The Varying Landscape of Europe’s Programmatic Marketplace
Estelle RealeDecember 4, 2014
Nowadays we see many articles and surveys proving the meteoric rise of Programmatic in Europe’s digital marketplace. IDC's recent research predicts that the Western European Programmatic market will grow from $381 million in 2012 to $3.3 billion in 2017, and that spending on data technology and services will hit $6.8 billion by 2018 in Western Europe. While reading these figures, it is important to note that there are considerable differences in the way programmatic marketplaces are developing across the region. Here are few examples to understand how not all programmatic development is equal in Europe.
In the Netherlands, the combination of early adoption and the cooperation of media buyers and sellers have led to a rich Programmatic environment, exemplified by an openness and consistency towards innovation. In addition to an increase in Programmatic trading across multiple platforms (mobile, video, web, and most recently radio), the Dutch have also taken great strides in the advancement of rich media and high impact formats in their programmatic market.
Traditionally, the UK advertising marketplace has been buyer led. Over the last 18 months the major agency holding companies have rolled out their Programmatic capabilities and Programmatic volume has grown rapidly. Starting with RTB, the market has quickly integrated data to drive intelligent and targeted audience buying. By leveraging their unique market position, the major buyers such as GroupM and Xaxis have been instrumental in driving new inventory through Programmatic pipelines, increasingly replicating offline relationships in the more efficient digital world. As a result, there is now an increased focus on Programmatic premium or Programmatic direct, with greater collaboration between buyers and sellers.
Contrary to the UK, France is where we have seen sellers take up the Programmatic initiative and where we find that programmatic premium now plays a central role in the marketplace. Three years ago, media sales houses and publishers joined forces to create their own private marketplaces. They then rapidly implemented ‘first-look’ strategies with a select few demand players driving premium advertising. Nevertheless, there is now work to be done for channels other than display. For example, there is still much improvement needed for Video programmatic Trading in France, where compared to other markets, there is not a huge amount of quality Video inventory available for Programmatic brand campaigns. As a result, buyers remain apprehensive about buying video programmatically and so are continuing to buy a mix of video inventory via traditional means. We see the same trend for mobile but a few dedicated local exchanges are starting to emerge which could make a difference over the next few months given the clear demand for mobile.
In Germany, sellers shape the market and advertisers appear to be more conservative. The industry there has watched closely while other markets have experiment with RTB and will likely act only when a winning model for their business has become clearer. Today, the German advertising industry has no doubt about the impact of real time advertising where private marketplaces dominate the programmatic landscape. In 2013, focus shifted from ad evaluation to execution and so leading sales houses have now built programmatic capabilities across their businesses with a particular focus on bringing display and mobile together in multi-screen offerings that can be packaged and traded efficiently to attract brand advertisers.
For Southern Europe, with markets such as Italy and Spain, programmatic only took off during the second half of 2013. Since then, both markets are developing at a rapid pace with Italy leading the way. Many ad tech companies have encouraged publishers to move away from trading in solely standard display inventory to trading in premium inventory that includes rich media, video, and specialised placements like Skins. IAB Europe’s recent study clearly illustrates Italy’s appetite for video and other compelling high impact ad formats.
Those examples highlight that the European programmatic marketplace can be difficult for companies to embrace if they come with only a global vision in mind. As our colleague, Candice Odhams, recently pointed out in her blog, “One of the key advantages of Xaxis is that we can mirror the global, regional and local structures of our clients and agencies to support their needs and understand their business at each level”.
This is a key consideration to keep in mind for any company looking to tackle the challenges that the varying landscape of Europe’s Programmatic Marketplace can present.