Dive Brief:

• By 2019, 65% of all digital media advertising spend will be traded programmatically, according to Zenith's Programmatic Marketing Forecasts. Advertisers will spend $84 billion programmatically next year, up from $70 billion this year, which represents 62% of digital media expenditures. By 2020, Zenith predicts that programmatic ad spend will reach $98 billion, representing 68% of digital media ad spend. 
• The new forecast shows that Zenith has pulled back slightly from previous forecasts as factors like GDPR and infrastructure investments slow down the transition to programmatic. Last year, Zenith forecast that 54% of digital media would be programmatic in 2018 and that the percentage would reach 67% by 2019. The growth in programmatic advertising spend is slowing as the space matures. Programmatic ad spend is forecast to grow 24% in 2018, down from 32% in 2017. It is forecast to grow 19% in 2019 and 17% in 2020.
• The U.S. is the largest programmatic market in terms of spend. In the U.S., $40.6 billion is expected to be spent programmatically in 2018, representing 58% of the total. China is second at $7.9 billion, followed by the UK with $5.6 billion. The U.S. will trade 83% of all digital media programmatically this year, followed by Canada at 82%, the UK at 76% and Denmark at 75%. By 2020, programmatic advertising will make up 80% of digital media in those four markets, and Canada will have nearly pure programmatic trading, with 99% by that year.

Dive Insight:

The Zenith report suggests that programmatic will become the default for trading all types of media, but the transition is taking a little longer than previously expected. The report cites the impact of the E.U.'s General Data Protection Regulation (GDPR), which has made certain data used for programmatic transactions unavailable and other data more costly to process as one reason for the slowdown. Also, advertisers are investing more in infrastructure and data to make their programmatic campaigns more effective. 

Marketers have been attracted to programmatic for the efficiency and automation that it offers, but they don't always have control over where their ads will appear. As more ad formats are available via programmatic trading, including mobile, video and audio, marketers should be pushing publishers to offer more transparency in programmatic ad buys and higher-quality inventory. 

The Zenith report suggests that advertisers need to reorganize internally to fully support programmatic trading, that agencies can only be effective in programmatic strategies through solid partnerships with clients and that strategies are only as effective as the data used to implement it. 

An Interactive Advertising Bureau study released in May revealed that 65% of marketers purchasing digital ads programmatically have either moved those functions in-house or have started to with plans to continue internalizing the functions. Reasons for the move include improved ad performance and ROI, greater cost efficiency and transparency, better control and management of ads, better targeting and a greater focus on brand goals.