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The Digital Advertising

Stats You Need for 2018


Intro
2017 was another big year for advertisers, publishers, and ad
tech providers. We saw the continued dominance of client-
side header bidding as well as the advent of server-to-server;
the announcement of a new ad tech consortium to make
cookieless, cross-device targeting a reality; a promising
industry response to fraud in the form of ads.txt; and the
beginnings of a potential machine learning revolution in ad tech.

But if there’s one thing that’s clear about our industry, it’s this:
Change is the rule, not the exception – so, you can expect a
whole lot more of it in 2018. In order to help you prepare, we’ve
compiled this data-driven guide. Inside, you’ll find the numbers,
charts, and graphs you need to refine your 2018 strategy,
including information on emerging formats, header bidding
adoption, the state of the duopoly, and more! Read on, arm
yourself with knowledge, and get ready for a productive 2018!
Table of
Contents
The U.S. Digital and Programmatic Landscape 4
Digital Advertising Around the World 9
Video 15
Native 23
Mobile 28
Ad Fraud 34
Machine Learning and AI 39
Header Bidding 43
Duopoly 48
The U.S. Digital
and Programmatic
Landscape

4
Total Projected
U.S. Digital Ad Spend
Digital Ad Spending (billions)
Percent of Total U.S. Ad Spend

$140 55%
$129.26
$117.53
$120
$105.44 50%
51.31%
$100 $93.75
48.94%

Percent of Total U.S. Ad Spend


$83.00
Total Spend (Billions)

45%
$80 $71.60 46.56%
Some good news:
Digital ad spend $59.82 43.62%
continues to rise $60
40%
and take up a 40.48%
bigger share of all $40
ad dollars. By 2021,
digital ad spend 36.71% 35%

is expected to $20
32.70%
represent a majority
of all U.S. ad spend. $0 30%
2015 2016 2017 2018 2019 2020 2021

Source: eMarketer 5
Total Projected
U.S. Programmatic
Ad Spend (Display)
Programmatic Digital Ad Spending (billions) $50 100%
Percent of Total Digital Display Ad Spend $45.72
$45
95%
$39.10
$40

Percent of Total U.S. Digital Display Ad Spend


90%
$35 $32.56

Total Spend (Billions)


85%
$30
$25.48
83.60%
$25 80%
Even better, 81.50%
2017 saw total $20 $17.50
78.00% 75%
programmatic
spend increase more $15

and take up a bigger 73.00%


70%
$10
piece of the total
digital pie, though $5
65%
growth seems to be 65.00%
levelling off. $0 60%
2015 2016 2017 2018 2019

Source: eMarketer 6
U.S. Desktop
Display Viewability
Rates by Ad Size
300x1050 78.10%

160x600 66.80%

300x600 64.70%

970x66 62.00%
Ad Size

970x250 54.00%

970x90 53.50%
Total viewability for desktop
display ads is 53.6%, 300x250 52.90%
meaning that nearly half of
all display ads purchased 728x90 49.80%
are never seen by anyone.
0% 10% 20% 30% 40% 50% 60% 70% 80%
In-View Rate
Source: eMarketer 7
U.S. Display Ad
Click-Through
Rates by Format 0.08%
0.08% Enhanced
Custom
In-Page
Banner

0.06%Rich Media
0.07% Image
0.03%
HTML Banner

Enhanced banner and


custom in-page ads
0.05%
Flash In-Page
attract the most clicks in
the display category.

Source: eMarketer 8
Digital Advertising
Around the World

9
Projected Digital Ad Spend Of the top five digital
ad markets, China is
by Country: 2017 vs. 2018 expected to see the most
growth in 2018 at 13.9%.
(Markets of $7B and above)
2017
2018

$100
$97.16
$86.39
$80
Total Spend (Billions)

$60
$50.76
$44.59
$40

$20 $14.70 $16.17 $12.32 $13.06


$7.73 $8.23
$0

US China UK Japan Germany

Source: PWC Outlook 10


Projected Digital Ad Spend Digital ad spend in Indonesia is
expected to grow a whopping
by Country: 2017 vs. 2018 27.8% in 2018. Other countries
expecting substantial growth
(Markets between $1B and $7B) are Mexico at 17.4%, Russia at
2017
13.8%, and Brazil at 12.8%.
2017 + 2018

$7.00 $6.76

$6.00 $5.66
$6.20 $5.15
$5.00
$4.57
Total Spend (Billions)

$5.24
$4.00 $4.77
$4.20
$3.00 $2.56
$2.26 $2.38 $2.21 $2.22
$2.01 $1.90
$2.00 $1.67 $1.50
$2.27 $1.34 $1.38
$2.14 $2.09 $2.03 $2.00 $1.86
$1.00 $1.48 $1.48 $1.28 $1.25 $1.23
$0.00

