Programmatic buying has made serious inroads into the online video ad market. As automation of media buys becomes more common and viewing hours of online video continue to rise (they’re growing by 24% a year, according to Forrester), marketing leaders will need to upgrade their planning and media-buying approaches to execute cross-screen video advertising campaigns effectively, and the TV ad marketplace could start to go through upheaval within three years.
Content is less relevant as you increasingly know more about who is watching that program. No advertiser wants the Olympic audience. They want the men, or the women, or an age group, or better yet people with a high propensity to use products in the category. That’s what programmatic will eventually enable.”
It’s already having an impact. The advantages of the more open and automated buying process will propel programmatic buying techniques to 30% of online display ad spending in 2017 from 21% in 2013, according to Forrester, and TV will follow.
The report predicts that there may actually be four programmatic models for video in the future:
Proto-programmatic: Firms such as Simulmedia and Viamedia are adopting approaches borrowed from programmatic buying and provide richer audience data than Nielsen ratings to drive program selection for TV inventory.
Programmatic Direct: The buyer and seller, not the computers, will discuss and agree on terms of the contract. While the terms may include some fixed inventory, one of the areas for negotiation will be how much of the buy will be programmatic, the cost for that inventory and the factors that guide placement.
Private Exchange: Publishers take the lead, creating programmatic marketplaces for their properties but inviting only a select set of advertisers to participate. “Networks may still host upfronts to show off their content, “but they won’t make deals over dinner. Buyers will go back to the office and use their computers instead.”
Open Exchange: Any advertiser or publisher can participate in exchanges run by independent vendors such as Bright Roll and SpotXchange, much like they do today.
Each European market has specific characteristics that affect the uptake of programmatic video:
UK
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.
France
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.
Germany
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 Seven One 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 d ata 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.
Spain
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.
Italy
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
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