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UK programmatic adspend nears £1bn

29 Jun 2015  |  Ellen Hammett 
UK programmatic adspend nears £1bn

Almost half of online display ads in 2014 - worth just under £1 billion - were bought through programmatic technologies, according to the second annual industry study quantifying how UK digital display advertising is traded.

The Internet Advertising Bureau (IAB) UKs 'Media Owner Sales Techniques' study, conducted by consultancy MTM, reveals that of the £2.13 billion spent on display ads across the internet and mobile in 2014, 45% (£960 million) was traded programmatically - up from 28% in 2013.

Programmatic was narrowly behind direct sales between publishers and buyers (49% share of display ad sales), while just 6% were bought through ad networks (down from 22%).

Chart 1

The research also revealed that programmatic's share of mobile ad sales almost doubled between 2013 and 2014 from 37% to 64%. Currently, nearly 18% of video ads are now traded programmatically.

"Programmatic's role in digital ad buying has grown from virtually zero to nearly half of all transactions in just five years," said Tim Elkington, chief strategy officer, IAB.

"However, the impact on mobile has been even greater due to its more fragmented ecosystem providing a ripe breeding ground for intermediaries."

Elkington added that while some still consider programmatic primarily as a direct-response tool, its increasing role in video ads - a branding medium like TV - shows that programmatic is a top priority for advertising.

"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."

Chart 2

According to Stephen Adshead, associate director at MTM, when it comes to which advertisers are most advanced in the use of programmatic, the general perception among media owners is that online retailers, telecoms and finance brands are allocating the highest proportion of display spend to programmatic.

Despite the growth, some industry experts suggest that ad effectiveness is losing out in the programmatic gold rush.

"Programmatic is fantastic, but also problematic," said Nick Manning, chief strategy officer of marketing analytics company Ebiquity.

"It's the holy grail, but we're not there yet. Industry will tell you that we are, but actually we know that for every $100 our clients spend, maybe only 15 or 20 cents in a dollar actually reaches the screen in a meaningful way. There is enormous wastage."

Speaking at the annual RBS Media Conference earlier this month, Manning - who has spent more than 30 years in the media industry and co-founded Manning Gottlieb Media in 1990 - said it was now the responsibility of media agencies, on behalf of advertiser clients, to improve viewabilty scores by lobbying publishers.

"We see a lot of ad inventory going through ad networks which is very poor quality, with very bad viewability scores and very high non-human traffic scores," he said.

"The advice to advertisers is to be very careful what you buy...buy direct - you'll pay a higher CPM, but it's much better value for your money. If you buy on a blind basis, you might not even know where your advertising is going."

The buying and selling of display ads programmatically continues to see huge growth, with a survey earlier this year showing that three quarters of marketers plan to increase programmatic brand spend in the next six to 12 months.

65% of marketers said that a lack of transparency is the main barrier to increasing programmatic ad spend, followed by the "complexity" of the ecosystem (55%) and "lack of appropriate measurements" (50%).

In contrast, increasing sales is seen as the biggest advantage of programmatic (cited by 75% of marketers), followed by the ability to personalise ad messages and to make use of CRM data (both cited by 65%).

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26 Feb 2020 

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