US PROGRAMMATIC AD SPENDING FORECAST 2018contentb-na2.emarketer.com/content3/US... · US...

US PROGRAMMATIC AD SPENDING FORECAST 2018Private Setups Pull Even More Ad Dollars to Automation

APRIL 2018

Lauren T. Fisher

Contributors: : Nicole Perrin, Andrea Szasz, Tracy Tang

Read this on eMarketer for iPad

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US PROGRAMMATIC AD SPENDING FORECAST 2018: PRIVATE SETUPS PULL EVEN MORE AD DOLLARS TO AUTOMATION ©2018 EMARKETER INC. ALL RIGHTS RESERVED 2

US PROGRAMMATIC AD SPENDING FORECAST 2018: PRIVATE SETUPS PULL EVEN MORE AD DOLLARS TO AUTOMATION

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.

■ Nearly $19 billion in additional ad spending will enter the programmatic display space between 2018 and 2020. And the majority will go to private setups, such as private marketplaces (PMPs) and programmatic direct transactions, as buyer wariness toward the open markets’ transparency and quality issues persists.

■ By 2020, almost 90% of all mobile display ads will transact programmatically, buoyed by continued investment in social platforms, and ongoing efforts to bring programmatic and its audience-buying capabilities to the in-app space.

■ Programmatic channels will claim nearly three-quarters of digital video ad dollars in 2018, a portion that will rise to almost 80% by 2020. As added investment in over-the-top (OTT) and connected TV (CTV) inventory grows, momentum around programmatic video will only rise.

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. The full data set for the forecast can be found in this report’s accompanying spreadsheet.

billions, % change and % of total digital display ad spending*

US Programmatic Digital Display Ad Spending,2016-2020

2016

$25.69

46.8%

73.0%

2017

$36.85

79.3%

2018

$46.55

82.5%

2019

$56.81

84.8%

2020

$65.63

86.2%

Programmatic digital display ad spending% change % of total digital display ad spending*

Note: digital display ads transacted via an API, including everything frompublisher-erected APIs to more standardized RTB technology; includesnative ads and ads on social networks like Facebook and Twitter; includesadvertising that appears on desktop/laptop computers, mobile phones,tablets and other internet-connected devices; *includes banners, richmedia, sponsorship, video and otherSource: eMarketer, March 2018236261 www.eMarketer.com

43.4%

26.3%22.0%

15.5%

KEY STAT: By 2020, more than $65 billion will be spent on programmatic digital display advertising in the US.

CONTENTS2 US Programmatic Ad Spending Forecast 2018: Private

Setups Pull Even More Ad Dollars to Automation

3 What’s Inside

3 Programmatic Ad Spending Outlook

4 Programmatic Direct

6 Real-Time Bidding (RTB)

9 Native Advertising

9 Mobile Programmatic

11 Video

13 eMarketer Interviews

14 Related eMarketer Reports

14 Related Links

14 Editorial and Production Contributors

http://totalaccess.emarketer.com/images/chart_gifs/emarketer_2002219_images/emarketer_2002219.xlsx


WHAT’S INSIDE

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:

■ Total US programmatic digital display ad spending

■ US native programmatic digital display ad spending

■ US programmatic direct digital display ad spending

■ US digital display ad spending transacted via real-time bidding (RTB)

■ US digital display ad spending transacted via open exchanges

■ US digital display ad spending transacted via PMPs

■ US mobile programmatic display ad spending

■ US mobile programmatic display ad spending, by transaction method

■ US programmatic digital video ad spending

■ US mobile programmatic display ad spending, by format

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.

