Rise of the machines: Programmatic set to account for 80% of online ads by 2018
According to research commissioned by the Internet Advertising Bureau (IAB), programmatic's total share of online advertising in the UK rose from 28% in 2013 to 45% in 2014 and will soar to 80% by 2018. Programmatic makes up an even larger percentage of mobile ad sales, with 64% of mobile inventory sold programatically in 2014. The explosion of video and native ad formats has been key to this shift with publishers’ efforts to push them as premium alternatives proving successful. The Globe & Mail published an extensive article about the development of the programmatic advertising industry in recent years, stating that companies such a Proctor & Gamble targeted 70-75% of their ad spending automatically last year. The industry is expected to keep growing at a quick pace, as digital billboards are used more frequently, and companies increase investment in technologies. 
Mobile advertising is increasingly becoming a programmatic buy for advertisers, accounting for two thirds of mobile ad sales in the UK, according to a report.

Some 64 per cent of display and video inventory was sold automatically either directly from publishers or through programmatic exchanges in 2014, revealed the Internet Advertising Bureau (IAB).

It is almost double mobile’s share of the programmatic pie in 2013 (37 per cent), a sign that publishers are rapidly adapting programmatic techniques from display for use with mobile.

The explosion of video and native ad formats has been key to this shift with publishers’ efforts to push them on mobile as premium alternatives proving successful. Indeed, nearly one fifth (18 per cent) 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,” says Tim Elkington, chief strategy officer at the IAB. “However, the impact on mobile has been even greater due to its more fragmented ecosystem providing a ripe breeding ground for intermediaries.”

Such is the appetite to scale the online market for automation that the IAB has predicted up to 80 per cent of all digital media spend will be programmatic by 2018.

Advertisers pumped £2.13bn into display ads on desktop and mobile in 2014, of which 45 per cent (£960m) was shifted programmatically – up from 28 per cent in 2013. The discipline is closing in on direct sales between publishers and buyers, which accrued half (49 per cent) of display ad sales in 2014 compared to programmatic 45 per cent. Only 6 per cent were bought through ad networks, down from 22 per cent.

“These findings won’t come as a surprise to anyone who works in programmatic,” said James Bourner, head of display at Jellyfish, which handles the programmatic strategy for Nestle in the UK.

“As more formats become available programmatically, growth will naturally follow. With platforms such as Twitter making inventory available (a move that could add a much needed spike in ad revenues for Twitter) and other native-type inventory such as Sharethough, we expect programmatic to continue to grow. Once the misconception that programmatic is a direct response medium is dispelled, spend will be able to grow further, incorporating more awareness budgets and programmatic direct spend.”

The findings revealed programmatic technology is paying off despite lingering concerns over the lack of transparency and the proliferation of low-quality inventory. Marketers are increasingly more willing to share their programmatic endeavours, which was often something they would previously have handed over to their media agencies due to a lack of knowledge.

“Some still consider programmatic primarily as a direct-response tool. However, its increasing role in video ads – a branding medium like TV – shows programmatic is on advertising’s top table,” noted Elkington.

The IAB’s “Media Owner Sales Techniques” study was conduced by research and strategy consultancy MTM. It is based on submissions from 31 companies as well as a further 27 in-depth interviews and group discussions with industry participants. These insights were then combined with data from the annual IAB/PwC Digital Adspend report.