Programmatic advertising to represent 80% of online display ad sales by 2018

Programmatic advertising, which has jumped from being worth virtually nothing to comprise just under half of the total online display ad sales market in less than five years, is expected to account for up to 80% by 2018.

The term covers a range of technologies that automate the purchase, placement and optimisation of adverts in targeted inventory systems. But the Internet Advertising Bureau (IAB) UK’s “Media Owner Sales Techniques’” study, which was undertaken by consultancy MTM, revealed that, of the £2.1 billion spent on display ads for online and mobile devices in 2014, 45% or £960 million was handled programmatically, up from 28% the year before.

This means that the approach is only narrowly behind direct sales between publishers and buyers (49% versus 51% in 2013) in terms of popularity and way ahead of purchasing via ad networks (6% versus 22% in 2013).

Programmatic advertising proved particularly popular in the mobile world, where it made up 64% of all ad sales last year, up from 37% in 2013.

Tim Elkington, the IAB’s chief strategy officer, said: “Programmatic’s role in digital ad buying has grown from virtually zero to nearly half of all transactions in just five years. However, the impact on mobile has been even greater due to its more fragmented ecosystem, providing a ripe breeding ground for intermediaries.”

Although he acknowledged that some advertisers still saw it primarily as a tool for direct response advertising, he said it was also playing an increasing role in video ads sales (18% are now traded programmatically), which are used for branding purposes, indicating that its scope was broadening.

“Consequently, due to the rise in mobile and video ad spend, we estimate around 70-80% of all digital spend will be programmatic by 2018,” Elkington said.

The industry sectors that are currently spending the most on this approach are online retailers, telecoms and finance.