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Almost half of online display ads in 2014 – worth just under £1 billion – were bought through ‘programmatic’ technologies, according to the second annual industry study quantifying how UK digital display advertising is traded.
The Internet Advertising Bureau (IAB) UK’s Media Owner Sales Techniques study, conducted by research and strategy consultancy MTM, reveals that of the £2.13 billion spent on display ads across the internet and mobile in 2014, 45 per cent (£960 million) was traded programmatically – up from 28 per cent in 2013.
‘Programmatic’ – which refers to ads bought and sold using automated systems and processes such as real-time bidding – was narrowly behind direct sales between publishers and buyers (49 per cent share of display ad sales). Only 6 per cent were bought through ad networks (down from 22 per cent).
Programmatic accounts for two-thirds of mobile ad sales
Programmatic’s share of mobile ad sales has nearly doubled from 37 per cent in 2013 to 64 per cent in 2014. “Programmatic’s role in digital ad buying has grown from virtually zero to nearly half of all transactions in just five years,” says Tim Elkington, Chief Strategy Officer at the UK’s Internet Advertising Bureau. “However, the impact on mobile has been even greater due to its more fragmented ecosystem providing a ripe breeding ground for intermediaries.”
Nearly one fifth (18 per cent) of video ads are now traded programmatically. “Some still consider programmatic primarily as a direct-response tool. However, its increasing role in video ads – a branding medium like TV – shows programmatic is on advertising’s top table,” notes Elkington. “Consequently, due to the rise in mobile and video ad spend, we estimate around 70 to 80 per cent of all digital spend will be programmatic by 2018.”
Stephen Adshead, Associate Director at MTM, says: “When it comes to which advertisers are most advanced in the use of programmatic, the general perception among media owners is that online retailers, telecoms and finance brands are allocating the highest proportion of display spend to programmatic.”