For all the talk of "programmatic direct" and bringing more automation to display ad sales, the future is bleak for the human element of ad sales, said IDC analyst Karsten Weide, who predicted that 80% of total US display sales will be sold via real-time bidding by 2022. Read the report [pdf].
In a presentation at PubMatic's Ad Revenue 6 conference, Weide called RTB "the fastest-growing area of media in history" and said it will be very hard for direct sales to compete with RTB once advertisers decide to handle most of their spending via automation.
"Publishers and agencies will lay off ad sales people because automation will take over," he said as he presented a series of slides showing the growth trajectory of RTB and programmatic buying across countries.
Showing how far he thinks RTB will go, Weide noted that 11% of US display this year will be traded as RTB. By 2017, that number will be 28%. Putting the numbers in further context, Weide juxtaposed 2012-2017 growth forecasts on a compound average rate for video (22%), mobile (39%) and RTB, which will have risen 51% over that period.
Putting that in 2012 dollars, global RTB spending was $2.7 billion; by 2017, RTB will attract $20.8 billion in media expenditures; the United States will account for $14.7 billion within the next three years.
Other countries to watch are China -- which is relatively nonexistent on the RTB meter right now, but is expected to rise quickly -- and Australia, a country experiencing strong growth, largely due to its consistently strong display market and tight relationships between big multiplatform publishers and global agencies.
If China is two to four years behind the US in wide adoption of RTB media sales, Latin America is even further back. Despite the advertising gains in countries like Brazil, RTB is not expected to be more than blip for most of the next several years.
"The vast majority of the spending is happening in the US, naturally," Weide said. "Most other markets are considerably more conservative than the US when it comes to RTB and programmatic. But China, as it addresses its infrastructure and networking issues, will rise quickly. The ideal time frame for a bid is 30 milliseconds and China's networks are too slow. Australia is well advanced when it comes to RTB, but its market is small so not a whole lot of spending there."
Video will be a minor contributor on overall revenue because there isn't enough inventory to go around. The inventory that is available is being sold direct.
While private marketplaces are generally viewed as a way for publishers to minimize the impact on traditional direct sales while maximizing the efficiency of programmatic, Weide said the use of these tools will remain "minimal."
The reason is that exchanges thrive on liquidity and volume. A private marketplace, by definition, artificially reduces that liquidity. "What they will continue to do is allow publishers to stick their toes into the water, without being afraid to drown," Weide said.
Ultimately, agencies want RTB because it is fast, clear and effective. "As such, publishers will embrace RTB for their survival, and they'll simply need less people to handle it," he said.