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eMarketer predicts that more than $46 billion will go to programmatic advertising in the US this year. By 2020, 86.2% of all digital display ads will be bought via automated channels.
WHAT’S IN THIS REPORT? Our latest forecast for programmatic digital display ad spending in the US, along with key trends likely to affect growth through 2020. Included in the forecast is a breakdown of projected ad spending for all major transaction methods. Further breakouts of mobile display and programmatic video are also included.
KEY STAT: By 2020, more than $65 billion will be spent on programmatic digital display advertising in the US.
This report explores how much US ad buyers will invest in programmatic advertising through 2020, highlighting critical trends and influences. It includes our forecasts for the following areas:
Behind the Numbers
Our forecasts are based on an analysis of quantitative and qualitative data from research
firms, government agencies, media firms and public companies, plus interviews with top
executives at publishers, ad buyers and agencies. Data is weighted based on methodology
and soundness. Each forecast fits within the larger matrix of all our forecasts, with
the same assumptions and general framework used to project figures in a wide variety
of areas. Regular re-evaluation of available data means the forecasts reflect the latest
business developments, technology trends and economic changes.
For the full data set for our US programmatic forecast, see this report's accompanying spreadsheet.
eMarketer’s definition of programmatic digital display ad spending considers all dollars spent programmatically on banners, rich media, video and sponsorships, across desktop, mobile devices such as smartphones and tablets, and IP-connected TV and OTT devices. Social media and native ad units are also included.
We raised the total number for US programmatic ad spending slightly compared with our October 2017 forecast. This reflects the continued growth of the larger digital display advertising market and accounts for the continued momentum behind programmatic advertising across all major properties and ad formats.
While some of that momentum centers around buyers’ and sellers’ unwaivering interest in leaning on programmatic to streamline and automate their processes, a significant portion now focuses on programmatic’s rich audience targeting capabilities.
Buyers have come to rely on programmatic as the primary way to infuse their ad campaigns with first-, second- or third-party data insights. And for sellers, it offers an unparalleled means of packaging and activating one’s own audience data alongside premium inventory across screens to command higher CPMs.
The added nearly $19 billion moving into programmatic between 2018 and 2020 will be driven by the continued growth of major programmatic platforms and ad tech players, as well as a sustained industry push to improve digital advertising quality and transparency across the ecosystem. While some of these transparency and cleanup initiatives will drive investment in the open markets, the greatest portion of dollars will flow toward safer, more private or one-to-one setups such as programmatic direct deals and PMPs.
Programmatic direct accounts for the lion’s share of programmatic display ad spending, thanks to marketers’ continued investment in social properties like Facebook and their heightened interest in moving more automated dollars direct to publishers.
Spend allocated to programmatic direct setups, such as programmatic guarantees and big social platforms’ API-based buying, will account for 58.0% of total programmatic ad expenditures this year, or $27.00 billion.
To find out more on eMarketer’s latest projections for US ad spending, look out for our upcoming
April 2018 report,
“US Ad Spending Forecast 2018: TV Slides, Facebook and Google Grow, Mobile Surges.”
Healthy outlooks for major properties like Facebook, Snapchat and Amazon will help to drive programmatic direct’s share of total programmatic display ad spending to 61.0% by 2020, as will growing demand for programmatic direct setups across the broader landscape. While social players such as Facebook and Twitter account for well over half of all programmatic direct ad dollars in the US today, by 2020 programmatic investment outside of these two properties will nearly double, causing their share of the programmatic direct pie to fall.
Factors driving growth and interest in programmatic direct during the forecast period include:
RTB, which includes both open market and PMP spending, will account for 42.0% of total programmatic ad investment this year, or $19.55 billion.
As noted earlier, RTB’s share of programmatic ad dollars trails that of programmatic direct. Take Facebook and Twitter out of the picture, however, and RTB’s share of programmatic display ad spend rises to 61.7%. The bottom line? Outside social, RTB dominates—at least for now.
RTB ad outlays will continue to climb throughout the forecast period, reaching $25.59 billion by 2020. Its overall share of ad spending, however, will fall slightly to 39.0% as investment in programmatic direct—both social sites and guarantees—outpaces both open market and PMP spending growth.
Open exchanges, or open markets, remain the dominant RTB arena. Despite buyers’ and sellers’ continued frustrations with the levels of brand safety, ad quality and transparency in the open markets, spending in this segment will rise slightly each year through 2020. The total share of open marketplace dollars going to programmatic display will fall, though, as PMP investment outpaces that of the open markets by more than 2 to 1.
Open exchanges have borne the brunt of the negativity associated with ad fraud, brand safety and lack of transparency, but buyers and sellers have made positive strides over the past 12 to 24 months toward making the open markets a safer, more transparent arena. We expect those efforts to continue throughout the forecast period, though they will not happen fast enough to prevent buyers and sellers from shifting a good portion of dollars from the open markets to more private-type setups.
Over the next two years, the following factors are likely to affect open market participation:
Advertisers are upping their PMP budgets faster than their open market ones. This year, they will spend almost $9 billion on PMPs. By 2020, that will rise to nearly $13 billion, or 50.2% of RTB ad dollars and 19.6% of total programmatic display spending.
As noted, many of the issues associated with open market buying continue to draw hesitant buyers to PMPs and even programmatic direct deals. We forecast that by 2020, advertisers will spend the vast majority—80.6%—of their programmatic ad dollars either directly with publishers or through PMPs.