Australia South Korea Canada France Brazil Italy Russia Netherlands Sweden Spain Indonesia Switzerland Mexico Denmark Hong Kong

Source: PWC Outlook 11


Projected Digital Ad Spend While all of these countries had
relatively low digital ad spend in 2017,
by Country: 2017 vs. 2018 nearly all of them are expecting double-
(Markets below $1B) digit growth in 2018. India especially
stands out, with an expected 24.0%
2017 growth rate in 2018 and a population of
2017 + 2018 over 1 billion potential consumers.
$1.20

$1.00

$0.80

Total Spend (Billions)


$0.60

$0.40

$0.20
Taiwan

Norway

Poland

India

Turkey

Argentinaa

Czech Republic

Belgium

New Zealand

Austria

Ireland

Thailand

Izrael

Philippine

Malaysia

UAE

Hungary

Saudi Arabia

Singapore

Finland

Greece

Chile

South Africa

Colombia

Portugal

Kenya

Egypt

Peru

Romania

Nigeria

Venezuela

Vietnam

Pakistan
Source: PWC Outlook 12
0%
5%
10%
15%
20%
25%
30%
35%
40%
Pakistan
Egypt
Indonesia

Source: PWC Outlook


Philippines
Thailand
Malaysia
India
Nigeria
Vietnam
Chile
South Africa
Portugal
Mexico
each country?

Venezuela
Greece
Romania
UAE
Saudi Arabia
Colombia
Argentina
Kenya
Peru
spend grow this year in

Poland
China
How much will digital ad

Russia
Singapore
Ireland
Hong Kong
Brazil
Israel
US
Switzerland
Turkey
Czech Republic
Norway
Hungary
Sweden
New Zealand
UK
Taiwan
Australia
Austria
Netherlands
France
Belgium
South Korea
Canada
Spain
Denmark
Germany
Japan
Italy
Finland
Spend Growth by Country
2018 Projected Digital Ad

13
Projected Digital Looking at the broader regional trends,
this is the year Asia-Pacific is expected
Ad Spend by Region to overtake North America as the world’s
leading destination for digital ad dollars.
Through 2021
Asia Pacific
North America
Western Europe
$160.00
Latin America
Central & Eastern Europe
$140.00
Middle East & Africa

$120.00

Total Spend (Billions)


$100.00

$80.00

$60.00

$40.00

$20.00

$0.00

2015 2016 2017 2018 2019 2020 2021

Source: eMarketer 14
Video

15
Total Projected U.S.
Programmatic Video
Ad Spend
Programmatic Digital Video Ad Spending (billions) $14.00 $13.43 90%
Percent of Total Digital Video Ad Spending

$11.43
$12.00
80%

Percent of Total Digital Video Ad Spend


$10.00 69.00% 76.50%
74.00%
70%

Total Spend (Billions)


$8.00 60.00%
$9.13
60%

$6.00

$6.42
50%
The last two years have seen $4.00 $3.00
a huge influx of dollars into
the US programmatic video 40%
$2.00
market. Growth is expected
39.00%
to continue, but at a slower
pace in 2018 and beyond. $0.00 30%
2015 2016 2017 2018 2019

Source: eMarketer 16
Projected Share of 2017 is the year mobile
overtook desktop in
Programmatic Video Ad Spend programmatic video ad
spend. The gap is expected
by Device, 2017 vs. 2018 to widen further in 2018.

Desktop Desktop
Mobile Mobile
45% 42%
55% 58%
2017 2018

Source: eMarketer 17
2017 Video Ad The completion benchmarks every
video advertiser needs to know.
Benchmarks

61.67% 70.67% 71.33%


Viewable
Viewability Rate Completion Rate Completion Rate

Source: eMarketer 18
Video Ad Formats Users
Report as Interruptive
(U.S. Internet Users)
Desktop Mobile

Outstream 46% 60%


Publishers and advertisers
may want to be weary of
mid-roll ads – on both
Pre-roll 17% 17%
desktop and mobile – as
users are most likely to say
they find them interruptive. Mid-roll 53% 72%
Source: eMarketer 19
Projected U.S. Viewership: Cord-cutting: Through 2018 and
beyond, people will be watching
Digital video vs. Broadcast TV, less broadcast TV and more digital
video every year, fleeing broadcast
2017-2021 for digital options, including
Over-The-Top (OTT) content via
Digital Video Viewers Connected TV (CTV) devices.
Broadcast TV Viewers

$250

234.5 239.4 244.3


228.8
$200 222.7
196.3 192.0 188.3
Total Spend (Millions)

184.7 181.7
$150

$100

$50

$0
2017 2018 2019 2020 2021
Source: eMarketer 20
Average Time per Day
Spent with Video for
U.S. Adults: TV vs.
Digital Time per day
(Hours:Minutes)
TV
Digital Video Consequently, as
digital video grows, we’re
seeing users spend less
and less time per day
watching broadcast TV.

