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US PROGRAMMATIC AD SPENDING FORECASTThe Duopoly Drives Dollars Through 2019

OCTOBER 2017

Lauren T. Fisher

Contributors: Maria Minsker, Monica Peart, Nicole Perrin, Tracy Tang, Martín Utreras, Paul Verna

Read this on eMarketer for iPad

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US PROGRAMMATIC AD SPENDING FORECAST: THE DUOPOLY DRIVES DOLLARS THROUGH 2019 ©2017 EMARKETER INC. ALL RIGHTS RESERVED 2

US PROGRAMMATIC AD SPENDING FORECAST: THE DUOPOLY DRIVES DOLLARS THROUGH 2019

US programmatic digital display ad spending will reach $32.56 billion by year’s end, eMarketer projects. By 2019,

more than four in five US digital display ad dollars, or $45.72 billion, will flow via automated means.

■ Continued emphasis on advertising quality and brand safety will accelerate spending in both programmatic direct and private marketplace (PMP) deals. By 2019, the combined share of these two transaction types will be 79.6% of the total programmatic pie.

■ 2017 will be the first year that the growth in open-market spending slips into the single digits. Yet the continued adoption of header bidding will help keep dollars flowing here over the forecast period.

■ Mobile’s share of US programmatic digital display ad outlays will increase, thanks to overall market trends and the continued influence of players like Facebook and Google, which are both mobile- and programmatic-centric. By 2019, nearly 80% of programmatic ad spend will go to mobile—rather than desktop—ads.

■ Programmatic buying of digital video ads will continue to grow, thanks to brands’ rising use of advanced audience buying practices and publishers’ growing acceptance of automation’s role in the sales process. By 2019, 77% of all US digital video ad dollars will move programmatically.

WHAT’S IN THIS REPORT? eMarketer’s latest forecast for programmatic digital display ad spending in the US, along with key trends likely to affect growth in the next 12 to 24 months. 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.

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

US Programmatic Digital Display Ad Spending,2015-2019

2015

$17.50

51.0%

65.0%

2016

$25.48

45.6%

73.0%

2017

$32.56

27.8%

78.0%

2018

$39.10

20.1%

81.5%

2019

$45.72

16.9%

83.6%

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, Oct 2017231119 www.eMarketer.com

KEY STAT: By 2019, 83.6% of US digital display ad dollars will transact programmatically.

CONTENTS2 US Programmatic Ad Spending Forecast: The Duopoly

Drives Dollars Through 2019

3 What’s Inside

4 Programmatic Ad Spending Outlook

6 Programmatic Direct

7 Real-Time Bidding

9 Mobile Programmatic Ad Spending

11 Programmatic Video Ad Spending

13 Related eMarketer Reports

13 Related Links

13 Editorial and Production Contributors


WHAT’S INSIDE

This report explores how much US ad buyers will

invest in programmatic advertising through 2019,

highlighting critical trends and influences. It includes

eMarketer’s estimates 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 private marketplaces (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

■ US programmatic TV ad spending

Behind the Numbers

eMarketer’s forecasts and estimates 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 eMarketer forecast fits within the larger matrix of all its 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.

Defining Programmatic Advertising

eMarketer defines programmatic advertising as an automated, technology-driven method of buying, selling or fulfilling digital display ad placements. Other terms used in this report include:

Real-time bidding (RTB): Auction-based approach used to buy or sell impression-level inventory. Auctions can either be public or private.

Programmatic direct: Non-auction-based approach to buying or selling ad inventory, not at the impression level. Programmatic direct deals can be orchestrated via pre-existing RTB technology, through publisher-owned APIs such as on social sites or via self-service user interface or deal discovery tools. Programmatic direct deals specify a fixed price and may or may not guarantee fixed inventory amounts.

Open exchange: Public RTB auction open to all buyers and sellers; also called an open auction or open marketplace.

Private marketplace (PMP): Auction owned by a single publisher or a small group of publishers and open only to a select number of invited buyers; also called a private exchange or private auction. These are typically executed via normal RTB technology and may include a deal ID—a tag that notifies the auction that a specific buyer has some sort of preferential treatment, whether in price or priority.

