US companies continue to spend more on ad technology (adtech). In our latest Forrester Data Business Technographics® Marketing Survey, 2017, 60% of US respondents expect to increase spending on adtech this year, versus 45% last year. Almost one-quarter plan to increase adtech spending by more than 10%. With the adtech space, data management platforms (DMPs) facilitate smarter media buying by unifying data from multiple sources to allow more accurate and detailed audience segmentation.
When we examined the DMP market in early 2016, we expected higher market growth driven by companies using DMPs in nontraditional ways outside of media buying. Now almost two years later, this evolution has not really happened. Instead, we still see companies using DMPs primarily to support media buying, with audience segmentation based on first and third-party data.
Based on this trend, we have cut our forecast estimates for US DMP adoption and spending, but we still expect very healthy growth for the sector in the US. We project that US spending on DMPs will grow to $2.5 billion in 2022, up from $1.0 billion in 2017, implying a 21.6% compound annual growth rate. Forrester ForecastView clients can see more details in this forecast developed in collaboration with Susan Bidel, Forrester Data: Ad Technology (Data Management Platforms) Forecast, 2017 To 2022 (US).
Forrester believes that with increased spending on adtech, these investments face the same return on investment (ROI) hurdles as traditional marketing technology investments. As Susan mentions in her report Make The Case For Ad Technology Investments, “Adtech investments are difficult to evaluate. Immediate costs and benefits may be easy to identity, but finding hidden costs and ancillary benefits can be challenging.” She encourages companies to evaluate all potential contributions quantitatively, account for all costs and benefits, and assess risk and future flexibility to estimate the true ROI on a DMP investment.