Programmatic Ads Gobble Up 75% of Mobile Ad Spending

With the release of eMarketer’s US Programmatic Ad Spend Forecast came the news that three out of every four mobile ad dollars spent will be automated or “programmatic” by the end of 2016—marketing a huge uptick in the popularity of mobile programmatic advertising.

Programmatic advertising involves the use of software to predict and purchase digital advertising inventory automatically, via a real-time auction process that only takes milliseconds. As opposed to traditional ads, the benefit of programmatic advertising is increased efficiency at audience-targeting and the ability to scale large ad campaigns. The use of real-time buying data allows marketers to reach the right customer, at the right time and even in the right place.

Mobile-only publishers may not recall the days of offering inventory to advertisers directly. This highly manual process involved extensive negotiations and insertion orders (IO) to commit to a campaign. With the rise of mobile media buying and automation, mobile programmatic advertising earned rights to be the preferred method for buying and selling digital ads.

Smaato was invited to provide data and mobile expertise to the eMarketer Programmatic Ad Spend Forecast, and we’re pleased to have contributed to several key takeaways for the whole advertising industry. Mobile programmatic advertising continues to command a dominant share of display ad budgets. According to eMarketer, spending for mobile programmatic advertising went from $4.4B in 2014 to $17.7B in 2016—growing by more than 4X in two short years.¹

Earlier this year, we learned that more than two-thirds of digital display advertising is programmatic. As more people turn to their phones and tablets to find, research and buy products, marketers have begun shifting their campaigns to mobile programmatic. Only a few years ago, desktop/laptop advertising attracted the majority of programmatic spend. But how times have changed in recent years—eMarketer predicts that by 2018, mobile will account for nearly 78% of all programmatic ad spending.

Programmatic video advertising is another key area that draws particular interest. Continued investment in programmatic advertising technology and transactions will see the programmatic share of total US digital video ad spending rise to 82% by 2018. Publishers will continue to offer a greater portion of programmatic video inventory to advertisers and demand sources.

One of the reasons mobile programmatic advertising accounts for three-quarters of mobile display ad spending is that advertisers have much greater comfort with programmatic technology now. More and more marketers are using data to drive ROI for their global ad campaigns. The ability to isolate datasets and target specific audiences helps marketers understand the value of programmatic—and impressive campaign results give them the confidence to use automation more frequently. Publishers have also become attuned to audience-based selling, which means they are inclined to offer more programmatic inventory than ever before.

Overall, there’s little doubt that programmatic advertising is here to stay. Mobile and video programmatic ad spending are expected to continue growing at double-digit rates in the coming years. Now that programmatic ad technology has matured, advertisers are increasing their demand for automated, hyper-targeted audiences. In return, publishers are expanding their programmatic data to deliver more audience-based inventory.

¹ eMarketer US Programmatic Ad Spend Forecast, Lauren T. Fisher & Cindy Liu – September 2016