1:01 1:10 1:17 1:22 1:26

4:10 4:05 3:58 3:52 3:47


2015 2016 2017 2018 2019

Source: eMarketer 21
U.S. CTV Users by Device With over 168 million users in
the U.S. alone, CTV keeps on
growing. But which CTV devices
are the cord-cutters flocking to?

81.2
$80

62.8 $70

$60

Device Users (Millions)


$50

36.9 38.9
35.8 $40

29.0 $30
21.3
$20

$10

$0

Apple TV Blu-Ray Player Amazon Google Roku Connected Game Smart TV


Fire TV Chromecast Console
Source: eMarketer 22
Native

23
Total Projected U.S.
Native Ad Spend
(billions)

$16.21

$22
.09
2018 2017 2016

Native ad spend in
the US is estimated
27.8%
YoY Projected
to reach $28 billion in
8. 2 4
$2
2018, a 27.8% percent
increase from 2017. Increase
Source: eMarketer 24
2017 Share of Total Native Ad
Spend: Social Networks vs.
All Other Native Display

15.84%
All Other
Native Ad
Spend

84.16%
The vast majority of that spend
goes to social networks. Native
advertising on the open internet –
Native Social Network Spend what most people probably think of
when they think native – accounted
for just under $3.5 billion in spend.

Source: eMarketer 25
Click-Through Rates (CTR):
All Display vs. Native Display

0.09%
All Display

0.80%
Native Display

CTRs for native display


ads are 8.8x higher than
the average display ad.
Source: eMarketer 26
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
Pets 1.10%

Source: eMarketer
Food & Drink 1.10%

Family & Parenting 1.00%

Travel 0.90%

Technology B2C

B2C
0.90%

Style & Fashion 0.90%

Home & Garden 0.80%

Finance & Insurance 0.80%

Entertainment 0.80%

CPG 0.80%
Native Ad Click-Through
Rates by Brand Category

Business 0.75%

Education 0.70%

Automotive 0.70%

Sports 0.65%

Health & Fitness 0.65%

Technology B2B 0.50%


B2B
Native ads have

brand categories.
well for advertisers in
the Pets, Food & Drink,
performed particularly

and Family & Parenting

27
Mobile

28
Total Projected U.S. Mobile Programmatic mobile spend in the
US continues to rise, and made
Programmatic Ad Spend up 74.1% of all programmatic
display spend in 2017. That share is
expectedto climb to 77.0% in 2018.

$35
$36.09
$30

$30.09
$25

$24.14
Total Spend (Billions)

$20

$15 $17.99
$10
$10.68
$5

$0
2015 2016 2017 2018 2019

Source: eMarketer 29
U.S. Programmatic
Mobile Ad Spend:
In-App vs. Mobile Web 97% In-App

3%
Mobile Web

In-app ads dominate mobile


programmatic ad spend.
That shouldn’t be a surprise
considering the average U.S.
consumer spends 89% of their
time on their smart phone in-app.

Source: Smaato 30
2017 U.S. Mobile Ad Display, search, and rich
media are the formats
Spend by Ad Format driving mobile ad spend.

$30.25
$30.00
$25.69
$24.28
Total Spend (Billions)

$20.00

$10.00
$5.96
$2.15
$0.00

Display Ads Search Rich Media Online Other


Video Ads (cleassifieds/
email, lead gen)
Source: eMarketer 31
Projected U.S. Mobile We expect each of those formats to
grow in the coming years, especially
Ad Spend by Format, video, display, and search.

2017-2021
Display
Search
Banner, Rich Media, Sponsorship

$52.69
$50
Video
Other (Classifieds, Email, Lead Gen)

$47.85

$44.81
$42.36
$40

$41.85
$40.65
$38.13
$36.30

$36.05
$33.79
$30
$30.25

$30.75
$29.07
$25.69
$24.28

$20

$10.84
$9.72
$8.57
$7.22
$5.96

$10

$4.51
$4.21
$3.60
$2.15

$2.71

$0
2017 2018 2019 2020 2021
Source: eMarketer 32
U.S. Mobile Display
Ad Viewability Rates

14
0% .
7.8

19
28.
70

47.20
.60
%

20%
%
3.90%

%
Performance benchmark:
How long are mobile ads in view?

