Programmatic advertising has seen a stellar rise, more than doubling each year for the past two years. This year the share of programmatic will be over half of the total display advertising market. And as display advertising has shifted to mobile very rapidly, programmatic is no exception.

In 2015, mobile will account for 44.1% of all US programmatic display, a market currently worth $10 billion. By 2016, mobile is expected to surpass desktop, claiming an estimated 56.2% of all ad expenditure. After experiencing tremendous growth of 243.4% last year, eMarketer predicts ad spend on mobile programmatic display will nearly double this year to $8.36 billion. Next year, expect mobile programmatic to claim 70%, or the lion’s share of the programmatic display market.

Programmatic is not the same as RTB

Obviously, advertisers see the benefits of allocating their ad spend to electronic ad buying. It’s more efficient, enables better targeting, and provides significantly more transparency down to the single impression level, compared to direct deals. Some publishers on the other hand fear a “race to the bottom”, as they expect Real Time Bidding (RTB) to drive down CPM. However, programmatic entails much more than RTB and therefore these fears are largely ungrounded. In addition, mobile programmatic differs significantly from its desktop counterpart.

Programmatic advertising entails transacting advertising media (static image, rich media, video, etc.) through data-driven auction technologies. The keyword here being data-driven. As discussed a few weeks back in this article, a customer-centric approach is essential to reach modern multi-device consumers and this approach needs a solid foundation of first and third party data.

Providing audience intelligence on the single impression level across different channels will be increasingly in demand, and it will be sink or swim for publishers. Especially on mobile, the world’s most intimate device, being able to deliver the right message to the right consumer at the right time increases both ROI for advertisers and eCPM for publishers. No wonder 33% of marketers (or the majority) see mobile as the channel with the most opportunity for programmatic advertising.



Programmatic direct

Publishers with premium inventory – usually uncomfortable with offloading this inventory to open exchanges – are increasingly using programmatic as well, but with a direct component, called programmatic direct. This combines the efficiency and data from programmatic with the benefits of guaranteed inventory and fixed prices of direct. eMarketer expects that this type of ad buying will soar the coming years as premium publishers adopt it in big numbers, forming 42% of the programmatic market up from 8% today.


Private exchanges

Another way for premium publishers to keep more control of their inventory is through private exchanges. These allow publishers to whitelist appropriate advertisers and set price floors. It provides advertisers with more transparency and sometimes better targeting and measuring capabilities through unique first party data.

With the influx of ad spend in mobile programmatic, data will become the force which drives audience-centered programmatic into the mobile ecosystem. The large-scale and complex execution of enterprise-sized cross-channel campaigns will necessitate data platforms to facilitate this which makes stellar measurement capabilities and data analytics tools indispensable.

In my next article, we will cover 3 key challenges in programmatic today plus predictions around the future of programmatic and how it relates to mobile video.