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Programmatic soars in UK, Germany

News, 15 September 2016

LONDON/BERLIN: Programmatic is expected to account for nearly three-quarters (70%) of the UK digital display market this year and further growth is anticipated, according to eMarketer.

The New York research firm forecast UK advertisers will spend £2.67bn ($4.08bn) on programmatic trading in 2016, up 44% from last year, and it further expects programmatic to account for more than three-quarters of all buys in 2017.

Digital advertising is also expected to see a shift in the way ads are bought with programmatic direct, the process that does not involve an auction, expected to overtake real-time bidding (RTB) within the next couple of years.

According to eMarketer, programmatic direct and RTB will reach parity this year, at £1.33bn ($2.03bn) each, but it expects programmatic direct to account for 52% of all programmatic spending by 2018.

"Much of the programmatic direct total is accounted for by social media ad impressions, which are predominantly traded this way," said Bill Fisher, UK analyst at eMarketer.

"However, outside of social, people are coming round to the greater degree of certainty offered by this way of trading. Even within the RTB total, private marketplaces – small, invitation-only auctions – are becoming increasingly prevalent as people seek more control over the programmatic trading function."

With more eyeballs moving to mobile, eMarketer expects £1.99bn ($3.04bn) of total programmatic display adspend to be devoted to mobile inventory this year.

Furthermore, that proportion is expected to reach what eMarketer called a "staggering" 82.1% by 2018, when mobile will account for £3.2bn ($4.89bn) of programmatic spend.

Data from Warc's latest State of The Industry report, conducted on behalf of the Mobile Marketing Association, show that 43% of mobile marketers in the UK often use programmatic/RTB as a medium for ad buying, while an additional 14% always do.

Further, 37% state that they use a private marketplace (PMP) to secure mobile ad space. Chief among their reasons for doing so are to secure quality ad inventory (cited by 93% of UK PMP users), the heightened transparency PMPs offer (64%), and the better consumer targeting PMPs provide (36%).

Separate to their UK findings, eMarketer forecast that the programmatic digital display market in Germany will grow by more than 24% this year to €798m ($885.34m), or 41% of all digital display advertising.

Although still a much smaller market than the UK, which eMarketer says is a market leader in programmatic, Germany is expected to reach a tipping point next year when more than half (54%) of all digital display adspend is bought programmatically.

"It's widely acknowledged that publishers, advertisers and agencies in Germany didn't welcome programmatic ad trading with the same enthusiasm as those in France, the UK or the US," said eMarketer analyst Karin Von Abrams.

"That said, they couldn't ignore the growing evidence in favour of programmatic, and the momentum of adoption in other markets. Hence the robust growth we're seeing now, and the gains expected through 2018," she added.

Data sourced from eMarketer; additional content by Warc staff