In-View Rate (60+ sec)


In-View Rate (30+ sec)
In-View Rate (15+ sec)
In-View Rate (10+ sec)
In-View Rate (5+ sec)
In-View Rate

Source: eMarketer 33
Ad Fraud

34
Global Estimated Ad Ad fraud accounted for over $14
billion in lost revenue in 2017.
Revenue Lost to Fraud By 2022, that total is expected
to rise 214% to $44 billion –

!
unless we band together to
stop it in its tracks.

2022 estimate

2017
$44.00
(billions)

$14.20

Source: Juniper Research 35


Estimated Global Ad When it comes to
programmatic, mobile
Fraud Rates by Format display inventory presents
the highest risk of fraud.
and Transaction Type
Detected Rate of Ad Fraud
Desktop Mobile Desktop Mobile
Dislay Display Video Video

Programmatic Buys 12% 15% 13% 2%

Direct Buys 10% 6% 16% 4%


Source: Integral Ad Science (Please note: This chart’s data reflects fraud rates for buyers not using ad fraud prevention technology) 36
Reasons Senior
Marketers Give for Not
Buying Programmatic
Fraud is the second-leading reason
marketers provide for not buying ads
programmatically.
7%
18%
Media buying
Ad misplacement
in problem
transparency and
searches/content
channels
accountability
7%
7% 9%
Budget
limitations

13%
Social media risks
and reputation
management 7% Other

5%
Incompatible
site content 7%
Fake news and 5% Phishing, scams
and/or brand Ad fraud and
digital media Viewability
mistrust of digital
hijacking
website traffic
advertising
verification

Source: CMO Council and Dow Jones 37


How Mobile Ad 53%
Executives Say They’re 48% We have assigned
Responding to Ad Fraud We use data and
fraud-related KPIs
to our media buying
analytics tools to
understand and agency and ad
Given the heightened fraud risk in measure suspicious networks
mobile programmatic, Forrester patterns for mobile
ad fraud
asked 250 marketing leaders
how they’re fighting back. Many
of their responses are applicable

43%
across all formats and channels.

32%
25% Require clarity from Third-party traffic
We reduced the media
vendors on how they validation technology
budget assigned to in- combat fraud
app advertising

19%
We aggressively
25% 31% 32%
28%
update blacklists

6% We subscribe to a
blacklist service
We reduced the media Require clarity from
Have not responded budget assigned to vendors on how they
yet but plan to We implement combat fraud
mobile web advertising
target white lists

Source: Forrester and AppsFlyer 38


Machine
Learning
and AI

39
Projected Worldwide
AI Technology Investment

Companies across
nearly all industries
are expected to rapidly
embrace artificial
intelligence in 2018
and beyond.

$2.35
2017
$6.03
2018
$11.45
2019
$19.28
2020
$28.96
2021
Source: eMarketer 40
Retail Marketers’
Attitudes Toward
AI in Marketing
86%
Makes marketing teams

86%
more effective

80% Makes marketing


teams more efficient
AI marketing will
revolutionize the
marketer’s role

82%
79% Allows marketing staff
Marketers are especially
excited about what AI can do
Changes the role of to focus on value-
generating tasks as AI
for them. 80% of surveyed
marketing toward
more strategic work automates workflows marketers say AI will
revolutionize their role.

Source: Emarsys 41
Areas Marketing
Leaders Believe
Sentiment analysis 56%

Lead scoring 57%


AI Can Help Them Customer segmentation/lookalike audience modeling 58%

Productivity of marketers 59%

Hyperpersonalization at scale 59%

Digital asset management 59%

Campaign analytics 59%

Business insights across data and systems 59%

Predictive journeys 60%

60% marketing leaders already Hyperpersonalized product recommendations 60%


believe AI can help them run
Programmatic advertising and media buying 60%
more effective programmatic
campaigns. We agree, which is Hyperpersonalization of content 61%
why we put machine learning
at the center of our new DSP: Dynamic landing pages and websites 61%
the AppNexus Programmable
Delivering the right message, on the right channel, at the right time 61%
Platform (APP).

Source: Salesforce 42
Header
Bidding

43
Percent of Top 1,000 U.S.
Web Sites Using Header
Bidding, January 2018

27%
Do not

73%
use header
bidding

Use header
The vast majority of the most bidding
popular, programmatic ad-
supported sites on the internet
have adopted header bidding.

