SpotXchange recently published its industry research report on programmatic video advertising across Europe (done in association with IHS), detailing trends in the key markets. ExchangeWire spoke to Andrew Moore, European Managing Director at SpotXchange about the report's findings.

Overall what are likely to be the key trends driving the growth of programmatic video across Europe?


There are different drivers for both the buy and supply-side.

On the supply-side, we are seeing more quality inventory becoming available from both premium publishers and broadcasters. In several cases this is the result of publishers becoming more active in video production and looking for new way to expose this to market.

Consumption is also changing and publishers are faced with having to find new approaches to monetize across multiple media channels and deal with greater audience fragmentation. These publishers are increasingly finding programmatic channels are the most effective way to take this to market. Particularly as they are becoming smarter about packaging up their audiences and exposing these segments to programmatic buyers.

On the demand-side, there has been a significant shift to audience based trading vs. the traditional contextual buys of online video. This lends itself well to using programmatic channels where audience decisioning can be made at an impression level in real time.

The second trend is the role that online video serves for buyers. Video is overwhelmingly seen as a branding vehicle and in the case of programmatic video, this gives the advertiser the ability to deploy brand budgets programmatically. Brand budgets moving through programmatic channels are becoming significant with several leading agency trading desks seeing over 30% of their billings coming from programmatic video.

This growth comes with new advertiser expectations around effective targeting, real-time campaign adjustment and return on investment. Programmatic channels allow the demand side to fulfill those requirements and agencies through their trading desks are keen to pursue these new capabilities.

Why is there such a huge jump in the projected growth in the UK video market over the next 4 years?  Where is the spend coming from?

Legacy media such as print and magazines are struggling to hold audiences and as such, we are seeing brand advertising moving online. As these digital budgets continue to grow, online video is one of the key beneficiaries as it is seen as the most effective digital channel at delivering brand metrics.

TV remains in strong health and online video is seen compliment helping advertiser to drive incremental cover and engage audiences that are difficult to reach.

As a result, online video is able to encourage new types of advertisers who are more interested in story telling to increase their investment online.

You mentioned that third party data is sustaining market development?  Can you give more detail about this?

Data remains a key issue in the development of programmatic video. Buyers increasingly want to deploy scalable data strategies for targeting but publishers remain concerned about releasing 1st party data for fear of data leakage.

We are faced with a patchwork of data sources across Europe of varying quality and significant concerns over the lack of clarity of how data is being used.

We are seeing the emergence of private deals in online video where publishers are confident they can retain control of their data and are therefore prepared to make it available. The Guardian are a good example of a publisher that has addressed this issue and have a clear data policy.

You also noted that the publisher alliances in France will contribute to growth in the programmatic market?  Why is that?

France has innovated in the area of publisher collectives where co-operation is key to give premium publishers and broadcasters the confidence to make inventory available programmatically.

By grouping together, publishers strengthen their offering and create market power - They are no longer subject to the ecosystem but they become a vital part of it. These publisher alliances deliver significant inventory into the market in a controlled way and provide the liquidity that is needed to drive growth.

Why is the growth in Germany so anaemic in comparison to France and UK?  Is this a resistance to programmatic buying?  You mention a conservatism in the media market?  Can you elaborate on that?

German adoption of programmatic video is slower than other markets and they are by nature conservative – culture plays a huge part. You see a similar trend when you look at German adoption of other digital channels such as mobile advertising, eCommerce and programmatic display.

This is where the paradox comes in. Germany is a high-tech market but also a handshake market – inter-personal relationships are key to doing business. Germany also has a strong engineering culture based on perfect measurement, which is in conflict with the “make do now” beta culture of the ad tech markets.

When you look at online video specifically, the market structure is very concentrated. The vast majority of video inventory is managed by two groups – IP Deutschland and SevenOne. They sell their own inventory but also act as a sales house, representing many other publishers. This gives these groups significant market power and they are in a position to dictate trading terms.

Across Europe, the growth in programmatic video is typically driven by the buy-side and this shift in the balance of power explains the slower rate of adoption in Germany.

What key trends do you see in smaller markets like Italy and Spain?

We do see different trends emerging from southern Europe but it is important to understand that each market within Europe is unique with different rates of adoption and ways of doing business.

Typically, these markets are lagging behind northern Europe but are rapidly catching up.

In Spain, the overall advertising markets are deep in recession but this is fostering greater innovation and adoption of new technologies out of necessity. In Spain, the video landscape and technology adoption are booming with premium publishers and broadcasters actively engaged in programmatic.

In Italy, the market is more nascent with the tech infrastructure and ecosystem only now becoming established. However, Italy has a strong online video legacy where broadcasters dominate. Despite low levels of development, awareness of programmatic pre-dates market adoption – this position is completely opposite to the rest of Europe.