• by Tyler Loechner  @mp_tyler, July 20, 2015

U.S. marketers spent $10.1 billion through programmatic ad technologies last year, representing over half (52%) of the digital display market. The $10.1 billion figure also accounts for 20% of last year’s overall Internet ad revenues in the U.S.

The data comes from the Interactive Advertising Bureau’s (IAB) first-ever programmatic revenue report, prepared by PwC US.

The report also found that while private exchanges and “programmatic direct” technologies began to take hold last year, the programmatic marketplace was still dominated by open exchanges. Per the IAB’s report, approximately 70% of programmatic revenue -- or $7.07 billion -- came from open auctions. The report does, however, note that the shift toward private exchanges and programmatic direct technologies is alive and well.

Also rising are mobile and video ads sold via programmatic, but display banner ads still reigned supreme last year. The IAB’s report notes that display banner ads made up approximately 80% of programmatic revenues last year, a number that should to decline over time in favor of mobile and video.

Paul Alfieri, SVP of marketing at Turn, told Real-Time Daily that according to Turn’s internal data, mobile and video advertising worldwide has more than doubled in the first half of 2015, indicating that the shift is well underway.

“Sizing the programmatic market has proven both challenging and illuminating, as we learned more about how that sector moves ads and money,” stated Sherrill Mane, SVP of research, analytics and measurement at the IAB.

One key finding: Ad tech companies received approximately 55% of the programmatic revenues, while publishers pulled in the other 45%.

“The 55/45 revenue split is not surprising against the backdrop of industry chatter and anecdotal evidence,” Mane said to Real-Time Daily. “What is now supported by facts is that we need greater transparency and better understanding of the programmatic marketplace, especially fee structure. As currency changes and more consumers use more digital media, demand for digital inventory will increase.”

Chip Schenck, VP of programmatic sales at strategy at Meredith Digital, had a similar reaction. He pointed to the fact that 70% of programmatic revenues last year came from open exchanges -- a big moneymaker for the ad tech companies -- as the key reason why he wasn’t surprised by the 55/45 revenue split finding.

“Ad tech companies do provide value, and the market economy will continue to force adjustments in fees via competition between tech platforms,” Schenck said. “However, it reiterates the need the buyers and publishers to work together to make sure more of the advertiser's spend goes towards working media through more transparent means, like private auctions, unreserved fixed rate [and the like].”

According to eMarketer projections from last year, “programmatic direct” is expected to account for 42% of all programmatic ad spend by 2016, up from 8% last year. Private exchanges are also expected to see a surge of growth, while spend via open exchanges will remain relatively flat.

The IAB’s study provides benchmarks for the industry on the subject of programmatic, a topic that remains “red hot” for marketers, according to Bill Duggan, group executive vice president of the Association of National Advertisers (ANA). He noted that ANA members voted “programmatic” as the word of the year last year in a “landslide,” and said that interest in the topic has not yet died down.

Duggan did say that the IAB report highlights the need for greater transparency in the programmatic marketplace, noting that the supply chain is “complex and murky.”

In that vein, the IAB has also announced the launch of the “Programmatic Fee Transparency” project, which will be overseen by the IAB Programmatic Council. The group will “identify areas that require or deserve more transparency and develop a set of best practices involving fee disclosures.”