Programmatic hits tipping point

Warc, 30 September 2014    

NEW YORK: Programmatic spending continues to advance, increasing its share of global display-related advertising expenditure from 33% in 2013 to 42% this year and is predicted to hit 48% in 2015, according to new figures from Magna Global.

The strategic global media unit of IPG Mediabrands analysed digital media buying in 35 countries and said that inventory transacted through programmatic methods would increase 52% in 2014 to reach $21bn, of which $9.3bn would be transacted through real-time bidding (RTB) methods.

It projected an average annual growth of 27% out to 2018, by which time programmatic adspend would be worth $53bn.

Magna Global revealed that social inventory was already predominantly traded programmatically, while display and video were expected to reach adoption rates of 54% and 43% respectively by 2018.

"Pretty much all of social in most markets is transacted through a technology platform," Luke Stillman, forecasting manager at Magna Global, told Bloomberg. "Even within digital, the programmatic portion is the fastest growing," he added.

The US is leading the way in the adoption of programmatic – with $10.9bn worth of transactions in 2014, it represented 53% of the global market. Programmatic transactions are forecast to take 62% of US display-related digital dollars this year, growing to 82% by 2018.

Within the next four years it foresaw only the most premium digital inventory – such as sponsorship, full episode video or non-standard formats – continuing to be transacted through traditional mechanisms.

Magna identified several drivers of this growth, including the pressure to reduce transaction costs, the chance to monetise the so-called 'long tail' of digital media impressions, and the opportunity to leverage consumer data at scale to improve the efficiency of ad campaigns.

There had also been significantly increased uptake of programmatic by certain categories in the past 18 months, particularly among large verticals, such as CPG, automotive and pharmaceuticals, and direct-response verticals – including real estate, dating, gaming and education.

This was a direct consequence of new tools allowing marketers to measure and benchmark the impact and efficiency of programmatic campaigns on branding goals and not just immediate conversion.

Data sourced from Magna Global, Bloomberg; additional content by Warc staff