eMarketer: Programmatic Ad Spending Will Grow 137% This Year, Accounting for Almost 50% of the U.S. Digital Display Ad Market

In its first ever attempt to look into figures involving programmatic ad spending in the U.S., market research company eMarketer predicted that programmatic digital display ad spending will top $10 billion this year, and will increase to as much as over $20 billion by 2016. [See Figure 1]

By eclipsing $10 billion worth of ads in 2014, eMarketer reckons that programmatic advertising will account for almost 50% of the total U.S. digital display ad spend this year, representing a growth of 137.1% year-over-year. Lauren Fisher, Analyst for eMarketer, said that programmatic advertising has been very much active in the past year, noting that “holdouts on participation are proving the exception, not the norm.” She added, “2014 has proven a pivotal year, and with the majority of infrastructure now laid and testing well in progress, we’ll see programmatic ad spending explode from 2015 into 2016.”

The eMarketer report also suggests that spending will rise to 47.9% in 2015, with programmatic accounting for 55% of the total display ad market before reaching $20.41 billion, or 63% of all U.S. digital display ad spend in 2016. The research firm credits the “build-out of private market places and programmatic direct deals” for the predicted rise of ad spend and also mentions the “continued maturation in both mobile and video advertising” as a factor for the said growth. [See Figure 2]

eMarketer also noted that banner ads still contribute to the majority of programmatic buying. Other rich ad formats, such as videos in particular, will represent 40%, or $3.84 billion, of the total digital video ad spend by 2016. [See Figure 5] This finding correlates with another programmatic video ad spending study by Adap.tv, saying that 2014 spending on digital video ads is up 42% compared to the previous year, with a 25% growth next year in the number of video ad buyers transacting through a private marketplace.

eMarketer emphasized that the majority of the ad spend growth is coming from mobile, which is bound to account for nearly half or 44.1% of U.S. programmatic display ad spending this year. It will also most likely exceed desktop spend by 2015, accounting for 56.2% of all programmatic ad expenditure.

Despite the growth of programmatic direct trading methods, eMarketer said that real-time bidding (RTB) is still driving the majority of the progress. RTB was described as the “auction-based approach to programmatic advertising in which digital display ads are transacted in real time, at the impression level” and was estimated RTB to take 92% of all programmatic ad dollars, equivalent to $9.25 billion, in 2014. Programmatic direct holds the remaining 8%, but eMarketer predicts it to account for 42% by 2016. [See Figure 3]

However, while eMarketer predicts open RTB exchanges to “remain essentially flat,” private marketplace exchanges are expected soar to $3.31 billion by 2016. [See Figure 4]

This forecast by eMarketer is based on the analysis of “dozens of data sources” and interviews with over 50 executives at ad agencies, brands, publishers, media companies, and advertising technology firms, the firm said.

Do you think the figures provided by eMarketer in their U.S. Programmatic Ad Spend study are accurate? How is your business faring in terms of programmatic advertising? Share your thoughts in the Comments section below.

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