PROGRAMMATIC AD SPENDING OUTLOOK

More than four in five digital display ad dollars

in the US transacts programmatically today,

and that percentage is rising. By 2020, over $65

billion—86.2%—of all digital display ad spending will

flow via automated channels.

billions, % change and % of total digital display ad spending*

US Programmatic Digital Display Ad Spending,2016-2020

2016

$25.69

46.8%

73.0%

2017

$36.85

79.3%

2018

$46.55

82.5%

2019

$56.81

84.8%

2020

$65.63

86.2%

Programmatic digital display ad spending% change % of total digital display ad spending*

Note: digital display ads transacted via an API, including everything frompublisher-erected APIs to more standardized RTB technology; includesnative ads and ads on social networks like Facebook and Twitter; includesadvertising that appears on desktop/laptop computers, mobile phones,tablets and other internet-connected devices; *includes banners, richmedia, sponsorship, video and otherSource: eMarketer, March 2018236261 www.eMarketer.com

43.4%

26.3%22.0%

15.5%

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.

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: Facebook and Google to Capture Over One-Quarter of the Market.”


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

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.

billions, % change and % of total programmatic digital displayad spending

US Programmatic Digital Display Ad Spending, by Transaction Method, 2016-2020

Programmatic direct*

—% change

—% of total programmaticdigital display ad spending

Real-time bidding (RTB)**

—% change


2016

$13.62

49.7%

53.0%

$12.07

43.8%

47.0%

2017

$20.64

51.6%

56.0%

$16.21

34.3%

44.0%

2018

$27.00

30.8%

58.0%

$19.55

20.6%

42.0%

2019

$34.09

26.3%

60.0%

$22.72

16.2%

40.0%

2020

$40.03

17.4%

61.0%

$25.59

12.6%

39.0%

Note: includes native ads and ads on social networks like Facebook andTwitter; includes advertising that appears on desktop/laptop computers,mobile phones, tablets and other internet-connected devices; *includes allprogrammatic ads that are transacted as blocks of inventory using anon-auction-based approach via an API; **includes programmatic ads thatare transacted in real time, at the impression levelSource: eMarketer, March 2018236262 www.eMarketer.com

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:

■ Continued pushes from marketers for more brand-safe, transparent relationships. As noted in prior forecasts, difficulties associated with transparency and brand safety in open programmatic environments have led to a pullback in open-market participation over the past 24 months. Instead, big brand advertisers are transitioning dollars to programmatic


guarantees or other one-to-one direct setups, where they can ensure spend is going to brand-safe, fraud-minimized publishers.

■ Added focus on streamlining and cost savings. Shifts to programmatic direct aren’t just about brand safety. For a growing number of brands, agencies and even buy-side platforms, transparency and ad quality initiatives have brought about heightened demand for weeding out partners and publishers that add little value—in terms of both cost and performance. As this continues, some of these dollars will inevitably move direct. But these practices aren’t aimed only at cutting low-quality partners. Hardeep Bindra, managing director of real-time value creation at ad tech firm Sizmek, said buyers are also shifting to programmatic guarantees to minimize payments to intermediaries such as fraud verification services or brand safety vendors.

■ Buyers’ continued push for ownership and activation of their own data. First-party data has become table stakes for buyers leveraging their own customers and realizing cross-screen goals. As marketers readily invest in the tools and technology required to own and manage proprietary data (along with other key data assets), reluctance to share it with intermediaries and open exchanges is growing. As a result, PMPs and guarantees are flourishing.

“When we first started our data business, we were pushing these data segments to our clients at a [demand-side platform] DSP level,” said Michael Jacobson, manager of advertising data and solutions at ratings and reviews software Bazaarvoice. “But now we’re seeing buyers wanting the data pushed to them at a DMP level. Everyone wants to be able to control their own destiny in terms of centralized buying. We see a lot of brands directly asking for our data to be put into their system so they can use it alongside their own first-party data or third-party data sources that they’re also buying from.”

■ Premium publishers’ pursuit of programmatic. Programmatic is no longer seen as a remnant, real-time bidding (RTB) arena. Premium publishers now know it can be an efficient mechanism for streamlining sales with large-scale clients and enabling more advanced audience targeting capabilities. We expect more premium video content providers and aggregators to shift larger portions of their inventory to programmatic during the forecast period, which will mean more spending on programmatic guarantees.

