Current state of programmatic buying, market trends and forecasts across models and examples

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Programmatic Buying
High Impact Advertising Opportunity

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Key Points
• Programmatic share of total digital ad display spending will rise from 45% in
2014 to 63% in 2016
• Build-out of private marketplaces and programmatic direct deals will drive
future growth for programmatic along with the boost from continued
maturation in both mobile and video advertising
• Open Exchanges (open auctions) account for the majority of RTB based ad
spends, though Private marketplaces will see much steeper growth over the
next few years
• Mobile will surpass desktop as early as next year, taking 56.2% of all
programmatic ad expenditure
• Programmatic video is in the early stages of adoption and implementation,
but investment is growing

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Marketers are spending more money than ever to reach
online consumers
$51
Billion
Total spending on US digital advertising in 2014
$22
Billion
Total spending on US digital display advertising
in 2014 - 44% of total digital spending

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Programmatic is big and getting bigger
$10.1
Billion
Programmatic digital display ad
spending in 2014
$20.4
Billion
Programmatic digital display ad
spending in 2016
Programmatic share of total digital ad display
spending will rise from 45% in 2014 to 63% in 2016

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The programmatic family tree has a few key branches
Is inventory being
auctioned?
Real Time Bidding (RTB) Programmatic Direct
Is it a public auction? Is inventory guaranteed?
Preferred deal
(Unreserved fixed rate)
Programmatic
guaranteed
(Automated
guaranteed)
Private marketplace
(invitation only auction)
Open Exchange
(Open Auction)
YES NO
YES NO YES NO

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Current state of Programmatic

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US Programmatic Ad Spend tops $10 Billion in 2014, to
Double by 2016
US programmatic digital display ad spending will grow 137.1% to eclipse $10
billion this year, accounting for 45.0% of the US digital display advertising market
Note –
* Digital Display ads transacted via an API, including everything from publisher erected APIs to more standardized RTB technology. Includes
advertising that appears on desktop/laptop computers as well as mobile phones and tablets
# Includes banners, rich media, sponsorship, video and others
Source - eMarketer
US Programmatic Digital Display Ad Spending*
2013 – 2016 (In $ Bn)
• Build-out of private marketplaces
and programmatic direct deals will
drive future growth
• Boost with continued maturation in
both mobile and video advertising
#

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RTB remains the dominant transaction method, at least for
now
US Programmatic Digital Display Ad Spending - Real-Time Bidding (RTB) *
2013 – 2016 (In $ Bn)
Note – Includes advertising that appears on desktop/laptop computers as well as mobile phones and tablets.
* Includes programmatic ads that are transacted in real time, at the impression level
Source - eMarketer

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Open Exchanges (open auctions) account for the majority of
RTB based ad spends
US Programmatic Digital Display Ad Spending* by Channel
2013 – 2016 (In $ Bn)
Open Exchange * Private Marketplace #
Note – Includes advertising that appears on desktop/laptop computers as well as mobile phones and tablets.
* includes ads transacted through a public RTB auction in which any buyer / seller can participate, also known as an open auction or open marketplace
# includes ads transacted through an invitation-only RTB auction where one publisher or a select group of publishers invite a select number of buyers
to bid on its inventory
Source - eMarketer
• In 2014, open exchanges will account for almost 90% of US RTB digital display ad spending, totaling
$8.14 billion
• Private marketplaces will see much steeper growth over the next few years

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3 factors behind the rapid rise in private marketplace
(invitation only auction) spending
Control Increased adoption and participation from publishers
Competitive
Advantage
Growing demand from agencies and other large
scale buyers
Client
Demand
Efforts by ad-tech players to incorporate private
marketplace – type capabilities

