OpenX Blog

How Much Will Digital Advertising and Programmatic Spend Continue to Grow?

By Dan Sheehy, Vice President Business Development, OpenX

The first half of 2014 has been an exciting time for programmatic. According to the IAB, spending for Q1 2014 is 19% higher than Q1 2013, and reached an astounding $11.6 billion in a single quarter.

Why the sustained growth? According to Sherrill Mane, SVP of Research, Analytics & Measurement at IAB, it’s a direct result of increasingly sophisticated audience targeting, which justifies continued spending:

“These Q1 revenue levels speak to digital’s unique ability to identify the most relevant audience segments and deliver powerful results.”

Programmatic spending is deep and wide

Programmatic spending is increasing across new formats and from new buyers, as shown and projected by recent industry reports. Here are some highlights from a collection of trend reports comparing Q1 2014 growth to Q1 2013:

      • Programmatic mobile spending surged 109%[1].
      • Programmatic video spending is up 65%[2].
      • Programmatic display and social spending is up 20%[3].
      • Local brands are beginning to purchase programmatic, accounting for 5% of total programmatic spend – up from 2% in Q1 2013[4]
      • Regional brands now account for 11% of total programmatic spending[5]

Meanwhile, Europe’s biggest demand-side platform, Adform, reports that across the continent programmatic spending jumped a spectacular 366% from Q1 2013 to Q1 2014.

Brands are taking Programmatic in-house

DIY programmatic is a rising trend over the past few quarters. Brands are eager to reap the efficiency of programmatic and they’re willing to invest in the necessary skills to bring it in house. It makes a lot of sense; programmatic marketing is a startling effective research tool, enabling marketers to get extremely close to their customers.

According to eMarketer, “June 2014 will go down as the month when you needed two hands to count the number of big advertisers running their machine-driven media buys in-house.”

And big they are: Procter & Gamble, American Express, Kellogg’s, Kimberly-Clark, Unilever, Netflix, 1-800-Flowers, Allstate Insurance, and Mondelez are just some of the brands going solo these days.

The trend will have a huge impact on future programmatic spending for a very simple reason: when marketers bring programmatic marketing in house, they no longer need to hire their managed services or agencies to run their campaigns for them. And that, in turn, means they’ll have more budget to spend acquiring media, which will drive a higher ROI.

Going into the second half of the year, there’s no doubt that programmatic will continue to grow – and deliver rewards for both publishers and advertisers.  Why? It’s simple, programmatic offers a rich array of digital formats and buying models through operationally efficient pipelines. This allows both publishers and advertisers to configure their ad tech and digital advertising needs as they see fit.

So just how high will programmatic spend go? eMarketer says it will rise 165% in the US this year. And we’re betting they’re right.

 

[1] http://www.thedrum.com/news/2014/06/04/mobile-advertising-spend-109-and-video-65-q1-2014-says-turn-report
[2] http://www.thedrum.com/news/2014/06/04/mobile-advertising-spend-109-and-video-65-q1-2014-says-turn-report
[3] http://www.thedrum.com/news/2014/06/04/mobile-advertising-spend-109-and-video-65-q1-2014-says-turn-report
[4] http://www.mediapost.com/publications/article/226342/local-brands-adopting-programmatic-financial-sect.html
[5] http://www.mediapost.com/publications/article/226342/local-brands-adopting-programmatic-financial-sect.html