Programmatic ad revenue hit $10.1B in 2014, but lack of inventory holds back video ads

Online video advertising is still seeing slower growth than display ads, but the programmatic market overall is on a massive upswing. The International Advertising Bureau said 2014 revenue for programmatic ads totaled $10.1 billion, scraping past non-programmatic ads for the first time.

The total is in line with October 2014 estimates by eMarketer, which forecast that programmatic display ads would pass $10 billion for the year. Digital video ads were forecast to only be around $710,000, with about 12 percent of that being programmatic video ads (ads that are bought or sold and placed automatically). The IAB did not break out actual online video ad revenues for 2014.

IAB programmatic revenues 2014

A scarcity of premium video inventory was blamed for the lower adoption rates last year. But that availability is rapidly changing as an increasing number of ad-supported online video providers stoke their premium ad programs in the wake of Google's successful Preferred program. AOL rolled out a slate of premium video formats that mesh with its ONE platform, for example.

"Through our discussions, we repeatedly heard that premium video inventory is selling out through traditional digital direct sales channels," the IAB said in the report. "As a result of this demand, premium video publishers are able to sell their inventory directly and can negotiate deals with advertisers at a premium price. Inventory that goes unsold (remnant) on premium video publishers, which is often less valuable, is then pushed to the programmatic channels."

Still, the same problems that plagued programmatic advertising in 2014 are around this year. A lack of transparency regarding viewable ads, ad fraud and fragmentation of the industry due to so many different platforms are key issues for online advertising in general.

"... understanding where dollars are distributed across the ad-stack from advertiser to publisher can be quite disorienting in the current programmatic landscape," the IAB report said. "Are the added costs of programmatic buying and selling resulting in stronger overall revenues than traditional direct sales?"

Despite the problems, there could be bright times ahead for online video advertising. "While multiple industry executives told us in our interviews that premium programmatic video inventory is limited, they expect growth in this area," the IAB said. "We suspect that until there is significant growth in premium inventory, the projected growth will likely come from Invitation-Only Auctions and through Automated Guaranteed buys where publishers can better manage pricing on their existing premium inventory."

The IAB contracted with PricewaterhouseCoopers to conduct the study, which surveyed leading industry players and gathered and compiled historical data from them. The study included all forms of online, mobile and Internet advertising.

For more:
- download the study
- see this Ad Age article

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