European Programmatic Video: Uncertainty, Growth and Opportunities

SpotXchange Study on European Programmatic VideoSpotXchange has published a report on the state of programmatic video advertising in the leading European markets. The study was carried out by IHS who interviewed broadcasters, agencies, ad tech vendors and publishers from France, Italy, Germany, Spain and the UK. The findings provide some interesting and refreshingly honest insights into the key trends and the future of programmatic video in Europe.

Many Publishers Still Concerned About Data and Measurement…

Unsurprisingly, the research found that scarcity of supply was holding back programmatic video, as most publishers have been selling out via direct sales. However, IHS also noted that this is likely to change as the market matures.

Data was also a major issue for publishers on a variety of levels. Many publishers still don’t have a first party data strategy and are reluctant to make it available to third parties. When it comes to applying third party data, many publishers don’t trust it and see data acquired via cookies as ‘an unaudited black box and hence lacking in credibility’. Then the regulatory uncertainty in the EU cookies and tracking has led many publishers to question whether it’s worth bothering to develop a data strategy at all.

Finally, the lack of an agreed measurement standard is also limited growth, making it difficult to assess the effect of buying programmatically. Nielsen OCR, comScore VCE and other local panel-based systems are being rolled out across Europe, but IHS say it’s still too early to assess whether these will satisfy advertisers and be acceptable to publishers.

…But Opportunities Are Also Being Identified By the Supply-Side

It’s certainly not all bad, and many publishers are discovering advantages in selling programmatically. The ability to tap into international audiences is a major strength of selling programmatically and that was the ‘entry point’ for publishers adopting the programmatic model.

Publisher alliances and private exchanges have been helping to give publishers a stronger sense of control – now some publishers feel they are ‘co-shaping the ecosystem’. IHS also found that successful experimentation dispels myth around price erosion, and many publishers are rethinking the relationship between programmatic video and the direct sales process, often combining the two in a private exchange environment.

Programmatic Video is Set to Count for 33.2 Percent of Total Video Ad Revenue By 2017

Programmatic Share of Total Video Ad Revenue

The UK is the Most ‘Advanced’ European Market

The UK leads the programmatic video market, with revenues of €20.5m in 2012 (9 per cent of the total video advertising market) expected to rise to €224.5m in 2017 (38.9 per cent of the total video advertising market). However, the state of the British market has less to do with British innovation and more to do with the fact that ‘international players’ – i.e. US ad tech companies – have entered and dominated the market.

France is second behind the UK. While still small and extremely young (most players entered the market in 2012), revenues from programmatic video are expected to grow from €5.5m in 2012 to €157.9m in 2017. Two broadcaster and publisher alliances will hold the majority of video inventory available for programmatic trading by the end of 2013, but IHS say the co-ownership of ad tech infrastructure by media owners removes access barriers to adoption. However, the study identified a ‘strong programmatic culture’ in France,spurred by the success of homegrown display retargeting companies like Criteo.

Video Advertising in Europe in Big 5

Germany – the market that strikes terror into even the bravest US ad tech executives – was found to be relatively conservative. The video advertising landscape is centralised and consolidated with IP Deutschland and SevenOne dominating, making it difficult to penetrate. The study also stated that the market is characterized by a “perfect data or no data at all” approach to measurement, which translates into slower adoption of new ad trading tools. As things stand, YouTube is fuelling the growth of programmatic video in Germany.

In Spain, it’s still early days but online video is booming in spite of the country’s economic difficulties. On the programmatic front, Spanish video publishers are finding that programmatic selling is useful for monetising audiences in Latin America where they’re less likely to have sales teams on the ground.

Over in Italy, the market is just getting started, with just €2.5m in 2012 expected to rise to €63.2m in 2017. In some respects the market is similar to Germany in that the broadcasters dominate, with YouTube flying the flag for programmatic.

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