Programmatic guaranteed: Upfront commitment to both price and inventory amount secured via programmatic pipes between one buyer and one seller; also called programmatic reserved, forward market or just “upfronts.”

Preferred deal: Upfront commitment to inventory price, but not inventory amount, between one buyer and one seller; also called private access or first right of refusal.


PROGRAMMATIC AD SPENDING OUTLOOK

For US digital display ad buyers and sellers,

automation is now the norm. More than three-

quarters (78.0%) of US digital display ad dollars will

transact programmatically this year. By 2019, that

share will rise to 83.6%, or $45.72 billion.

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

US Programmatic Digital Display Ad Spending,2015-2019

2015

$17.50

51.0%

65.0%

2016

$25.48

45.6%

73.0%

2017

$32.56

27.8%

78.0%

2018

$39.10

20.1%

81.5%

2019

$45.72

16.9%

83.6%

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, Oct 2017231119 www.eMarketer.com

eMarketer’s definition of programmatic display ad spending considers all digital display dollars spent programmatically on banners, rich media, video and sponsorships across desktop, mobile devices such as smartphones and tablets, and IP-connected TV and over-the-top (OTT) devices. Social media and native ad units are also included in this number.

While programmatic ad spending will see double-digit growth through 2019, annual growth will continue to slow as programmatic levels near saturation, at over 80% of all US digital display expenditures by 2018.

Still, over $13 billion in spending is expected to enter programmatic channels between 2017 and 2019. This significant chunk of ad dollars will be the result of several buyer- and platform-led influences over the next 24 months.

Continued emphasis on audience activation from both brands and publishers is one such influence driving added programmatic investment. Brands and publishers are placing greater emphasis on first-party data, hoping to better zero in on the right audiences, and programmatic is well-suited for this purpose. eMarketer expects platforms and publishers will continue to invest in the necessary capabilities for activating and onboarding these data sets. That, coupled with the growing use of data sets such as shopper and location data, will continue to increase both programmatic activity and CPMs.

As buyers push publishers for these capabilities, spending that otherwise would have gone toward traditional direct-sold deals will go to programmatic direct-type transactions. This should pull new ad dollars to more premium forms of digital video ads, such as connected TV and OTT inventory, as they become more available in the second half of the forecast period.

In addition, the enablement of these types of audience-driven advertising capabilities will help to drive added investment to cross-screen programs. Also driving cross-screen buying forward will be the continued emergence of partnerships among key ad tech players hoping to keep ad budgets away from Google and Facebook.

As noted before, programmatic direct will continue to get dollars via the ads on social sites, which are API-based. Facebook, Twitter, Instagram, Snapchat, Pinterest and other social platforms will also encourage investment by offering advertisers richer audience insights, targeting and measurement capabilities.

Programmatic direct and other private setups such as PMPs will see an added influx of ad dollars throughout the forecast period, as advertisers increasingly look to leverage their first-party data in these more controlled setups, and turn to these transaction types to ensure greater brand safety and control over issues still plaguing the industry—including fraud and viewability.

The continued growth of the duopoly will also contribute to rises in programmatic investment, especially within mobile, throughout the forecast period. In 2017, the combined net US digital ad revenues of Facebook and Google will account for 56.2% of all US digital ad spending, a portion that is on par with their programmatic share. That share will continue to inch up during the forecast period.


One other player meriting a mention for its rapidly growing contribution to the programmatic ecosystem is Amazon. Since the prior forecast period, ad buyers have increasingly turned to it for such products as Advertiser Audiences and the Amazon Advertising Platform, its demand-side platform (DSP). In addition, its header bidding solution, Amazon Publishing Services, has been widely adopted by sellers.

For these reasons, Amazon’s continued expansion into the programmatic space will be worth watching throughout the forecast period. While today eMarketer estimates Amazon’s total contribution to programmatic ad spending in the US is slightly less than Twitter’s, by 2019 its ad spending is expected to double, well surpassing Twitter (whose own ad revenues will decline during the forecast) and nearing the size of larger programmatic players like Oath—the rebranded AOL/Yahoo property. Beyond 2019, it is difficult to make further assumptions about total revenue growth and potential. Perhaps more than other platforms rich in audience data, Amazon—with its rich shopper insights and purchase intent data—will have to weigh the value of those insights and the user experience against the value of offering that data to third parties.

