67% of Streaming Spots To Be Programmatic Buys

Borrell says automation will transform digital video advertising by 2020
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By 2020, 67% of commercials in streaming video will be bought programmatically, according to a new report.

Borrell Associates estimates that advertisers spent $20.5 billion on video-streaming commercials during 2014. About 4% of streaming video ads were bought via programmatic systems the prior year.

Programmatic buying data is used to identify the target audience of an ad campaign and the advertising that reaches those consumers is selected using automation. In some cases the transaction is completed mechanically as well.

“Programmatic will be the catalyst that transforms digital video into a multimedia giant - and in the process, follows the transition of broadcast television and cable entertainment from the big, single-purpose screens on our walls to all manner of digital devices throughout our homes, vehicles, pockets, backpacks and on roadside billboards, elevators and gas pumps. Our forecasts for programmatic video reflect the shape of this marriage to come,” the report says.

Borrell did not make predictions about how programmatic will affect the $37.6 billion spent on broadcast TV and cable advertising in 2014.

Programmatic buying is now responsible for placing 4.7% of all local digital advertising in 2014, Borrell says. That share will grow to 10% this year. That means $5 billion of local digital ads will be purchased via automation.

“Does this spell the death of the digital salesman? Hardly,” the report says. “But the role will certainly change as advertisers shift to buying specific audiences across a myriad of sites.”

Borrell surveyed 154 local digital managers and they said that more than two-thirds of them are already participating in some sort of programmatic network and have already assigned or hired someone to manage the opportunity.

"There’s a growing demand for full-time programmatic managers who can optimize CPMs and strike an appropriate balance between direct-sold inventory and programmatic,” the report added.

(Photo via Ervins Strauhmanis's FlickrImage taken on Sept. 19, 2014 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)

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