Factors driving growth in ad spending on PMPs over the next 24 months include:
As native advertising (digital display ads that follow the form, feel and function of the content of the media on which they appear, be it a webpage or an app) continues to flourish, the portion of native ads transacting programmatically also climbs.
With so much of the native ad dollar pie consisting of social and mobile ads—both of which have a high tendency to transact via automated means—programmatic’s share of native ad spending is already high. We estimate that programmatic will account for over 85% of all US native display ad dollars this year, a share that will only grow throughout the forecast period.
Looking at this year’s $28.13 billion in native programmatic spend another way, one can see how greatly native advertising is contributing to the larger programmatic display ad ecosystem. More than seven in 10 dollars invested programmatically this year will go to native ads, and that figure will jump to nearly 79% in 2019.
Programmatic ad spending in the US is predominantly mobile at this point. We forecast that seven in 10 dollars allocated to programmatic display in 2018 will go to a mobile device, rising to 73.3%—or $48.08 billion—by 2020.
For a more in-depth look at native display ad spending, look out for eMarketer’s upcoming report,
“US Native Digital Display Advertising Forecast: Mobile Growth Leads the Way.”
Our estimate for total US mobile programmatic display ad spending was raised from the October 2017 forecast, due to strong revenue gains reported by Facebook and Google for 2017. The two companies enjoy a significant portion of programmatic ad revenues and are predominantly mobile platforms. Mobile’s share of overall programmatic ad investment, however, was lowered to rightsize estimates for desktop ad spending, which prior forecasts had underestimated. As noted by Google in both its Q3 and Q4 2017 earnings calls, desktops and laptops remain the preferred devices for performing more complex (and less mobile-friendly) tasks such as booking travel or comparing providers and vendors. Accordingly, we revised our forecast of mobile’s share of US programmatic digital display ad spend for 2018 down from 77.0% to 70.4%.
A revision to mobile’s influence on programmatic does not suggest that mobile programmatic investment is declining. Our revised estimate for US mobile programmatic display ad spending also led to a more optimistic revision for mobile programmatic as a proportion of total mobile display. Today, more than four in five dollars spent on mobile display ads transact programmatically, and that share will rise to nearly 90% by 2020.
Ongoing shifts in consumption habits will draw more dollars to mobile devices during the forecast, as will investment in mobile-heavy arenas such as social advertising. Other factors likely to draw additional ad spending to mobile programmatic include:
The portion of mobile programmatic spending allocated to each of the three transaction methods mirrors the broader programmatic display landscape. We predict that 61.2% of all US mobile programmatic display ad dollars will go to programmatic direct transactions this year, with the remainder divided among open and private marketplaces. Of the $12.72 billion devoted to mobile RTB in 2018, the open markets will see the greatest share (58.8%). That share, however, will slide to 53.2% in 2020 as PMP growth outpaces that of open marketplaces.
There are slight differences in trends surrounding transaction types in mobile vs. the broader display space. For one, the direct share of total mobile programmatic display will remain relatively flat between 2018 and 2020, despite roughly $9.5 billion in incremental ad spending. The health of social buying—which is predominantly mobile in nature—and brands’ inclination to move dollars toward guarantees will keep spend flowing into programmatic direct.
While RTB’s share of mobile programmatic will decline slightly, growth in mobile programmatic investment via PMPs will outpace both open market and programmatic direct spending growth throughout the forecast period.
Still, many believe a good portion of the in-app space to be largely open market-driven—a trend most don’t see fading until app and web environments are more seamlessly integrated.
“The big challenge in the app space is that it’s a cookieless environment,” said Jeremy Hlavacek, global head of monetization at IBM Watson Advertising. “Most of the audience buying through the DSPs has been built around the cookie and web-based protocols. Without those in place in mobile, a PMP is a bit harder to sell.”
Once the major holdouts on programmatic advertising, premium video buyers and sellers now transact the vast majority of their dollars through automated pipes. We forecast that advertisers will spend $13.22 billion on programmatic video ads this year, or 74.0% of all US digital video ad outlays. This proportion will rise to 79.3% by 2020.
YouTube remains a significant contributor to both the broader digital video pie and the programmatic video one. While YouTube’s growth will contribute to the expansion of the programmatic video landscape in the next 24 months, its share of programmatic video ad revenues will slide as other premium video content makes its way into the space. That content will largely be monetized via PMPs and programmatic guarantees, as buyers and sellers look to these more direct, one-to-one deals as a means of maintaining control and activating important audience assets—such as first-party data.
Additional factors driving greater investment in programmatic video during the forecast period include:
The acceleration of OTT benefits mobile programmatic video. Mobile will account for 54.0% of total programmatic video ad spending this year, rising to 56.6% by 2020. Growth in mobile programmatic video will outpace that of desktop, at respective compound annual growth rates (CAGRs) of 45.2% and 27.7% between 2016 and 2019.
Still, video’s total share of mobile programmatic display expenditures remains small. A significant portion of mobile programmatic dollars still flow to social platforms, where in-stream video is largely unadopted.
And across the broader ecosystem, continued reliance on in-stream alternatives, such as native video, out-stream video and rich media, also keeps video’s portion of mobile programmatic ad spending minimal.
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President and CEO
Managing Director, Real-Time Value Creation
Senior Vice President, Global Brand and Programmatic and General Manager
CMO and Head of US Publisher Development
Head of Global Automated Monetization, Watson Advertising
Senior Vice President, Programmatic
Senior Vice President, Media Development
General Manager, Supply
Vice President, Programmatic
Director, Adobe Digital Insights
Co-Founder and CEO
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