The promise offered by programmatic video advertising is finally turning into a promise fulfilled: Among U.S. publishers, programmatic will drive the majority of ad spending in 2016.
According to a new report from eMarketer, 60 percent of all digital video ad spending will come through programmatic. That's a significant increase from 2015, when just 39 percent of video ad spending was run through programmatic solutions.
There are no signs this trend will slow down, either. eMarketer estimates programmatic's share of overall digital video ad spending will increase annually in 2017 and 2018, eclipsing $10 billion in spending by the end of that period. It will also approach an overall market share of close to 75 percent.
Those figures make clear what has already been anticipated: Programmatic buying is the future of digital video advertising. There are a couple of key factors that played into this growth, along with several important implications for digital marketers.
What Caused This Change?
The rise of programmatic video advertising can be tied to one influence more than any other: YouTube. The online video giant rakes in more than one-fifth of all domestic digital video ad revenues, giving it significant influence on the marketplace. Because of its outsize presence and its decision to adopt programmatic solutions, YouTube has managed to help set a standard for digital video ad buying while also pushing other video publishers to accept the ensuing changes.
Additional pressures to adopt programmatic have come from advertisers rather than publishers. Those advertisers have been seeking better results through audience-based targeting and other efficient ad-buying strategies enabled by programmatic solutions. And as the quality of programmatic technologies has improved, it has become easier for publishers to elevate their standards of performance, moving closer to programmatic ad buying's ultimate potential.
What Does It Mean for the Future?
For publishers, the pressure is on to embrace programmatic ad buying or risk losing business to more forward-thinking platforms. Advertisers, meanwhile, should think about what they can do now to take advantage. If your existing advertising outlets don't offer programmatic purchasing choices, it might be worth examining your options to see if another platform offers a better economic outlook.
Anyone new to programmatic may also want to test a programmatic ad-buying strategy against a traditional strategy, just to see the difference programmatic can make. The ultimate goal is more efficient spending: Even if you increase your digital ad spend, you're paying for better exposure and ad spaces, and this should make your ROI even stronger than before.
With programmatic's adoption and market share both slated to grow for years to come, advertisers and publishers have every incentive to overhaul their current strategies. But advertisers can push this innovation even further ahead by demanding change or seeking it from publishers more in touch with the future.
