When it comes to ad spend these days, programmatic advertising — using software and algorithms to purchase data-based and highly targeted digital ads automatically — is the new king.
In 2016 alone, programmatic advertising will account for 73 percent of all digital display ad budgets. That’s a total of $25.23 billion in ad spending this year, according to eMarketer.
And it’s a figure that is only growing.
By 2018, eMarketer predicts that programmatic advertising will account for 82 percent of all U.S. digital video ad spending thanks to growth in technology and advertisers’ ad buying habits. Already this year, programmatic ad spending has jumped about 40 percent compared to last year as more and more advertisers get a handle on the technology and its effectiveness to target consumers.
“Programmatic is extremely efficient and unparalleled in its ability to pair rich audience data with ad inventory and targeting,” according to eMarketer Senior Analyst Lauren Fisher. “Buyers and sellers are also becoming more comfortable with the technology. As a result, it is being rapidly adopted across a variety of channels and ad formats.”
In 2016, programmatic ad dollars will surpass spending on real-time bidding for the second year in a row, according to eMarketer, amounting to 53 percent of all U.S. programmatic ad dollars. That’s a $13.37 billion industry this year.
Mobile is also rapidly driving growth of programmatic ad spending, as eMarketer predicts it will reach 69 percent of programmatic digital display ads by the end of the year. That’s a $15.45 billion figure. Next year, the mobile ad display number is forecasted to rise even higher to 78 percent of overall dollars and $21.22 billion. EMarketer also predicts that mobile video programmatic ad spending will surpass its desktop counterpart for the first time in 2017.
“Next year will be the tipping point for programmatic mobile video ads, as mobile surpasses desktop for the first time,” according to eMarketer. “By 2017, programmatic mobile video ad spending will reach $3.89 billion, representing 51 percent of total programmatic ad spending in the U.S. By comparison, programmatic desktop-based video ad spending will reach $3.73 billion, dropping to 49 percent of total programmatic digital display ad spending in the U.S.”
OwnerIQ, a second-party data analysis company, also predicts similarly bullish growth in the programmatic advertising market, more than doubling from around $15 billion in ad buys in 2015 to a predicted $32 billion by the end of 2017.
“The core of the display market, performance-based impressions, will shift toward programmatic exchange-based trading at a rate of 11.4 percent annually between 2014 and 2019,” according to ownerIQ.
Already, ownerIQ believes that 96 percent of all marketers are using some form of programmatic advertising to buy display ads, and it believes that programmatic will draw $47 billion in local advertising alone come 2019. By 2020, ownerIQ believes that programmatic advertising will account for 85 percent of all targeted ad banners and 67 percent of all streaming video ads.
“Programmatic advertising dramatically reduces human error and the laborious process of media buying,” according to ownerIQ. “With savvy programmatic techniques targeting the right consumer, at the right time, in the back end.”
OwnerIQ believes that, in 10 years, 90 percent of all advertising period will be programmatic. Think about that for a second.
Already dominating digital ads, programmatic advertising is also expected to see steady growth when it comes to TV advertising as well, according to eMarketer. Programmatic advertising is expected to triple this year, climbing 127.8 percent to $710 million.
Although it only makes up about 1 percent of overall TV ad spending now, eMarketer expects programmatic advertising to skyrocket over the next few years and total 6 percent of all TV ad dollars by 2018. That would amount to $4.43 billion.
“There are several things driving the growth of programmatic TV, including ease of transactions and the ability to target ads,” according to eMarketer Forecasting Analyst Martín Utreras. “We expect national and local players to take a conservative approach at releasing inventories programmatically, amid fears they could cannibalize their inventory. At the same time, they’re working to become more adept at leveraging data for both ROI measurement and targeting.”
Marketers need to realize that programmatic advertising isn’t just the future of advertising; it’s the now of advertising as well.