“More and more premium publishers and networks are coming online and leveraging technology and programmatic for greater scale,” said Tammy Le, head of product marketing for Adobe Advertising Cloud. “This is especially true for TV-like content or even TV content: They’re using programmatic software to figure out how to better monetize some of their inventory.”


REAL-TIME BIDDING (RTB)

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.




—% change


Real-time bidding (RTB)**

—% change


2016

$13.62

49.7%

53.0%

$12.07

43.8%

47.0%

2017

$20.64

51.6%

56.0%

$16.21

34.3%

44.0%

2018

$27.00

30.8%

58.0%

$19.55

20.6%

42.0%

2019

$34.09

26.3%

60.0%

$22.72

16.2%

40.0%

2020

$40.03

17.4%

61.0%

$25.59

12.6%

39.0%

Note: includes native ads and ads on social networks like Facebook andTwitter; includes advertising that appears on desktop/laptop computers,mobile phones, tablets and other internet-connected devices; *includes allprogrammatic ads that are transacted as blocks of inventory using anon-auction-based approach via an API; **includes programmatic ads thatare transacted in real time, at the impression levelSource: eMarketer, March 2018236262 www.eMarketer.com

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.

% change

US Programmatic Digital Display Ad Spending Growth,by Transaction Method, 2016-2020

2016

22.7%

107.0%

49.7%

2017

21.7%

56.7%

51.6%

2018

12.3%

32.1%

30.8%

2019

10.6%

22.8%

26.3%

2020

9.1%

16.3% 17.4%

Open exchange*Private marketplace**

Programmatic direct***

Note: includes native ads and ads on social networks like Facebook andTwitter; includes advertising that appears on desktop/laptop computers,mobile phones, tablets and other internet-connected devices; *includesads transacted through a public RTB auction in which any buyer or sellercan participate, also known as open auction or open marketplace;**includes ads transacted through an invitation-only RTB auction whereone publisher or a select group of publishers invite a select number ofbuyers to bid on its inventory; ***includes all programmatic ads that aretransacted as blocks of inventory using a non-auction-based approach viaan APISource: eMarketer, March 2018236256 www.eMarketer.com

OPEN EXCHANGE 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.



US Open Exchange Digital Display Ad Spending,2016-2020

2016

$7.73

2017

$9.40

2018

$10.56

2019

$11.68

2020

$12.75

Open exchange digital display ad spending% change% of total programmatic digital display ad spending

Note: includes native ads and ads on social networks like Facebook andTwitter; includes advertising that appears on desktop/laptop computers,mobile phones, tablets and other internet-connected devices; includes adstransacted through a public RTB auction in which any buyer or seller canparticipate, also known as open auction or open marketplaceSource: eMarketer, March 2018236268 www.eMarketer.com

30.1%25.5%

22.7% 20.6% 19.4%

22.7% 21.7%12.3% 10.6% 9.1%

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:

■ The adoption of ads.txt and other industry initiatives aimed at bringing greater supply chain transparency to the programmatic ecosystem. Over the past six months alone, the portion of publishers using ads.txt—a text file through which they can clearly list all authorized resellers of inventory—has risen substantially. A review of websites worldwide conducted by fraud verification firm Pixalate found that the number using ads.txt increased more than 4,400% between September 18, 2017 and February 26, 2018, jumping from 3,500 sites to 154,400. Further adoption of ads.txt, along with growing interest in supply path optimization—a practice aimed at finding the most direct and beneficial route between buyer and seller—will continue to bring greater clarity to the open markets. That clarity will help to keep ad dollars there.

■ The continued rise of header bidding for web-based inventory, coupled with the growing shift to first-price auctions, is driving up CPMs for both desktop and mobile web inventory. These changes aren’t just fetching publishers higher prices for inventory. They’re also drawing a greater number of sellers to consider monetizing more premium inventory via open marketplace auctions, as buyers are increasingly eager to access such inventory via header without upfront commitments.

