The State of Programmatic Video in Germany

Programmatic Video in GermanyProgrammatic video advertising is finally starting to gain traction in Germany. While even just last year the market was still hugely under-developed, there’s a growing sense in the industry that 2015 will be the year we start to see progress as a number of players on the sell-side will finally take off the training wheels to make more meaningful moves.

Christian Wilkens, Managing Director for Xaxis Germany, told VAN, “Germany is still at the beginning when it comes to programmatic video advertising. In open exchanges there is no reach, but high quality inventory is available. These uncertainties make it difficult to increase the demand for programmatic video. But the publishers who can demonstrate that they have high quality inventory and have good reach are being rewarded with a lot of demand.”

Last year’s wave of consolidation – most notably SpotXchange’s acquisition by RTL Group and Facebook’s acquisition of LiveRail – has led to increased investment in the development of the German market. However, more ad tech players doesn’t necessarily equate to more reach, and there is still a very limited amount of video inventory available on open exchanges. “As the open market is kind of limited, the clients are more reserved,” adds Rosa Markarian, Director Product & Training EMEA at Xaxis. And the limited pool of video inventory ensures that prices remain high.

This was also the view of Swen Büttner, Head of Video Marketing at Axel Springer Media Impact. “When it comes to programmatic, advertisers are willing to spend the same for premium inventory like they spend for classic video ad campaigns”, he says.

So if publishers are seeing high revenues, why are more of them not tapping into programmatic demand? The reason is one that is one that will be familiar to many people working in other European media markets: as long as there is a shortage of supply, selling video by insertion order is still delivering high CPMs, so at this point there are few incentives to ‘go programmatic’ for the sake of it.

Technology and Quality

The technological issues as video ad tech is considerably more complex than display. This complexity is compounded by the lack of technical standards, the large number of video players in the market, and the fact that many of the key metrics are still evolving. For example, whereas display advertisers typically look at things like click-through rate (CTR), with video there are often still discussions taking place around parameters like spot length, view rate and targeting options.

Inventory quality also continues to be a big issue for buyers. Brand advertisers want to know where their ad has been shown and if they’re reaching the right target audience, and running ads programmatically doesn’t always offer them the transparency they are asking for. So quality checks sometimes still need to be carried out manually. “Quality is important for us. Often the inventory that is offered to us does not meet our quality requirements”, says Wilkens.

Outlook for 2016

So while 2014 and 2015 have been the testing years for programmatic video, 2016 just might be ‘the year of programmatic video’ in Germany, even if it won’t completely replace the conventional methods of selling video inventory any time soon. Something that might push the industry forward is the rapid growth of mobile video. “We do see the biggest growth in mobile video and this will rise new technological questions and requirements, says Markarian. “Additionally, it will be also very important to offer new video ad formats that are not only compatible with all operating systems, but also demonstrate efficiency. And it will be interesting to see if German TV campaigns will be booked programmatically, as we’re already seeing happen in the US.” says Markarian.

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