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Why Google Views Programmatic Ads as an Important Growth Driver

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Mobile and video programmatic ad impressions are growing rapidly for Google

In our previous series on Google (GOOG), titled How Is Google Successfully Leveraging the Mobile Revolution? and Why YouTube Is Growing in Importance for Google, we discussed the company’s important growth drivers such as Mobile search and YouTube. Another important growth driver for Google is its programmatic ads business.

Programmatic ads are the technological framework for conducting automatic real-time auctions for display and video ads. Google’s programmatic ads business includes DoubleClick Ad Exchange and DoubleClick Bid Manager. Google mentioned that, leading up to last year’s Black Friday, “more than 60% of programmatic impressions came from mobile devices.” Plus, the impressions from programmatic video ads doubled over the 2015 holiday season compared to the 2014 holiday season.

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The US programmatic ad market could double between 2014 and 2016

The programmatic ad market has huge growth potential. According to a report from eMarketer and as the chart above shows, programmatic ad spending in the United States will more than double in two years—from $10.4 billion in 2014 to $21.6 billion in 2016. The report also mentions that US mobile programmatic ad spending is estimated to have accounted for more than 60% of total US programmatic display ad spending in 2015. Video mobile programmatic ads are another format that will gain popularity.

This push into the video ad market has helped Google take the third spot on the list of the top video ad properties in the United States. AOL and BrightRoll are only ahead of Google in this market, according to a January 2016 report from comScore. Incidentally, AOL was acquired by Verizon (VZ) and BrightRoll was acquired by Yahoo (YHOO) last year. LiveRail is another seventh-ranked player in this market, and it was acquired by Facebook (FB).

For diversified exposure to Google, you can consider investing in the PowerShares QQQ Trust, Series 1, ETF (QQQ). QQQ invests 5.2% of its holdings in Google.

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