For more programmatic display ad pricing data and trends, check out eMarketer’s “Digital Ad Pricing StatPack.”

PMP 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.


US Private Marketplace Digital Display Ad Spending,2016-2020

2016

$4.35

157.3%

16.9%

2017

$6.81

92.9%

18.5%

2018

$8.99

37.3%

19.3%

2019

$11.04

30.9%

19.4%

2020

$12.85

26.0%

19.6%

Private marketplace digital display ad spending% change% of total programmatic digital display ad spending

Note: includes native ads and ads on social networks like Facebook andTwitter; includes advertising that appears on desktop/laptop computers,mobile phones, tablets and other internet-connected devices; includes adstransacted through an invitation-only RTB auction where one publisher or aselect group of publishers invite a select number of buyers to bid on itsinventorySource: eMarketer, March 2018236270 www.eMarketer.com

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.

http://totalaccess.emarketer.com/reports/viewer.aspx?r=2002203


billions


2016

$13.62

$4.35

$7.73

2017

$20.64

$6.81

$9.40

2018

$27.00

$8.99

$10.56

2019

$34.09

$11.04

$11.68

2020

$40.03

$12.85

$12.75

Programmatic direct*Private marketplace (RTB)**

Open exchange (RTB)***

Note: includes native ads and ads on social networks like Facebook andTwitter; includes advertising that appears on desktop/laptop computers,mobile phones, tablets and other internet-connected devices; *includes allprogrammatic ads that are transacted as blocks of inventory using anon-auction-based approach via an API; **includes ads transacted throughan invitation-only RTB auction where one publisher or a select group ofpublishers invite a select number of buyers to bid on its inventory;***includes ads transacted through a public RTB auction in which anybuyer or seller can participate, also known as open auction or openmarketplaceSource: eMarketer, March 2018236271 www.eMarketer.com

Factors driving growth in ad spending on PMPs over the next 24 months include:

■ Investment on the part of sellers to work out the kinks associated with implementing and delivering on PMPs. Industry discussions about PMPs often reveal that while such deals are promising alternatives to the open markets’ woes, they are hardly foolproof. Difficulties with prioritizing specific advertisers and delivering enough volume frustrate buyers, but the continued draw of a brand-safe, transparent real-time arena for transacting often outweighs these short-term gripes. “We’ve seen a dramatic pickup in publishers making PMPs a much bigger part of their sales strategy,” said Jeff Hirsch, CMO and head of US publisher development at supply-side platform (SSP) PubMatic. “And buyers are all for that in terms of the transparency and brand safety it offers.” As publishers work to make these deals live up to their promise, investment in PMPs will only rise.

■ Heightened interest in leveraging audience data within PMPs. The rising importance of first-party data to buyers and sellers will continue to draw both to PMPs as a mechanism for leveraging real-time audience data in premium environments. For both, protecting first-party and proprietary data in one-to-one setups is important, but it’s not the only gain. PMPs are

instrumental not just for direct deals that meet price and brand safety requirements, but also for buyers’ and sellers’ audience needs.


NATIVE ADVERTISING

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.

billions, % change and % of native display ad spending

US Native Programmatic Digital Display Ad Spending,2016-2019

2016

$13.67

76.6%

81.7%

2017

$21.10

54.4%

84.0%

2018

$28.13

33.3%

85.5%

2019

$35.80

27.2%

87.0%

Native programmatic digital display ad spending% change % of native display ad spending

Note: includes digital display ads that follow the form, feel and function ofthe content of the media on which they appearSource: eMarketer, March 2018236079 www.eMarketer.com

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.

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.”

MOBILE PROGRAMMATIC

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.