For a more in-depth look at Amazon advertising, please see eMarketer’s October 2017 report, “Amazon Advertising: Reconsidering the Retail Platform.”

eMarketer’s current numbers reflect lowered estimates for banner ads. This revision was also made to eMarketer’s US digital display ad spending forecast, given declining CPMs and less reliance on banner ads. These ad dollars have largely been reallocated to rich media, particularly more premium rich media ad units such as out-stream video, and select native ad units. eMarketer forecasts significant growth for US native programmatic digital display ad outlays this year and next, as both social and nonsocial publishers continue to invest in native ad products.

billions and % change

US Native Programmatic Digital Display Ad Spending,2016-2018

2016

$13.24

72.2%

2017

$18.55

40.1%

2018

$24.03

29.5%

Native programmatic digital display ad spending % change

Note: includes programmatic digital display ads that follow the form, feeland function of the content of the media on which they appearSource: eMarketer, March 2017223895 www.eMarketer.com

DID Q1’S BRAND SAFETY ISSUES AFFECT PROGRAMMATIC BUYING? Those keenly watching the programmatic space may be wondering if the brand safety debacles reported in Q1 2017 affected programmatic ad spending.

The short answer? No. While some brands and buyers (most notably Procter & Gamble) made headlines for pausing or ceasing programmatic advertising, eMarketer believes the majority of these actions were only temporary. Instead, we saw many ad buyers shift toward more controlled, private setups such as PMPs and programmatic direct deals. For others, this served as a strong wake-up call to the importance of ad verification services and more robust prevention techniques like whitelisting.

An April 2017 BrightRoll survey of programmatic decision-makers in North America shows added evidence of these practices. The study found that the largest group of respondents, more than two in five, planned to weed out fake news publishers and punish them financially by removing spending.

http://totalaccess.emarketer.com/reports/viewer.aspx?r=2002141



% of respondents

Primary Effect of Fake News on Programmatic AdSpending According to ProgrammaticDecision-Makers in North America, April 2017

Will maintain their spending regardless11%

Won't change their spending but will blacklist fake newspublishers

43%

Will reduce spending with programmatic partners whoseinventory includes brands associated with fake news

31%

Will deal with it on a case-by-case basis16%

Note: numbers may not add up to 100% due to roundingSource: BrightRoll, "Fake News Real Concerns," May 30, 2017230196 www.eMarketer.com

As noted earlier, many advertisers have since transitioned these dollars to more brand-safe publishers, often in the form of a PMP or programmatic direct deal. While such a shift may lead to a reduction in impression volume, spending has likely either stayed consistent or risen, given that these more premium-type setups often come at a higher price.

PROGRAMMATIC DIRECT

The desire for more automated direct deals as well

as the growing importance of Facebook and other

social sites continue to drive programmatic direct

ad spending upward. As they have since 2015,

programmatic direct dollars will make up the majority

(56.0%) of programmatic spending in 2017, at $18.23

billion. Over the forecast period, share will continue

to rise—reaching 60.0% by 2019—as social API-based

buying remains strong.

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

US Programmatic Digital Display Ad Spending, by Transaction Method, 2015-2019

Programmatic direct*

—% change

—% of total programmaticdigital display ad spending

Real-time bidding (RTB)**

—% change


2015

$9.10

63.6%

52.0%

$8.40

39.4%

48.0%

2016

$13.50

48.4%

53.0%

$11.97

42.6%

47.0%

2017

$18.23

35.0%

56.0%

$14.33

19.6%

44.0%

2018

$22.68

24.4%

58.0%

$16.42

14.6%

42.0%

2019

$27.43

21.0%

60.0%

$18.29

11.4%

40.0%

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, Oct 2017231120 www.eMarketer.com

The health of social platforms will continue to drive programmatic direct growth; however, growth outside of these platforms will increase. Excluding social players Facebook and Twitter, programmatic direct will account for 23.0% of all programmatic digital display ad spending in 2017, and that figure will be 35.0% by 2019.

