Martin Stockfleth Larsen, Adform, CMO, uses insights from the company's latest quarterly European report to reveal that programmatic media buying is more than a direct response mechanism.

Adform recently released its European RTB Trend Report for Q4 2014. The report provides some insightful (and some surprising) stats about RTB activity. The most obvious takeaway is the extent to which brand marketers are embracing creativity and automation through brand solutions (rich media ad formats) and programmatic trading– and to think just a few years ago we thought it was only a direct-response tactic!

However, before I get onto the numbers, let’s start with some top-level stats on the state of programmatic marketing in Europe. Overall, spending on programmatic grew a healthy 250% across the continent in 2014. Much of that growth was fueled by a 650% lift in spend for brand solutions. By December 2014, marketers allocated 17.1% of their budgets to brand formats.

Marketers are also starting (finally) to realise the importance of mobile and tablet. In Q4 2013, desktop accounted for 81.12% of all programmatic ad spend; by Q4 2014 it dropped to 72.62%. After desktop, marketers favored mobile inventory (14.22%) followed by tablet (13.16%).

Private marketplaces, which trade premium inventory to exclusive buyers, now account for 25% of all programmatic ad spend. Brand marketers desire premium inventory to justify high-quality creatives – and why shouldn’t they? There are (almost) infinite options – from interactive videos to homepage takeovers that totally dazzle the consumer, so there is no surprise that spend is up a massive 650%! New services, such as HTML5 and responsive formats, let marketers create-once-and-deliver-everywhere. If publishers were to truly open the door to their premium inventory, programmatic branding campaigns could take on much more ambitious goals. For example, building market share by reaching new consumers at various stages of the purchasing funnel.

Of course, this raises a question we’re obligated to ask: Is all this spending on brand solutions and premium inventory delivering real results for brand marketers? Well, let’s take a look.

Across Europe, CTR climbed 59% in 2014. A large part of that growth was fueled by brand solutions, which do a better job at capturing the consumer’s attention (CTR for brand formats are 209% higher than for standard formats). As for premium inventory, the CTRs earned in private marketplaces are 127% higher than those earned in the open marketplaces.

Cost-per-clicks (CPC) also tell a very interesting story. Though brand solutions cost a lot more, the CPC for these premium brand formats is 13% lower than the CPC for standard formats. Thus, in a very real way, brand formats are 13% more cost efficient than traditional banner ads.

An interesting side note: As much as the industry likes mobile channels, it’s the desktop that offers an appealing combination of low CPMs and reliable CPCs, making it the ideal channel for sectors, such as financial services and travel whose products require a high degree of consideration.

However, in terms of brand performance, the real test is engagement. How often do consumers engage with brand messages? And for how long? On that front, we continue to see excellent news. Q4 2014 engagement reached 1.88% for Europe, and 3.04% for the UK. The Q4 2014 engagement time decreased slightly, although was still an impressive 13.93 seconds (down from 14.33 seconds in Q3 2014).

There’s no doubt that across Europe, programmatic branding has continued to prove its strength, and brand marketers are quickly embracing this channel to help them achieve their brand objectives. So what does 2015 hold for programmatic branding?

The numbers only tell part of the story. In conversations and in planning meetings, we see key trends brewing for programmatic, particularly for brand marketers. For instance, programmatic outdoor advertising shows considerable promise, and we shouldn’t be surprised to see brand marketers folding it into their programmatic media plans in the years ahead.

Also, as television continues its migration to digital channels, programmatic will be the natural solution to reach the right consumer at the right time. Moreover, engagement will begin to supersede conversions in terms of KPIs; many brand marketers focus on the lifetime value of consumers, rather than one-time sales.

Lastly, we absolutely see a trend towards in-house programmatic, with brands purchasing DSP and DMPs seats to they can better control their campaigns, and own the data generated by their campaigns (and mix it with other data housed in the CRM and web analytics systems).

All of these trends can be summarised rather easily: Marketers are far more sophisticated when it comes to programmatic. I expect 2015 to be another banner year for the tactic.

A full version of the most recent Adform quarterly report can be downloaded by clicking on this link.