In-depth industry research report commissioned by SpotXchange offers first ever study of programmatic video advertising across Europe
LONDON – SpotXchange, the largest global marketplace of digital video ad inventory, announced the first ever comprehensive study into the adoption of programmatic video advertising across the five biggest advertising markets in Europe (UK, France, Spain, Germany and Italy). IHS, the research partner of the IAB Europe, conducted the study and has found that the European programmatic video market will grow an average 77.1 percent a year from 2012 to 2017, reaching €626.5m across Europe’s ‘Big Five’ markets. The research “Video goes programmatic: Forecasting the European online video advertising landscape,” is compiled from extensive research through interviews with both advertising agencies and publishers in these markets, analyzing trends and growth in the region.
“perfect data or no data at all”
IHS predicts that the market will mature quickly, and that by 2017, one third of all European online video advertising revenue will be generated programmatically, up from 4.6 percent in 2012. Scarcity of inventory limits current market size, but demand for programmatic video is increasing rapidly as it moves from being a tactical tool to a strategic component of media plans.
The report also found that Europe’s agencies and advertisers are driving the demand for video inventory to be available for programmatic trading, but successes such as monetizing international audiences and co-ownership of ad–tech infrastructure trigger publisher-driven innovation.
Each European market has specific characteristics that affect the uptake of programmatic video:
The UK was the most advanced of the Big 5 in 2012 and will remain the largest programmatic market through 2017, closely followed by France.
- The value of the video programmatic market in the UK in 2012 was €20.5m and is predicted to rise to €224.5m by 2017.
- The UK is the most advanced programmatic video market in Europe in terms of revenue and maturity of ecosystem. In 2012, 9.0 percent of all online video revenue was traded programmatically and by 2017 this figure will rise to 38.9 percent.
- Unlike other European countries, the technology side of market is dominated by international players.
- Market development is sustained by the good availability of third party data.
- The value of the video programmatic market in France in 2012 was €5.5m and is predicted to rise to €157.9m by 2017.
- France is second behind UK in video programmatic revenue and adoption of programmatic buying in video.
- The French programmatic market is young. Most companies entered the market in 2012 and there are still technology players in go-to-market phase.
- Two publisher alliances (La Place Media and Audience Square) hold the majority of video inventory available for programmatic trading. Co-ownership of ad tech infrastructure by media owners removes barriers to adoption.
- Strong programmatic culture, spurred by home-grown retargeting businesses such as Criteo, makes programmatic video more accessible as a concept than in other markets.
- The value of the video programmatic market in Germany in 2012 was €3.3m and is predicted to rise to €92.3m by 2017.
- Germany is a developed yet restrained digital advertising market. It is the second largest online advertising market in Europe in terms of revenue. However, it lags in adoption of digital innovations such as mobile advertising, display RTB and e-commerce and this is mirrored in programmatic video.
- The German media market is conservative.
- The video advertising landscape is centralized and consolidated with IP Deutschland and SevenOne dominating, making it difficult to penetrate for programmatic buying models.
- The market is characterized by strong measurement imperative. The German cultural approach to data is very different from other markets with a “perfect data or no data at all” mentality. This translates into slower adoption of new ad trading tools.
- Germany’s growth in programmatic trading principally stems from the rise of Google-owned YouTube with its vast user base and inventory.
- The value of the Spanish video programmatic market in 2012 was €4.2m and is set to rise to €88.7m by 2017.
- Although the overall advertising market is in deep recession in Spain, the video landscape and technology adoption within video are booming.
- The end of advertising on public broadcaster TVE created a tremendous opportunity for online video, satisfying excess TV demand. This made Spain the fastest growing market in Europe in 2012.
- There is an active push to tackle the scarcity of inventory. Media owners are actively making a larger share of their video content libraries available online.
- The automation of the buying process for video advertising is in its infancy, but developing rapidly. It is spurred by otherwise untapped international audiences such as those in Latin America, triggering Spanish media owners to jump on the programmatic video bandwagon.
- The value of the online advertising market in Italy in 2012 was €2.5m and is set to rise to €63.2m by 2017.
- The set-up of Italian agencies and ad tech infrastructures is delayed in Italy. The market is only just establishing its ecosystem in 2013 with first advances in late 2012.
- Strong online video legacy with broadcasters makes Italy a role model for the rest of Europe in terms of the number of advertising spots per video stream.
- The dominance of broadcasters also entails market concentration, parallel to that in Germany.
- Despite a low level of development, media owners’ strong awareness of programmatic pre-dates market introduction. This is an inverse relationship to the rest of Europe.
- YouTube revenue is a high proportion of total video revenue in Italy, distort the total programmatic share of video. Excluding YouTube, the size of the Italian programmatic market is parallel to Germany in 2013-2014 and Spain 2015-2017.
“This study confirms that while the online video industry has been growing exponentially across Europe, each country is at a different stage of adoption and capability. This research helps define the growth for each market and explain the different factors publishers need to understand in order to create a strategy for programmatic selling. I encourage agencies and publishers to download the report and use it as a tool for capitalizing on the significant shift in the trading of online video advertising,” said Andrew Moore, European Managing Director of SpotXchange.
Daniel Knapp, Director of Advertising Research, IHS, added, “Online video advertising is growing rapidly. As the format comes of age, advertiser expectations around measurability, targeting and return-on-investment are becoming more sophisticated in order to justify increased investments. Programmatic buying offers publishers the opportunity to future-proof their online video offering alongside these expectations. Our study shows that programmatic buying will be a core driver of online video in Europe over the next five years, growing on average 77 percent a year in terms of revenues. But as the programmatic video landscape is developing, it will not converge into a one-size-fits-all solution. Different legacy market structures, the availability of data, and ultimately marketing cultures mean that adoption in Europe will vary by country and by publisher, both in terms of pace and form.”
“We commissioned the IHS study across key European markets to better understand the varied advertising marketplaces across the region. We have led technological innovation in the programmatic video industry and remain committed to driving thought leadership in this space. We were the first company to commission this type of research in the US market and are thrilled to continue that trajectory with the first ever study for the European market,” Moore continued.
In the US, SpotXchange has commissioned two annual research reports looking at the US online programmatic market. The most recent Forrester Consulting RTB (Real Time Bidding) research report found that RTB in online video advertising is growing at a 57% CAGR, and total RTB spend will reach $1.14 billion in 2014. To download the study, visit SpotXchange. The ‘Video goes programmatic: Forecasting the European online video advertising landscape’ study confirms that although lagging behind the US, the European programmatic video advertising markets will be significant in the next few years.
SpotXchange Ltd launched in the UK in 2011. In December 2012 the company expanded its European expertise with the appointment of Sophie Davidas as Director, Business Development in France. With campaigns targeted outside of the US representing 19% of 2012 revenue, SpotXchange recognizes the significant growth opportunity in European markets.
The full report from IHS can be downloaded here.
With more than 400 million auctions per day, SpotXchange is the largest global marketplace of video ad inventory reaching 167 million unique visitors in more than 60 countries each month. The leading platform for programmatic buying and selling of digital video, SpotXchange connects thousands of publishers with advertisers, agencies, trading desks and ad networks, running top brand campaigns through its IAB-certified marketplace. SpotXchange shows premium publishers and more than 1,000 world class advertisers that there is a better way to buy and sell digital video — with solutions that guarantee total transparency, brand safety and real-time control in either a private or public marketplace.