Two-thirds of all money spent on advertising in digital media in 2019 (65%) will be traded programmatically, according to Zenith’s Programmatic Marketing Forecasts. Advertisers will spend $84 billion programmatically next year -- projected to reach $98 billion in 2020, when 68% of digital media expenditure will be earmarked for programmatic trading.
However, the transition is taking longer than Zenith expected, with last year's forecast projected to be 64% in 2018, and 67% in 2019. Analysts have pulled back both forecasts by two percentage points.
Further, Zenith estimates that programmatic ad spend will grow 24% in 2018 -- down from 32% growth in 2017, and forecast to be only 19% in 2019, followed by 17% growth in 2020.
This is due to the introduction of privacy legislation, such as the EU’s GDPR. It has had a "chilling effect," by making certain data previously used in programmatic transactions unavailable and making other data more costly to process, says Zenith.
“But we think the main reason for the slowdown in spending on programmatic media is that advertisers are investing more in infrastructure and data to make their programmatic activity more effective,” states the report.
“The scale of operational restructuring to make the most of it is both extensive and expensive. Advertisers are spending more carefully while they invest in infrastructure and data and review the quality of media," added Benoit Cacheux, global head of digital and innovation, Zenith. "All programmatic advertisers need a strategy for acquiring the best and most comprehensive data available, and to treat this data as a vital corporate asset.”
The U.S. will continue to dominate the market -- accounting for 58% of ad spend, worth $40.6 billion in 2018. This figure grows to $47.5 billion in 2019 and $55 billion in 2020. China is in a distant second place, spending $7.9 billion on programmatic advertising in 2019, followed by the UK, with $5.6 billion.
The U.S. is also the market that has most embraced programmatic advertising -- trading 83% of all digital media programmatically in 2019, worth $49.1 billion, followed by Canada (82%), the UK (76%) and Denmark (75%).
By 2020, programmatic advertising will account for more than 80% of digital media in all four markets. Canada will have almost completed the transition to pure programmatic trading, spending 99% of digital media programmatically that year.