US Programmatic Digital Display Ad Spending, by Device, 2016-2020

Mobile*

—% change


Desktop/laptop

—% change


2016

$17.99

68.4%

70.0%

$7.70

13.0%

30.0%

2017

$25.46

41.5%

69.1%

$11.40

48.0%

30.9%

2018

$32.78

28.8%

70.4%

$13.77

20.8%

29.6%

2019

$40.40

23.2%

71.1%

$16.42

19.2%

28.9%

2020

$48.08

19.0%

73.3%

$17.55

6.9%

26.7%

Note: digital display ads transacted via an API, including everything frompublisher-erected APIs to more standardized RTB technology; includesnative ads and ads on social networks like Facebook and Twitter; *includesad spending on tabletsSource: eMarketer, March 2018236272 www.eMarketer.com

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.


billions, % change and % of total mobile display ad spending

US Mobile Programmatic Display Ad Spending,2016-2020

2016

$17.99

68.4%

75.0%

2017

$25.46

41.5%

80.6%

2018

$32.78

28.8%

84.1%

2019

$40.40

23.2%

86.6%

2020

$48.08

19.0%

88.4%

Mobile programmatic display ad spending% change % of total mobile display ad spending

Note: mobile display ads transacted via an API, including everything frompublisher-erected APIs to more standardized RTB technology; includesnative ads and ads on social networks like Facebook and Twitter; includesad spending on tabletsSource: eMarketer, March 2018236275 www.eMarketer.com

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:

■ Improvements to viewability and ad verification measurement in-app. It’s no secret that many advertisers and app developers have been slow to pursue programmatic in-app. Limitations surrounding viewability measurement, ad verification and identity resolution have kept big brands from shifting dollars to in-app environments.

But with more app developers incorporating verification and measurement software development kits (SDKs) in the past 12 months, big brands are starting to lower the guardrails on in-app ad buying, as it becomes a more measurable arena for extending audience reach. “Advertisers’ ability to actually leverage and understand what value they’re getting from mobile has started to improve dramatically over the past year,” said James Malins, senior vice president of programmatic at ad tech firm Amobee. “If you can’t measure it, to a large extent in our industry, it’s not happening. But the fact that advertisers can now gauge the value and return affords them to pay more and spend more on those platforms than in previous years.”

■ The migration of in-app ad dollars beyond traditional brands. In spite of big brands’ reticence, app developers haven’t been starved for ad spend, thanks to other app developers pursuing cost-per-install (CPI) objectives—for example, gaming apps. But while those dollars have always been there, they are now more readily moving programmatically, due to buyers’ and sellers’ growing awareness of programmatic as a primary mechanism for creating audience-driven campaigns.

■ Continued emphasis and pushes on cracking cross-device identity. Efforts to make cross-device audience identification an easier, more seamless practice will help to draw more spend from advertisers still optimistically pursuing a holistic, audience-centric view. “As users have shifted to mobile, buyers have needed to find a way to find those same users,” said Jocelyn Gillespie, principal analyst at Index Exchange, an SSP. “Identity is going to be a big focus for 2018, and we’re only going to see that continue to rise.”

■ Momentum for more location data. Location data has become a prime programmatic input for mobile advertisers hoping to both target and measure their efforts against a more precise, localized audience. As more buyers and sellers lean on location data to enhance their mobile ad dollars, programmatic’s role in the allocation of those dollars—and the resulting dollars allocated—will only rise.

MOBILE PROGRAMMATIC BY TRANSACTION METHOD 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.


billions, % change and % total mobile programmatic displayad spending

US Mobile Programmatic Display Ad Spending, by Transaction Method, 2016-2020


—% change

—% of total mobile programmaticdisplay ad spending

Real-time bidding (RTB)