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Programmatic direct takes on RTB with increase in spends
by 2016
US Programmatic Digital Display Ad Spending* by Transaction Method
2013 – 2016 (In $ Bn)
Real-Time Bidding (RTB) * Programmatic Direct #
Note – Includes advertising that appears on desktop/laptop computers as well as mobile phones and tablets.
* Includes programmatic ads that are transacted in real time, at the impression level
# includes all programmatic ads that are transacted as blocks of inventory using a non-auction based approach via an API
Source - eMarketer
• Significant growth coming from programmatic direct, which will reach $8.57 billion in spending by 2016 to
represent 42.0% of programmatic ad expenditure in the US—up from 8.0% this year

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Programmatic moves further toward premium future
Channels where US advertising executives plan to increase
programmatic ad spending, June 2014
(% of respondents)
Source – AOL Platforms Survey
• On the brand/agency side, the most important reasons to spend on programmatic were economic
efficiency, cited by more than 75% of respondents, while 66% found the targeting beneficial
• Organizational efficiency came in third at 57%. On the publisher side, the top three were the same, but
more tightly grouped and with targeting slightly ahead

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Programmatic – Mobile & Video

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Mobile will overtake the desktop in programmatic too, only
sooner
US Programmatic Digital Display Ad Spending* by Device
2013 – 2016 (In $ Bn)
Desktop / Laptop Mobile / Tablets
Note – * Digital Display ads transacted via an API, including everything from publisher erected APIs to more standardized RTB technology
Source - eMarketer
• Mobile will surpass desktop as early as next year, taking 56.2% of all programmatic ad expenditure
• This trend is consistent with the digital display ad market overall, which has shifted to mobile rapidly

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US programmatic video is in the early stages of adoption
and implementation, but investment is growing
US Programmatic Digital Video Ad Spending
2013 – 2016 (In $ Bn)
• Today publishers largely guard high-value ad inventory such as TV and premium digital video content,
though we expect a greater number of ads sold programmatically in these formats starting in 2015
• “Those who do decide to turn to programmatic, however, are likely to do so via programmatic direct,
where they can still secure inventory guarantees
Note – Digital Display ads transacted via an API, including everything from publisher erected APIs to more standardized RTB technology
Includes advertising that appears on desktop/laptop computers as well as mobile phones and tablets.
Source - eMarketer

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Success Factors

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Connect 1:1 with Audiences
How marketers are doing it?
Across billions of impressions
in real time, globally
By design, programmatic is able to deliver personalized messages at scale in real time
Wide Audience Reach
Buying decisions made in
milliseconds
18ms
Southwest Airlines uses programmatic to
reach new customers, spread awareness
for new flight routes and drive sales.
In a recent campaign, they used custom
first party data to reach millions of target
customers in top performing regional
markets, with their agency Camelot
Communications

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Embrace Cross - Screen
How marketers are doing it?
Talk Talk used HTML5 to increase reached
across screens while reducing eCPA by
12%
Programmatic is aiding marketers in their rapid shift to cross-screen advertising
Rapid growth in mobile
programmatic
Mobile display ads bought
programmatically
297%
Projected industry mobile
programmatic growth in 2014

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Engage with Video
How marketers are doing it?
Nothing connects like video and programmatic can make it more powerful
Sony Mobile is investing more in
programmatic video after seeing positive
results on their branding efforts for the
launch of the new mobile Xperia Z1s
Precision targeting, combined with the
sight and motion, programmatic video is
integral Netflix’s content marketing efforts
Upsurge in programmatic video
spend
Access to video inventory has
sky-rocketed
4X growth
In impressions for videos
transacted programmatically
427% spend increase
y-o-y on non YouTube sites across
Google properties

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Measure what Matters
Programmatic buying is a leap forward to integrated marketing and measurement
How marketers are doing it?
Uses viewability as a metric to understand
who saw their ad
Gained Insight -
15% higher viewability
with programmatic
Centralized technology and data on
DoubleClick across channels
Gained Insight -
30% Increase in
conversions
Measuring what matters is
finally possible with new tools
Programmatic helps address
media fragmentation
4.7
Average number of digital platforms
used by advertisers to address
cross channel needs

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