Several factors will drive investment in programmatic direct deals outside of these social properties. They include:

■ Greater demand for programmatic enablement of more premium video ad inventory, both within “traditional” digital video ads as well as connected TV and OTT. Programmatic enablement of connected TV and OTT inventory is minimal right now, given how much is still direct-sold. However, eMarketer believes the latter part of the forecast period will see a greater flow of ad inventory into programmatic pipes, especially as advertisers look to integrate this inventory with their broader video strategy and plan to do so by leveraging richer audience insights.


■ Continued problems with running PMPs and other private but nonguaranteed deals through header bidding will also drive investment in programmatic direct deals. Ad buyers of all types—brands, agencies and DSPs—see greater competition within header bidding auctions, and see mixed results in terms of their ability to carry the necessary PMP information (such as deal IDs) through these auctions. As these problems get sorted out, buyers with strict definitions of premium inventory—and audiences—will continue to look to lock away as much of that as possible via automated guarantees.

REAL-TIME BIDDING

RTB, which includes both open marketplace and

private marketplace spending, will account for

44.0% of all US programmatic digital display ad

expenditures, or $14.33 billion, in 2017. Over the

forecast period, growth will remain in the double

digits, largely buoyed by dollars moving into PMPs,

though RTB’s share will decrease to 40.0% by 2019.

billions, % change and % of total RTB digital display adspending

US Real-Time Bidding (RTB) Digital Display AdSpending, by Segment, 2015-2019

Open exchange*

—% change

—% of total RTB digital display ad spending

Private marketplace**

—% change

—% of total RTB digital display ad spending

2015

$6.30

18.8%

75.0%

$2.10

190.4%

25.0%

2016

$7.66

21.7%

64.0%

$4.31

105.3%

36.0%

2017

$8.31

8.4%

58.0%

$6.02

39.6%

42.0%

2018

$8.87

6.7%

54.0%

$7.55

25.5%

46.0%

2019

$9.33

5.2%

51.0%

$8.96

18.6%

49.0%

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; *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 inventorySource: eMarketer, Oct 2017231122 www.eMarketer.com

Growth in PMP ad spending will far outpace the growth rate of open-market investment. And by 2019, the open markets’ share of RTB ad dollars will fall to 51.0%, from 58.0% in 2017.

OPEN EXCHANGE SPENDING Although the open markets will lose overall share of RTB ad dollars during the forecast, investment will continue to rise slightly each year. eMarketer predicts that US open exchange spending will increase from $8.31 billion in 2017 to $9.33 billion by 2019.



US Open Exchange Digital Display Ad Spending,2015-2019

2015

$6.30

18.8%

75.0%

2016

$7.66

21.7%

64.0%

2017

$8.31

8.4%

58.0%

2018

$8.87

6.7%

54.0%

2019

$9.33

5.2%

51.0%

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, Oct 2017231105 www.eMarketer.com

Open exchange spend accounts for about a quarter of all US programmatic digital display ad dollars today. By 2019, that share will fall to 20.4%. However, if Facebook and Twitter were removed from consideration, that portion would jump to 55.5% for this year. The open markets continue to play a strong role in programmatic participation outside of these platforms.

Noteworthy factors that will influence overall open exchange spending in the next couple of years:

■ Continued emphasis on cleaning up the supply chain and making open exchanges a safer, more transparent place. New and continued efforts to rid the open markets of ad fraud, viewability issues and less-than-desirable practices such as reselling will play out over the course of the forecast. As noted previously, the use of whitelists and more robust fraud detection tools is already underway. Other industry initiatives, such as the Interactive Advertising Bureau (IAB)’s ads.txt, a text file in which publishers can clearly list all authorized resellers of inventory, may also help to make the open markets more transparent.

■ Efforts on the part of the buy-side platforms, such as supply path optimization (a practice through which parties identify the most direct, efficient means of accessing publisher inventory), may also help identify low-value exchanges and ad networks.