—% change


Open exchange**

—% change


Private marketplace***

—% change


2016

$10.79

60.4%

60.0%

$7.20

82.1%

40.0%

$5.22

63.9%

29.0%

$1.98

157.3%

11.0%

2017

$15.53

43.8%

61.0%

$9.93

38.0%

39.0%

$6.11

17.1%

24.0%

$3.82

92.9%

15.0%

2018

$20.06

29.2%

61.2%

$12.72

28.1%

38.8%

$7.47

22.3%

22.8%

$5.24

37.3%

16.0%

2019

$24.80

23.6%

61.4%

$15.59

22.6%

38.6%

$8.73

16.8%

21.6%

$6.87

30.9%

17.0%

2020

$29.57

19.2%

61.5%

$18.51

18.7%

38.5%

$9.86

13.0%

20.5%

$8.65

26.0%

18.0%

Note: includes native ads and ads on social networks like Facebook andTwitter; *includes all programmatic ads that are transacted as blocks ofinventory using a non-auction-based approach via an API; **includes adstransacted through a public RTB auction in which any buyer or seller canparticipate, also known as open auction or open marketplace; ***includesads transacted through an invitation-only RTB auction where one publisheror a select group of publishers invite a select number of buyers to bid onits inventorySource: eMarketer, March 2018236277 www.eMarketer.com

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.”

VIDEO

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.

billions, % change and % of total digital video ad spending

US Programmatic Digital Video Ad Spending,2016-2020

2016

$6.47

116.0%

60.0%

2017

$10.11

56.3%

69.3%

2018

$13.22

30.7%

74.0%

2019

$16.39

23.9%

77.3%

2020

$19.26

17.5%

79.3%

Programmatic digital video ad spending% change % of total digital video ad spending

Note: digital display ads transacted via an API, including everything frompublisher-erected APIs to more standardized RTB technology; includesadvertising that appears on desktop/laptop computers, mobile phones,tablets and other internet-connected devices; includes advertising thatappears before, during or after digital video content in a video playerSource: eMarketer, March 2018236281 www.eMarketer.com

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:

■ Added demand for first-party data from both buyers and sellers. Anyone can buy third-party data, but not everyone has their own first-party data. Advertisers readily turn to programmatic to reach advanced targets


across screens (not just audiences based on age and gender). As buyers and sellers rely on programmatic to automate these audience buys, dollars will move from traditional direct-sold agreements into programmatic direct and PMP campaigns. “The dollars are getting smarter,” said John Rogers, senior vice president of media development at video advertising platform Videology. “It’s not just a scale game anymore; people are using data in smarter ways. We’re starting to see more and more folks bringing in first-party data for planning and forecasting.”

■ Continued growth of OTT and CTV ecosystems. Many people interviewed for this report were optimistic that 2018 would prove a “breakout year” for CTV inventory. While some of that optimism comes from advertisers simply observing the shift in consumers’ TV viewing habits to more digitally enabled devices, a good part also comes from watching the industry improve its efforts to establish a more common currency between TV and digital viewership.

■ While experts suggest that today, many buy-side and sell-side platforms see just single-digit percentages of CTV inventory, most are optimistic those portions will ramp up substantially in the next two years, bringing a host of CTV inventory into the forecast. But while CTV might be in its infancy, programmatic spending is already occuring via OTT services, which stream video to mobile and desktop devices as well. Players such as YouTube, Hulu, Roku and some of the major broadcasters have already made inventory accessible to programmatic buyers, and that share of programmatic ad dollars will only climb during the forecast period.

MOBILE PROGRAMMATIC VIDEO 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.

2018 2020

% of total programmatic video

US Programmatic Video Ad Spending Share, by Device,2018 & 2020

Note: digital display ads transacted via an API, including everything frompublisher-erected APIs to more standardized RTB technology; includesadvertising that appears before, during or after digital video content in avideo player; *includes ad spending on tabletsSource: eMarketer, March 2018236257 www.eMarketer.com

Mobile*54.0%

Desktop/laptop46.0% Mobile*

56.6%

Desktop/laptop43.4%

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.

billions, % change and % of total mobile programmatic displayad spending

US Mobile Programmatic Display Ad Spending, by Format, 2016-2020

Video*

—% change


Other**

—% change


2016

$2.98

154.8%

16.5%

$15.01

57.8%

83.5%

2017

$5.35

79.7%

21.0%

$20.11

33.9%

79.0%

2018

$7.14

33.5%

21.8%

$25.64

27.5%

78.2%

2019

$9.11

27.6%

22.6%

$31.28

22.0%

77.4%

2020

$10.90

19.6%

22.7%

$37.18

18.8%

77.3%

Note: mobile display ads transacted via an API, including everything frompublisher-erected APIs to more standardized RTB technology; includes adspending on tablets; *includes advertising that appears before, during orafter digital video content in a video player; **includes banners, rich media,sponsorships and other; includes native ads and ads on social networkslike Facebook and TwitterSource: eMarketer, March 2018236283 www.eMarketer.com

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.


