It has been less than a year now since AOL bought video advertising platform Adap.tv for $405 million. The purchase might have seemed a little risky at the time, given that t is one of AOL's largest acquisition ever, even more than the $315 million it paid for the Huffington Post in 2011. But the acquisition is apparently already starting to pay dividends for the company.
This year, AOL is now expected to see its first double-digit ad growth in the United States since the start of the recession in 2008, according to a new report out from eMarketer on Tuesday.
The company's net digital display ad revenues will go up by 15.5% in the United States in 2014. That is compared to 9.5% growth in 2013, and it will continue to see double-digit growth for at least the next two years as well, increasing by 13.5% in 2015 and 12.7% in 2016.
As you might expect, though, AOL still has a lot of growth to do if it wants to be in the same league as others in the display advertising space, most notably Facebook, Amazon, Google and Twitter.
Twitter saw its growth absolutely explode in 2013, with its display ad revenue nearly doubling with a 90.2% increase. That number is expected to come down to 78.8% this year, and down to 40% by 2016. Facebook also saw a huge year of growth, with its revenue increasing by 50.5%. Google’s net US digital display ad revenues grew 33.3% last year.
Still, this is encouraging news for AOL, which has struggled to keep up as its rivals increased their ad revenue year after year.
Besides the Adap.tv purchase, there is another factor in AOL's display ad growth: the company's commitment to programmatic display advertising.
Programmatic primarily uses real-time bidding (RTB), which allows advertisers to use software to buy and sell digital media, in real time. This gives them much more control over where, and how, their ads run. It’s easy to see why publishers would like this: they want their ads getting to the right people at the right time.
The industry is quickly trending in the direction of programmatic advertising. A study from Adap.tv back in October found that 60% of both brands and agencies plan to apply programmatic buying to their cross-screen planning and buying, including both mobile and linear TV, in the next year.
According to eMarketer, spending on RTB, which accounts for roughly half of U.S. programmatic ad buys, grew 76.5% in 2013. RTB ad buys will increase another 43.4% this year to total $4.86 billion, and that figure will continue to increase rapidly, growing 36.6% in 2015 and another 31.4% in 2016.
Finally, the report also looked at digital video ad spending, and foind that it grew 44.5% to $4.18 billion last year. It it expected to increase 41.0% to $5.89 billion this year.
By 2018, RTB spending and video ad spending are both expected to settle north of $12 billion.
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