LONDON: Almost half of UK online display ads were bought through programmatic technologies in 2014, amounting to just under £1bn in spending according to a new study.
Research for the Internet Advertising Bureau (IAB) UK was based on detailed submissions from 31 companies and supplemented by a further 27 in-depth interviews and group discussions with industry participants.
This revealed that of the £2.13bn spent on display ads across the internet and mobile in 2014, 45% (£960m) was traded programmatically – up from 28% in 2013.
The biggest losers from this shift in spending were the ad networks, whose share plummeted from 22% in 2013 to just 6% in 2014.
Direct sales between publishers and buyers remained the biggest single way in which digital display advertising was traded, although its share slipped back from 51% to 49%.
"Programmatic's role in digital ad buying has grown from virtually zero to nearly half of all transactions in just five years," noted Tim Elkington, IAB UK chief strategy officer.
"However, the impact on mobile has been even greater due to its more fragmented ecosystem providing a ripe breeding ground for intermediaries."
Programmatic's share of mobile ad sales had nearly doubled from 37% to 64% in the same period, while that of video ads reached 18%. Most of the balance was again accounted for by direct sales – 30% in the case of mobile, 79% for video – with ad networks taking only a small single-digit share.
Elkington added that programmatic was no longer just a direct-response tool. "Its increasing role in video ads – a branding medium like TV – shows programmatic is on advertising's top table," he stated.
"Consequently, due to the rise in mobile and video ad spend, we estimate around 70-80% of all digital spend will be programmatic by 2018."
Martin Kelly, CEO and co-founder of programmatic buying company Infectious Media, placed the shift to programmatic in a wider context, as he explained to Marketing Week that advertisers were unhappy with agency trading desks.
"The increase in [programmatic] 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 [current] deluge of global media pitches."
Data sourced from IAB UK, Marketing Week; additional content by Warc staff