EMARKETER INTERVIEWS

Why Brands Want to Own, Not Rent, Customer Data

Michael Jacobson Manager, Advertising Data and Solutions

Bazaarvoice Interview conducted February 1, 2018

Chi Lo Director, Partnerships and Platforms

Bazaarvoice Interview conducted February 1, 2018

What’s Behind Premium Publishers’ Push to Private Marketplaces?

Tammy Le Head of Product Marketing, Advertising Cloud

Adobe Interview conducted January 26, 2018

Kerry Bianchi President and CEO

Visto Interview conducted January 31, 2018

Hardeep Bindra Managing Director, Real-Time Value Creation

Sizmek Interview conducted February 6, 2018

Anne Frisbie Senior Vice President, Global Brand and Programmatic and General Manager

InMobi Interview conducted January 22, 2018

Jocelyn Gillespie Principal Analyst

Index Exchange Interview conducted February 1, 2018

Jeff Hirsch CMO and Head of US Publisher Development

PubMatic Interview conducted January 31, 2018

Jeremy Hlavacek Head of Global Automated Monetization, Watson Advertising

IBM Interview conducted January 22, 2018

James Malins Senior Vice President, Programmatic

Amobee Interview conducted February 15, 2018

John Nardone CEO

Flashtalking Interview conducted February 13, 2018

Ari Paparo CEO

Beeswax Interview conducted February 1, 2018

John Rogers Senior Vice President, Media Development

Videology Interview conducted January 19, 2018

Lewis Rothkopf General Manager, Supply

MediaMath Interview conducted February 16, 2018

Adam Schenkel Vice President, Programmatic

GumGum Interview conducted January 26, 2018

Taylor Schreiner Director, Adobe Digital Insights

Adobe Interview conducted January 26, 2018

Jon Schulz CMO

Viant Interview conducted February 13, 2018

Scott Swanson Co-Founder and CEO

Aki Technologies Interview conducted January 10, 2018

Dean Vegliante President

Netmining Interview conducted January 29, 2018

https://prolink.emarketer.com/content/why-brands-want-to-own-all-customer-data

https://prolink.emarketer.com/content/the-push-to-private-marketplaces-among-premium-publishers

https://prolink.emarketer.com/content/the-push-to-private-marketplaces-among-premium-publishers


RELATED EMARKETER REPORTS

Advancing Programmatic Advertising: Buyers and Sellers Seek Greater Control Over Ad Campaigns and Audiences Reached

Programmatic Advertising in China: eMarketer’s Updated Forecast and Estimates

Programmatic Advertising in France: Commitment and Innovation Fuel Continued Double-Digit Growth

Programmatic Advertising in Germany: Greater Confidence and Spending Herald a Mature Marketplace

Programmatic Connected TV and OTT Video Advertising: Automation, Audience Attracts Digital and TV Ad Buyers

UK Programmatic Advertising Forecast for 2016-2019: The Industry Gets Serious About Fraud and Brand Safety

US Digital Display Advertising 2018: Seven Big Bets for Buyers and Sellers

US Programmatic Ad Spending Forecast: The Duopoly Drives Dollars Through 2019

RELATED LINKS

Pixalate

EDITORIAL AND PRODUCTION CONTRIBUTORS

Michael Balletti Copy EditorKatie Hamblin Chart Editorial ManagerDana Hill Director of ProductionStephanie Meyer Senior Production ArtistHeather Price Managing Editor, ReportsErica Walker Copy Editor





















http://pixalate.com

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