost half of marketers surveyed -- 46.2% -- say they serve video advertising programmatically for their clients, while 53.8% do not.
Respondents noted such barriers to adopting programmatic video buying as cost -- the highest challenge to overcome -- poor targeting or waste, transparency issues and brand safety.
Similarly, the biggest challenges when using programmatic video advertising are issues with viewability and improper targeting or waste.
Nevertheless, respondents were bullish about the growth of this sector, with a strong 88.5% expecting an increase in the number of programmatic video buys in 2017. Marketers find that the largest shift in funds will come from display advertising and linear TV ads.
“There has been a massive surge in programmatic trading over the last year, and the biggest driver is private marketplaces," notes Steve Chester, The Interactive Advertising Bureau UK’s director of data and industry programs. "Confidence in programmatic is shedding its old skin of being direct response -- there has been a real step-change in perceptions.”
Video advertising in general still accounts for a relatively small portion of marketing budgets: 68.8% of respondents say their clients apportion less than one-quarter of their ad spend to video advertising, with 26.9% noting that their clients spend a quarter to half of their ad budgets on video.
The trend is positive, however, with 62.5% saying their clients are spending more on video in 2016 than they did in 2015.
Programmatic buying on TV has also seen significant growth over the past few years. According to the study, in 2014 programmatic accounted for 2% of spending on TV in the U.S. That number grew to 4% or $2.5 billion in 2015, and, according to Magna, programmatic buying will jump to 17% of the U.S. TV market in 2017, or $10 billion.