■ Greater adoption of header bidding has the potential to bring added investment into the open marketplaces, both in terms of inventory volume and price. As more publishers look to header bidding to improve their monetization strategies, they are opening up a greater amount of inventory supply to all buyer types—including those operating in the open markets. Because many of the supply-side platforms (SSPs) today prioritize winning buyers based almost entirely on price, not necessarily on the presence of private deals, this brings added potential for open marketplace buyers to snag more premium publisher inventory and audiences.

■ Blockchain, still in its infancy for digital ad buying, could help bring greater investment back to the open markets by validating programmatic transactions, or even transferring payment between parties in a secure, fraud-free manner.

For a more in-depth look at header bidding and the effects it is having on digital display CPMs, please see eMarketer’s October 2017 report, “Header Bidding for Ad Buyers: What Brands, Agencies and Buy-Side Platforms Need to Know.”

PRIVATE MARKETPLACE SPENDING eMarketer forecasts spending on PMPs will reach $6.02 billion this year, rising to $8.96 billion by 2019. During this timeframe, incremental dollars allocated to PMPs will outnumber those invested in the open markets by nearly 3-to-1.





US Private Marketplace Digital Display Ad Spending,2015-2019

2015

$2.10

190.4%

2016

$4.31

105.3%

2017

$6.02

39.6%

2018

$7.55

25.5%

2019

$8.96

18.6%

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, Oct 2017231106 www.eMarketer.com

25.0%36.0%

42.0% 46.0% 49.0%

Here again, PMPs are increasingly seen by buyers and sellers as safe havens against issues associated with inventory quality and brand safety. But they’re also seen as a core mechanism for enabling buyers to activate their own first-party data, or take advantage of a publisher’s first-party data, without having to strike a guarantee or upfront deal.

Although the introduction of header bidding has caused some headaches for buyers relying heavily on PMPs, many industry professionals believe there will be improvement over the next 12 to 24 months, as buyers push for ad tech players and publishers to better identify and honor these deals.

MOBILE PROGRAMMATIC AD SPENDING

Today, nearly four in five dollars spent on mobile

display ads transact programmatically. By 2019,

US marketers will spend $36.09 billion on mobile

programmatic display advertising—over 85% of the

total mobile display market.

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

US Mobile Programmatic Display Ad Spending,2015-2019

2015

$10.68

140.7%

66.0%

2016

$17.99

68.4%

75.0%

2017

$24.14

34.2%

79.8%

2018

$30.09

24.7%

82.9%

2019

$36.09

20.0%

85.2%

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, Oct 2017231125 www.eMarketer.com

eMarketer’s estimates for mobile programmatic display ad spending were revised slightly upward from our July 2016 forecast, due to revenue gains reported by both Facebook and Google’s YouTube in H1 2017. Both parties account for a significant portion of programmatic ad spending and are predominantly mobile platforms.

Programmatic investment on mobile will be almost three times the amount spent on desktop this year ($24.14 billion vs. $8.42 billion), a ratio that is in line with the overall state of the US digital ad industry. For 2017, mobile programmatic will represent nearly three-quarters of US programmatic digital display spending.


billions, % change and % of total

US Programmatic Digital Display Ad Spending, by Device, 2015-2019

Mobile*

—% change


Desktop/laptop

—% change


2015

$10.68

140.7%

61.0%

$6.81

-4.7%

39.0%

2016

$17.99

68.4%

70.6%

$7.48

9.8%

29.4%

2017

$24.14

34.2%

74.1%

$8.42

12.5%

25.9%

2018

$30.09

24.7%

77.0%

$9.01

7.0%

23.0%

2019

$36.09

20.0%

78.9%

$9.62

6.8%

21.1%

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, Oct 2017231126 www.eMarketer.com

Several key factors will drive growth in mobile programmatic ad spending:

■ Efforts by companies (other than Facebook or Google) to improve their cross-device targeting and measurement. Companies are banding together to offer more robust, scalable solutions, and this will continue throughout the forecast period. While such moves are unlikely to pull significant share away from the duopoly, they will increase the general flow of audience-driven ad dollars into mobile.

