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Worldwide Real-Time Bidding Based Display Ad Spend to Grow at 59% Annual Average to $13.9 Billion by 2016

Posted by | October 23, 2012 .

NEW YORK–(BUSINESS WIRE)–At its annual client and industry leadership conference, Ad Revenue 5,
PubMatic, the strategic selling platform for publishers, will unveil a
study showing that Real-Time Bidding (RTB) is the fastest growing
digital ad segment, predicted to increase to $13.9 billion in spending
worldwide in 2016. The study, conducted by research firm IDC and
sponsored by PubMatic, indicates that RTB will outperform all other
digital ad segments including mobile, video or social advertising.

In-depth interviews with senior online advertising industry executives
from around the globe revealed that RTB’s integration, automation and
optimization of value chains has created an environment of ease, speed
and labor-efficiency for both publishers and advertisers alike. The
optimization and real-time dynamic of RTB inventory and sale has lead to
vastly improved eCPMs for the publisher (with an average of a 100
percent increase in eCPM) and a significant increase in targeting
capabilities and ROI for the advertiser.

Although publishers continue to express reservations about implementing
RTB when trading premium inventory due to a lack of price controls,
strategic sales platforms like PubMatic address and alleviate these
apprehensions with the implementation of Private Marketplaces. These
direct sales transacted with automation are the perfect testing ground
for publishers to trial RTB with a limited amount of premium inventory
and a set list of buyers. IDC predicts programmatic direct sales in the
US will increase to $1.2B in 2016, primarily led by these burgeoning
Private Marketplace strategies. The market intelligence company foresees
that once publishers surmount these barriers to entry, most premium
inventory could eventually be traded programmatically via RTB.

In 2011, global RTB based display ad spend increased by 237 percent
compared to 2010, with the U.S.’s $2.2 billion RTB display spend leading
the way. The U.S. will remain the most advanced market with RTB spend
growing from $1.1 billion in 2011 to $8.9 billion in 2016 at a compound
annual growth rate of 53 percent. The market share of RTB-based spending
of all display ad spending will grow from 10 percent in 2011 to 27
percent in 2016, and its share of all indirect spending will grow from
28 percent to 78 percent.

The primary source of this growth will be RTB-based indirect ad sales.
In the U.S., the majority of indirect sales will be RTB-based by the end
of 2013 with the UK, France, Germany and Japan following quickly
thereafter.

In Europe, among the three major markets (UK, Germany and France), the
UK is farthest along in adopting RTB. IDC projects spending in the UK to
grow at a compound annual growth rate of 54 percent through 2016, with
RTB-based display ads accounting for 12 percent of all spend in 2012
already – up 108 percent year over year.

German RTB spending will account for 8 percent of total display ad sales
in 2012, an increase of 171 percent from the 2011 spend. RTB’s market
share in indirect ad sales will be 23 percent in 2012, up from 9 percent
in 2011.

In France, 8 percent of all display ad sales will be generated using RTB
in 2012, a growth of 120 percent compared to the 2011 spend of €23
million or 4 percent of total display ad sales. Its market share within
indirect ad sales will be 24 percent in 2012, up from 11 percent in 2011.

The white paper notes:

RTB has significantly impacted the way in which digital inventory is
traded. With the substantial benefits of automation, integration and
optimization, the RTB revolution is upon us. As long as both publishers
and advertisers continue to reap the benefits, it’s clear that RTB will
be adopted globally.

Information-gathering and analysis for the IDC White Paper, sponsored by
PubMatic, as led by Karsten Weide, Program Vice President, Digital Media
and Entertainment, and gathered by IDC through multiple sources
including in depth interviews with senior online advertising industry
executives in the U.S., UK, Germany, France, Japan, China and India as
well as IDC’s own proprietary research. IDC uses a predictive model to
forecast RTB data. This report was a follow-up to the report PubMatic
commissioned from IDC for October 2011’s Ad Revenue Conference.

PubMatic’s full IDC White Paper, sponsored by PubMatic, Real-Time
Bidding in the United States and Worldwide, 2011-2016 (October 2012) is
available to download here: http://www.pubmatic.com/reports-and-whitepapers.php

About PubMatic

Since 2006, PubMatic has been at the forefront of developing innovative
technology to help publishers automate the process of evaluating and
selling their advertising inventory. PubMatic (http://www.PubMatic.com)
gives premium publishers a real-time media selling platform for managing
revenue and brand strategy. PubMatic’s platform combines real-time
bidding (RTB), the most comprehensive brand protection tools, unified
optimization and audience insights as well as hands-on support to serve
the world’s leading publishers. PubMatic is privately held, backed by
funding from August Capital, Draper Fisher Jurvetson, Nexus Venture
Partners, and Helion Ventures, and has offices in the U.S., Europe and
Asia.

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