Rise of the machines: Programmatic set to account for 80% of online ads by 2018

Programmatic’s total share of online advertising in the UK has risen from 28% in 2013 to 45% in 2014 according to new research commissioned by the Internet Advertising Bureau (IAB) and will soar to 80% in three years’ time.

Of the £2.13bn spent on display ads across the internet and mobile last year, £960m was spent on programmatic and its solutions such as automated systems and real time bidding.

The IAB anticipates programmatic will grow even further. It predicts that programmatic will account for between 70% and 80% of all digital ad spend in the UK by 2018.

“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 IAB.

Programmatic advertising is most popular on mobile platforms with its share of mobile ad sales nearly doubling from 37% in 2013 to 64% in 2014. Nearly a fifth (18%) of video ads, meanwhile, are now traded programmatically according to the IAB.

Elkington added: “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.”

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In 2014, the 45% share for programmatic was narrowly behind direct sales between publishers and buyers, which represented 49% of total online ad spend.

Martin Kelly, CEO and co-founder of the UK’s first programmatic buying company Infectious Media, believes the move to programmatic is because advertisers are becoming disillusioned with the current agency trading model.

He explained: “The increase in spend has largely been a straightforward divert from the ad networks, with most advertisers still missing out on the advantages programmatic can offer. This is why we are seeing the deluge of global media pitches.

“Advertisers are not happy with the current agency trading desk model and are working out the model that is right for them, be that ATD or working with a specialist business.”

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