Source: ServerBid Header Bidding Industry Index. Note on methodology: ServerBid tracks header
bidding usage among the top 1,000 sites using programmatic advertising, as ranked by Alexa.com. 44
Header Bidding Sites
in Top 1,000 by Type of No wrapper

Wrapper, January 2018 Server-side


wrapper

What kind of
Right now, more than half wrapper do
of header bidding adopters the top 1,000
are only using a client-side header bidding
wrapper. But server-side header
bidding can help publishers add
sites use?
more demand partners without
increasing latency. 7.91% of 54.71% 28.24%
Hybrid wrapper
header bidding adopters are Client-side
using a server-side wrapper, wrapper only
while 28.24% are deploying.

Source: ServerBid Header Bidding Industry Index 45


Header Bidding Sites
in Top 1,000 by Type of
Wrapper, January 2018
What wrappers are publishers using?

19.70% 19.60% 16.20% 6.80% 3.40%

Index Exchange In-House Vendor Wrapper Vendor Wrapper In-House


Wrapper Built Built on Prebid (Non-Prebid) Wrapper
on Prebid (Non-Prebid)

Source: ServerBid Header Bidding Industry Index 46


Top 20 Header Bidding
Demand Partners
AppNexus is the most widely-adopted
demand partner for header bidding sites,
appearing in 48.6% of header bidding setups

48.6%
47.6%
for the top 1,000 sites.

40.6%
We’ve seen firsthand how machine learning can optimize programmatic

39.1%
campaigns. When Greenhouse Group tested APP’s augmented line item
feature – which uses machine learning to constantly optimize inventory

34.4%
33.4%
32.9%
selection and bid strategy – against a manual campaign managed by one
of their best traders, they found that APP achieved 13% lower CPCs while
decreasing manual operation time by 73%.

23.9%
6.6%

14.4%
13.1%
4.2%

4.5%

12%
3.3%

10.1%
8.2%
7.8%
7.1%

7.1%

AOL
TrustX

Open X
Kargo

bRealTime

TripleLift

RhythmOne

YieldBot

Conversant

Facebook

Pubmatic

DistrictM

PulsePoint

Sonobi

Sovrn

Criteo

Rubicon

Amazon

Index

AppNexus
Source: ServerBid Header Bidding Industry Index 47
Duopoly

48
Duopoly vs. All Publishers:
Estimated Share of Total
U.S. Digital Ad Revenue
Duopoly (Facebook and Google)
Other

45.30% 41.60% 36.90% 34.20% 32.40%

65.80% 67.60%
63.10%
58.40%
54.70%
Facebook and Google
took up a whopping 63.1%
of U.S. digital ad revenue
in 2017, and their share is
projected to grow further
in the next two years.
2015 2016 2017 2018 2019
Source: eMarketer 49
Duopoly vs. All Publishers: The concentration has gotten worse
since 2015, when Google and Facebook
Yearly Estimated Digital began capturing new digital ad revenue
at a much higher rate compared to
Ad Revenue Growth publishers and other platforms.
Duopoly (Facebook and Google)
Other

31.80%
27.80%

25.30%
20.80%

18.20% 19.20%
17.70%
15.60%

14.70%
12.40%
10.60%
9.00% 9.90%
6.50%
4.80%
2.80%
2012 2013 2014 2015 2016 2017 2018 2019

Source: eMarketer 50
Duopoly vs. All Other
Publishers: Estimated Other
Share of U.S. Mobile
Ad Revenue 41.50%

Duopoly
(Facebook & Google)

58.50%
The duopoly captures a
lower – but still a clear
majority – share of mobile
ad revenue as well. In 2018,
that share is expected to
jump from 58.5% to 60.9%.

Source: eMarketer 51
Where Digital Video
Ad Revenue is Going,
According to Senior
U.S. Marketers 9.1%
OTT

24.7%
Mobile
39%
Facebook

The issue persists in video as


well. Between Facebook and
YouTube, marketers estimate
the duopoly takes in 66.1% of
all digital video ad revenue. 27.10%
YouTube
Source: eMarketer 52
Disclaimer
All rights reserved. The information contained in this white paperis believed to be reliable and current as of the date of publication, but
accuracy cannot be guaranteed. Recommendations or forward-looking statements contained in this white paper are based on estimates
of future results at the time of publication and are inherently uncertain. Actual results may vary materially from those expressed or
implied in any such recommendations and forward-looking statements. AppNexus is under no obligation to, and expressly disclaims any
obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise.

53
U.S. Display Ad
Click-Through
Rates by Format
0.08% Custom
In-Page

0.08%Enhanced
0.07% Image
0.05%
Flash In-Page
Banner
0.03%
0.06%
HTML Banner

Enhanced banner and


custom in-page ads
Rich Media attract the most clicks in
the display category.

Source: eMarketer 54

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