At Altitude Digital, our mission is to deliver the programmatic technologies to streamline the connections between buyers and sellers in online advertising. In just a few short years, programmatic advertising has become one of the fastest growing segments of digital marketing. In fact, total digital advertising revenues surpassed $11.6 billion in Q1 2014 alone (up $2 billion from 2013), putting it on a trajectory to surpass television by 2018.
Programmatic marketing technology was born out of the necessity for efficiency and scale in transacting online advertising. As ad budgets and audiences continue to shift towards digital channels, technologies that automate and streamline the process will continue to thrive. There is no shortage of programmatic growth projections from the industry’s leading research firms and publications. While the numbers may differ from case to case, they all seem to agree on one thing – programmatic advertising is at an inflection point and poised for remarkable growth over the next few years.
We summarized recent research and projections from several sources to clarify the trajectory and punctuate the opportunity in programmatic advertising.
The Global Programmatic Market
Currently, The United States is the most mature and advanced market for programmatic advertising, accounting for over 60% of global programmatic ad spend worldwide in 2013. However, other markets are rapidly developing programmatic technologies that are accelerating their growth rate. MAGNA GLOBAL has projected that worldwide programmatic ad spending will reach $32.6 billion by 2017, with the US accounting 50% of the total.
The US Programmatic Market
MAGNA GLOBAL projects that $9.8 billion will be transacted programmatically in the US in 2014, growing to $16.9 billion by 2017 (63% and 83% of total US display ad spending respectively).
Let’s take a closer look at how this breaks down across various programmatic advertising channels.
Currently, RTB display accounts for the majority of programmatic spend (RTB is a subset of programmatic). eMarketer projects that RTB display spend will total $4.86 billion in the US this year, making up 22% of total display ad spending. By 2018, that amount is projected to reach $12.02 billion – 30% of all US digital display ad spend. Others, including the IDC, estimate more rapid growth:
Video RTB is also seeing impressive growth. Forrester Research, in a study commission by SpotXchange, forecasts video RTB spend to hit $1.14 billion in 2014 (284% increase since 2012). This will account for nearly 25% of U.S. online video advertising spend.
Mobile is playing a huge role in programmatic growth. In AdExchanger’s 2013 mobile roundup, Mobile RTB was projected to hit 30% of all mobile ad buys by the end of the year. MarketingProfs expects this trend to continue, and has projected mobile RTB to comprise 45% of all mobile ad buys by the end of 2014.
Among content categories, entertainment rules, growing its total share of mobile RTB ad share from 26% to 38% between Q4 2013 and Q1 2014. As a result of this increase, all other categories studied—social media, games, music, and communications and technology—lost share in overall traffic volume.
Premium Programmatic (Direct)
Premium programmatic (or programmatic direct) is direct sold, guaranteed inventory and is not to be confused with RTB or Private Marketplaces that involve bidding on individual impressions. As more brand dollars move to digital, both publishers and media buyers look to programmatic technology to lock in advertising agreements in advance to supplement traditional direct sales channels. In 2014, the IDC estimates $674.9 million in display ad spend will be conducted via premium programmatic. By 2018, this number is projected to reach $9.3 billion.
“Programmatic has evolved far beyond real-time bidding. It is enabling marketers to deliver the most relevant advertising experiences to consumers,” said Joanna O’Connell, Director of Research at AdExchanger. “Programmatic has become an accepted way of conducting business helping streamline operational processes along the way. I am pleased to see it on the rise and being embraced by those across the entire digital advertising ecosystem.”
There are some forward-thinking brand marketers, however, that have embraced programmatic. Just recently, American Express, Proctor & Gamble and Mondelez International (Oreo, Trident) announced that they plan on spending the majority of their digital budgets programmatically by the end of 2014. The automation, scalability and advanced targeting afforded by programmatic technologies will allow these companies to achieve efficiency and reach not possible with traditional direct buys.
According to Ivelisse Roche, Mondelez’s associate director for global media and consumer engagement, “Programmatic fits within the larger digital optimization strategy we’ve been employing for the last year as we shift more media spend to digital, and online video is a major area for growth.” While P&G declined to comment on their strategy, it nevertheless shows the increasing confidence in programmatic advertising on both the direct-response and brand advertiser levels.
The Future of Programmatic
Jimmy Kimmel once joked, “Programmatic buying is the gluten of advertising. Like gluten, ‘programmatic’ has become a buzzword that many people use but few really understand. They just know it’s important.” It’s funny but true. The goal of Programmatic advertising is to create a more efficient and healthy marketplace for buyers and sellers of digital advertising. It’s imperative that both publishers and advertisers select the right partners and technology platforms to help them leverage the power of programmatic.
Get Started With Programmatic
Altitude Digital has built Altitude ARENA with Video RTB enabling publishers to access the growing number of buyers who are leveraging programmatic technologies. Additionally, Altitude’s ACCESS platform supports agencies looking to execute campaigns programmatically. These solutions equip buyers and sellers to harness the power of programmatic.