Nearly one-in-three pounds spent on display advertising were bought using programmatic technologies in the UK last year according to an IAB survey, published today (26 June), which further forecasts this amount will grow to almost 50% in 2014.

The survey reveals that 28% of the £1.86bn spent on display advertising in 2013 was traded programmatically, with 37% of display ads on mobile traded using such technologies.

Meanwhile only 16% of internet video ads (excluding mobile video) were traded programmatically, according to the findings.

The study, based on submissions from 23 companies plus 35 in-depth interviews with industry participants was commissioned by the IAB and conducted by the MTM, also found that direct sales between publishers and advertisers accounted for half (51%) of UK digital display ad sales during the surveyed period (see chart).

It also found that just over a fifth (22%) were bought through ad networks.

The survey also predicts that programmatic advertising – defined as display ads that are bought and sold using automated systems and processes such as real-time bidding – will account for almost half (47%) of digital display ads in 2014. This share could further reach up to 60-75% of total digital display advertising by 2017, according to the trade body’s findings.

Tim Elkington, IAB, UK, director of research & strategy, says the study is the first attempt to quantify the value of the UK programmatic market.

He adds: “It’s important the industry understands how the market is split as it enables all those involved – media owners, advertisers and agencies – to take advantage of the exciting opportunities programmatic presents.

“Programmatic is more dominant on mobile due to various factors; it’s a more fragmented ecosystem and, being relatively harder to monetise, has enabled a wide range of intermediaries to develop more quickly, particularly having learned lessons from serving ads programmatically on PC’s.”

The survey underlines the growing importance of programmatic advertising, a trend which has piqued the interest of publishers, media agencies and brand-side marketers alike, a trend evidenced by ISBA (the UK trade body representing the interests of brand-side advertisers) preparing best practice guidelines with Infectious Media earlier this year.

David Ellison, ISBA, marketing services manager, says: “Programmatic trading’s rapid growth is reflected by the increasing interest ISBA is gauging from its members on this subject and how to get the most from it.

“We have produced guidance with Infectious Media that will help advertisers navigate a complicated space with numerous suppliers offering multiple solutions.”

Martin Kelly, Infectious Media, CEO, adds: "The growth of programmatic media trading in the UK is no surprise. The big story here is the underlying growth of display advertising. Programmatic has breathed new life into this previously exhausted channel.

“This turnaround of display is the surest sign that advertisers are waking up to the power that programmatic media buying gives them."

Earlier this month ExchangeWire spoke with Brian O’Kelley, AppNexus CEO and co-founder, where he shared his thoughts on how the ad tech sector, and how it could move unilaterally (away from trade bodies such as the IAB and JICWEBs) towards resolving potential issues, such as bid management technology issues and skills shortages, as programmatic increasingly underpins the ad tech sector.

Speaking with ExchangeWire about the industry findings: Graham Wylie, AppNexus,
senior director of marketing, EMEA & APAC, said: “ As members of the IAB UK Display Trading Council, we worked quite closely with the research team to help ensure a robust approach and the results make very interesting reading for everyone involved in the digital industry.

“It is clear from the study that Programmatic is now an established part of the UK digital landscape, with 2013 adoption shown to be notably higher than previous estimates. The pace of growth in 2014 shows that the industry is moving quickly to address the remaining obstacles.

“Notable among these in AppNexus' recent research with IAB Europe and WARC were a shortage of programmatic skills and a lack of client marketer understanding which limits budget allocation.

If these growth forecasts are to be achieved, its incumbent on the digital industry to invest in solving these problems.”