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Programmatic revenue hits $10.1bn

News, 21 July 2015

NEW YORK: Programmatic ad revenue in the US reached $10.1bn in 2014, accounting for a fifth (20%) of total internet advertising of almost $50bn last year, according to a new study from the Interactive Advertising Bureau (IAB).

The IAB Programmatic Revenue Report, co-produced with professional services firm PwC, suggests major change is underway concerning how display advertising is bought and sold.

But it also makes clear that there are lingering issues about insufficient transparency and says that even attempting to size the programmatic market is challenging because there are inconsistencies about how it is defined.

In this report, the IAB's first attempt to size the US programmatic market, programmatic is defined as display and video ads bought or sold via an automated channel.

Display banner ads for desktop and mobile accounted for approximately 80% of programmatic revenues in 2014, the report found, and it forecast that mobile and video formats will take more from advertiser and publisher budgets and inventory "over time".

Open auction marketplaces generated about 70% of programmatic revenue last year, but the IAB said it expected other formats, such as private auctions, unreserved fixed rate or automated guaranteed methods, to become more popular.

In terms of programmatic revenue recipients, ad tech companies comprised about 55% while the remaining 45% was taken by publishers.

"With our estimate of approximately 45% of programmatic revenues reaching publishers, understanding where dollars are distributed across the ad-stack from advertiser to publisher can be quite disorienting in the current programmatic landscape," the IAB said, in comments reported by Advertising Age.

With ROI remaining difficult to calculate, coupled with ongoing concerns about ad verification and transparency, the IAB also announced that it is establishing a Programmatic Fee Transparency project to develop guidance and improve confidence.

"Limited transparency around fees in programmatic has the potential to undermine trust and liquidity in the marketplace," said Carl Kalapesi, IAB vp of industry initiatives.

"The IAB Programmatic Fee Transparency project will develop guidance around fee disclosure and transparency within the programmatic ecosystem," he added.

Data sourced from IAB, Advertising Age; additional content by Warc staff