■ Continued demand for differentiated, unique mobile ad inventory and more “native” experiences. As mobile app developers continue to innovate on new ad formats and new points of engagement, eMarketer expects to see ad buyers looking to use programmatic methods to access these units and pair them with rich audience or location-based intel.

■ Greater access to OTT inventory in the latter half of the forecast period. As traditional TV viewership continues to give way to a host of IP-based viewing and streaming habits, OTT viewing is becoming more and more common. From mid-2018 through at least 2019, programmatic opportunities for accessing OTT inventory will rise.

MOBILE PROGRAMMATIC AD SPENDING, BY TRANSACTION METHOD Just as social’s influence drives a greater concentration of programmatic ad dollars into mobile, it does the same for the portion of mobile programmatic display spending flowing into direct deals. eMarketer estimates that 61.0% of US mobile programmatic ad outlays will go to direct deals this year. By 2019, that share will rise only slightly

to 61.9%, though an added $7.62 billion will flow into this channel between 2017 and 2019.

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

US Mobile Programmatic Display Ad Spending, by Transaction Method, 2015-2019

Programmatic direct*

—% change

—% of total mobile programmaticdisplay ad spending

Real-time bidding (RTB)

Open exchange**

—% change


Private marketplace***

—% change


2015

$6.73

113.6%

63.0%

$3.95

$3.18

205.3%

29.8%

$0.77

215.1%

7.2%

2016

$10.79

60.4%

60.0%

$7.20

$5.22

63.9%

29.0%

$1.98

157.3%

11.0%

2017

$14.72

36.4%

61.0%

$9.41

$5.79

11.0%

24.0%

$3.62

82.9%

15.0%

2018

$18.50

25.7%

61.5%

$11.58

$6.47

11.7%

21.5%

$5.12

41.3%

17.0%

2019

$22.34

20.7%

61.9%

$13.75

$6.89

6.6%

19.1%

$6.86

34.1%

19.0%

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, Oct 2017231129 www.eMarketer.com

Of that $7.62 billion, nearly three-quarters will go to Facebook and Twitter, with the remainder funneling into automated guarantees and reservations made across the broader mobile display ecosystem.

Social players aside, many of the same trends experienced by programmatic in general will also manifest themselves in mobile. Advertiser investment in PMPs within mobile programmatic will more than double from $3.62 billion in 2017 to $6.86 billion by 2019, bumping PMP’s total share of mobile programmatic from 15.0% to 19.0%. As shown in the previous chart, growth in this area will largely outpace growth in the open marketplaces, whose share of mobile programmatic display ad spending will fall from 24.0% in 2017 to 19.1% by 2019.


PROGRAMMATIC VIDEO AD SPENDING

Last year was the first in which programmatic’s

portion of US digital video ad dollars crossed the

halfway mark. By 2019, more than three in four

dollars allocated to digital video advertising, or $13.43

billion, will transact programmatically. The industry’s

continued migration to a more audience-centric way

of buying has been pivotal to this transformation.

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

US Programmatic Digital Video Ad Spending,2015-2019

2015

$3.00

376.3%

39.0%

2016

$6.42

114.2%

60.0%

2017

$9.13

42.3%

69.0%

2018

$11.41

25.0%

74.0%

2019

$13.43

17.7%

76.5%

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, Oct 2017231130 www.eMarketer.com

YouTube—a key player for both digital video and OTT—claims a healthy share of the programmatic digital video landscape. YouTube continues to show positive growth, as evidenced in strong performance for H1 2017; however, its share of the programmatic digital video pie will slide over the next couple of years, as publishers and programmers enable more digital video ad inventory programmatically to allow for the advanced audience targeting capabilities that brand and performance marketers increasingly crave.

Other factors that will drive growth in programmatic video ad spending over the forecast period:

■ Greater reliance on programmatic for enacting guarantees or direct deals. Digital video will be a primary benefactor of the continued growth of the programmatic direct category, as buyers and sellers

prefer to keep guarantees on the table for digital video ad inventory. As the technology and programmatic interfaces continue to innovate to make premium inventory discovery and the insertion order processes more streamlined, eMarketer expects to see more publishers turning to automation to enable buyers to layer on more advanced audience data.

