US programmatic ad spending set to reach nearly $180 billion by 2025

The forecast: The US programmatic digital display advertising sector has seen significant growth, rising 11.5% to over $135 billion last year. Spending in the segment is expected to approach $180 billion by 2025.

• The shift toward programmatic ads, which made up 90% of all digital display advertising in 2023, seems set to continue as more companies adopt algorithm-driven marketing strategies.

• In the programmatic world, direct transactions are still the most common, but real-time bidding is seeing a decrease. This year, it’s projected that 75% of programmatic ads will be placed through direct channels.
• Private marketplaces (PMPs), where ads are bought and sold between select parties, continue to grow and are expected to account for 15% of programmatic advertising in 2023.
• The shift from programmatic direct to PMP is due to several factors, including a desire to maintain buyer-seller relationships, ensure ad quality, and protect against ad fraud and brand safety risks.

Programmatic CTV’s trajectory: There's been a slight decline in growth, stabilizing at 16.7% in 2023, not reaching the expected $20 billion. However, this doesn't signal a downturn, as CTV is still forecast to rise to over $28 billion by 2025.

• The dip in CTV programmatic advertising reflects the rise of free ad-supported streaming TV (FAST) channels and ad-based video-on-demand (AVOD) tiers, like those introduced by Netflix and Disney+.
• These additions broaden the number of CTV ad units, leading to lower costs per thousand views (CPMs). Amazon Prime Video with ads will launch at the end of the month with CPMs in the low- to mid-$30 range, a highly competitive rate.

Our take: Despite the challenges ahead, the programmatic advertising sector is still growing significantly, especially on the open web, where spending is rising at a faster rate than in walled gardens and could surpass $50 billion by 2025. Ad-supported options from the likes of Netflix and Disney+ are bolstering the open web, making premium ad space available to more advertisers.

Go further: Consult our US Programmatic Forecast.