Programmatic Ads in Canada Pick Up the Pace - eMarketer

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Programmatic Ads in Canada Pick Up the Pace

Attractive CPMs, programmatic direct buys will drive growth

February 27, 2014

Programmatic advertising in Canada is still in the early stages of development, building the volume and scale required to deliver inherent benefits. However, Canada is among a group of second-tier nations that are rapidly growing automated ad delivery systems, according to a new eMarketer report, “Programmatic Advertising in Canada: Programmatic Direct Far Outpaces Real-Time Bidding.”

Though estimates among sources vary, programmatic ad spend made up approximately 15% of digital display spending in Canada last year. However, stronger growth in programmatic for Canada is inevitably coming—an evolutionary step that’s essential for more effective digital display marketing. This will be driven mainly by attractive CPMs for advertisers and programmatic direct buys, which outpace real-time bidding (RTB) volumes by about 3-to-1 (compared with an even split in the US market).

The International Data Corporation estimated that Canada’s RTB digital display advertising spending was $55.4 million in 2013, less than 2% of that in the US. But the country’s RTB market nearly doubled in 2013, with growth forecast at about 50% levels through 2017.

Real-Time Bidding (RTB) Digital Display Ad Spending in North America, 2012-2017 (millions and % change)

The much higher proportion of programmatic direct buys in Canada compared with other markets is the result of the direct selling preferences of major media companies. But it’s also a product of a system with fewer major marketers—20 or 30 brands—that are responsible for a large share of overall programmatic buying activity in the country.

“We’re definitely seeing in Canada that the needle is moved by major marketers,” said Andrew Casale, senior vice president of strategy at Casale Media. “It’s not moved by local. It’s not moved by pure direct response. The companies spending money are big marketers with huge budgets.”

The big story in Q4 2013 was the continued preference for premium programmatic, Casale said. The Canadian market has resisted jumping into the broad open market represented by RTB, instead preferring direct deals to better control price levels.

Low CPM levels are generating interest from the demand side of the ecosystem, but there’s mutual and growing interest from the supply side. Publishers have resisted auction models due to the downward pressure on CPMs and have typically protected premium inventory for direct sale on programmatic-direct models. The thinking goes, however, that CPMs for both premium and nonpremium inventory will adjust to market prices and spread the benefit between publishers and advertisers.

The full report, “Programmatic Advertising in Canada: Programmatic Direct Far Outpaces Real-Time Bidding,” also answers these key questions:

  • What is the current state of programmatic advertising in Canada, and how are advertisers in the country using it for digital display?
  • How do RTB and programmatic direct volumes compare in the country?
  • What are publishers’ attitudes toward RTB and the impact it has on CPMs?
  • In what ways are ad tech vendors meeting the need for greater automated ad buying?
  • How do advertisers in Canada plan to leverage programmatic in 2014?

This report is available to eMarketer corporate subscription clients only. eMarketer clients, log in and view the report now.


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