■ The continued shift in TV viewership toward more IP-connected devices will drive added growth opportunities for connected TV and OTT advertising beginning in the second half of 2018. As linear TV viewership continues to decline, and networks and programmers increasingly invest in connected TV and OTT to reclaim their audiences, more connected TV and OTT ad inventory will make its way into programmatic channels. The largest OTT companies today, such as Netflix and Amazon Prime Video, are not ad-supported. However, it’s likely that more hybrid or fully ad-supported models will emerge in the next several years, as consumers inevitably establish a threshold for how much they’re willing to pay for subscription services.

Interest and growth in bringing programmatic capabilities to linear TV and addressable TV advertising will also fuel increases. As the use of secondary data sets from the likes of Nielsen and comScore’s Rentrak become the norm for traditional TV ad buyers, that same ad buying mentality will only grow stronger for digital video. Although eMarketer predicts just 5.0% of all US TV ad spending will transact programmatically by 2019, we still foresee a greater portion of advertisers pushing for advanced audience targeting capabilities in this area. The technology needed for large-scale automated buying, selling and fulfilling will arrive after this forecast period, though, as will widespread adoption.


billions, % change and % of TV ad spendingUS Programmatic TV Ad Spending, 2015-2019

2015

$0.31

201.5%

0.5%

2016

$0.64

107.0%

0.9%

2017

$1.13

75.7%

1.6%

2018

$2.09

85.2%

2.8%

2019

$3.80

82.1%

5.0%

Programmatic TV ad spending % change % of TV ad spending

Note: the use of software platforms to automate the buying, selling orfulfillment of live TV and VOD advertising, distributed through cable, satelliteor broadcast networksSource: eMarketer, July 2017228277 www.eMarketer.com

For more information on advanced and programmatic TV advertising, please see eMarketer’s August 2017 report, “Television Update H2 2017: Advanced TV’s Progress.”

MOBILE PROGRAMMATIC VIDEO AD SPENDING eMarketer estimates that US programmatic spending on mobile video ads will total $5.02 billion this year, representing 55% of all programmatic video ad expenditures. By 2019, three in five programmatic video ad dollars in the US will go to mobile.

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

US Mobile Programmatic Display Ad Spending, by Format, 2015-2019

Video*

—% change


Other**

—% change


2015

$1.17

519.2%

10.9%

$9.51

123.9%

89.1%

2016

$2.89

147.1%

16.0%

$15.10

58.8%

84.0%

2017

$5.02

73.9%

20.8%

$19.11

26.6%

79.2%

2018

$6.62

31.8%

22.0%

$23.47

22.8%

78.0%

2019

$8.06

21.8%

22.3%

$28.03

19.4%

77.7%

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, Oct 2017231131 www.eMarketer.com

During the forecast, mobile programmatic video’s share of total mobile programmatic ad outlays will rise only slightly, to 22.3%. However, lack of share is more related to the continued dominance of social players—and their heavy reliance on in-feed and social video ads (both classified as rich media) vs. in-player video. Parties such as Facebook are just beginning to offer in-stream video advertising opportunities (e.g., via Facebook Watch), but it is too early to project the success—and overall programmatic contribution—of such endeavors.



RELATED EMARKETER REPORTS

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

Amazon Advertising: Rethinking the Retail Platform

Header Bidding for Advertisers: What Brands, Agencies and Buy-Side Platforms Need to Know

Television Update H2 2017: Advanced TV’s Progress

US Ad Fraud 2017: Buyers and Sellers Fall Prey to More Sophisticated Methods

US Native Digital Display Advertising Forecast: Social Dollars Drive the Market—for Now

US Programmatic Ad Spending Forecast: Most Mobile Display and Video Ad Dollars to Be Automated by 2018

RELATED LINKS

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EDITORIAL AND PRODUCTION CONTRIBUTORS

Michael Balletti Copy EditorKatie Hamblin Chart Editorial ManagerDana Hill Director of ProductionEden Kelley Senior Chart EditorStephanie Meyer Senior Production ArtistHeather Price Managing Editor, ReportsJohn Rambow Executive Editor, ReportsErica Walker Copy Editor














http://brightroll.com

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