Borrell Projects ‘Local Programmatic’ Will Reach Almost $50B by 2019

At LSA 15 last week we had a very interesting discussion on where local fit in with programmatic media. It featured xAd, Rocket Fuel, PaperG and YP. It’s imperative that publishers and marketers understand and have a position on programmatic.

Programmatic is not an inventory type; it’s a method of buying or selling ads (mobile, video, display). One of the panelists, Dorothee Bergin of xAd, characterized paid search as the original form of programmatic media because the process was entirely automated and bidding was at the center.

On the day of that session Borrell Associates coincidentally released an excellent report on the same topic. Called “Local Programmatic Advertising,” the report does a good job explaining what programmatic is and the various tiers within programmatic. It also addresses challenges and concerns tied into local publisher adoption of  programmatic.

Borrell Programmatic

Based on a survey of local media publisher ad managers, the report says that less than 5% of local digital advertising/inventory today falls into the programmatic category. However the report projects 10X growth over the next several years:

Last year programmatic buying at the local level was a veritable drop in the bucket. At just 4.7% of all locally spent digital advertising, local site operators might rightfully ask, who cares?

Things are changing quickly. This year we expect programmatic buying to account for 10% of all digital advertising, or $5 billion. Our forecast calls for the share to expand nearly tenfold over the next five years at a Compound Annual Growth Rate of 93.5%. At that rate, the level of local advertising flowing through programmatic networks would reach $47 billion by 2019 and surpass national programmatic spending. If that scenario holds true, 61% of local digital advertising and 97% of national digital advertising would be purchased via programmatic networks.

The question of what is “local” in the programmatic universe becomes challenging to define since increasingly programmatic is typically about audience targeting, with location as an audience segmentation input very often. But that’s a longer conversation.

The trust of the LSA discussion on programmatic was the following:

  • It’s not a threat to local media publishers for several reasons
  • It better monetizes unsold publisher inventory (this is one of the points of the Borrell report)
  • It creates more competition for local ad inventory and provides access to a larger advertiser pool
  • It offers better targeting and audience matching to advertisers
  • Programmatic is more transparent
  • For publishers acting as agencies on behalf of advertisers (local or national) it’s a way for them to obtain greater and more precise reach across the internet
  • It shifts roles and work rather than eliminating jobs because manual buying and selling processes are eliminated

Programmatic is a freight train. A very large percentage of media buying and selling will very quickly be automated. This is in part why Borrell sees 10X spending growth in four years.

No one can afford to remain ignorant or passive regarding programmatic. You need to climb on board or get out of the way.

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