A quick sumary from the IAB/PWC annual programmatic report for programmatic publishers and programmatic yield managers

A week or so back, the IAB and PWC published their annul programmatic ad report for 2014. Given that much of the industry is on vacation (or making up for those who are) we pulled this report into a few key bullets for your speed reading pleasure:
  • MARKET SIZING: Programmatic revenues made up ~ 52% ($10.1B) of display related advertising ($19.6 billion) in 2014, non-programmatic display related revenues comprised the remaining 48%.
  • MARKET DEAL COMPOSITION: Open auctions made up ~70% of programmatic transactions. The remaining 30% or programmatic sold inventory is composed of “Other” — Invitation only auctions, unreserved fixed rate auctions, and automated guaranteed.
    • The report emphasized a forthcoming shift from “Open” to the “Other formats”. The assumptions here are that the buy side wants more transparency and predictability, while the sell side likes better pricing, inventory control, and full buyer transparency.
  • REVENUE COMPOSITION: Adtech earned 55% of programmatic revenues, while publishers only earned 45%. Putting this into perspective are the following numbers that make one realize how hard it is for programmatic publishers to earn a reasonable margin:
    • Agency Trading desks (ATDs) charge 5-15% of media spend
    • Demand Side Platforms (DSPs) charge 6-25% of media spend
    • Ad networks charge 20-50% mark up fees
    • Ad exchanges charge 7-20% of media revenue transacted
    • Supply Side Platforms (SSPs) charge 10-20% of media revenue transacted on these platforms
  • BUYER WANTS: buyers are demanding broader and higher quality inventory and deeper data about the inventory to improve targeting and ad relevancy
  • SELLER WANTS: Publishers are looking to expand the use of programmatic selling to keep up with buyers. Publishers also seek expanded access to targeting data to improve pricing and buyer ROI.
  • FORMAT COMPOSITION: Banner ads made up ~80% of the revenue in 2014 . Research authors expect this to change as investment pours into mobile and video.
    • For banner, quality issues such as viewability and fraud could contribute negatively to growth, as impressions volumes may be reduced in quality emphasis initiatives in many areas of the ecosystem. Also the lack of quality inventory may hamper growth, despite the buy side’s desire to pull this inventory into programmatic. Editorial note: Adomik believes when sellers become more confident in their data-driven selling in programmatic channels they will have the confidence and pricing control to commit the “good stuff”.
    • Because of the fact that premium Video is largely selling out via direct deals and non-premium is the only inventory getting to programmatic channels, the “quality problem” persists in  programmatic video.
    • While mobile continues its growth, it is significantly behind programmatic desktop. Issues with tracking, targeting and cross device are hindering its effective use. Obviously social platforms that have login information (like Facebook) are the exception.
We hope you enjoyed the quick overview. The full report is available here: http://www.iab.net/media/file/PwC_IAB_Programmatic_Study.pdf

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Programmatic programmatic publisher programmatic yield management