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Programmatic Video Ad Buying Goes Mainstream in Europe

Strong growth projected for France, Germany

September 30, 2013 | Advertising & Marketing | Media Buying | Video

It’s no secret that technology is transforming media buying on digital platforms. Programmatic (automated) buying of video ad inventory enables brands to target audiences more efficiently and get better deals on placements.

In Europe, this approach is relatively new, but interest and investment are ramping up sharply. According to an IHS study commissioned by SpotXchange—an online video platform and service provider—programmatic video ad sales in the EU-5 will grow by 223.1% this year and reach €626.5 million ($803.2 million) in 2017. Moreover, an estimated 33.2% of all digital video ad revenue in the region will come from automated placements in 2017, up from 4.6% in 2012.

Programmatic Digital Video Ad Spending in the EU-5, 2012-2017 (millions of €, % change and % of total video ad spending)

The UK was the most advanced market among the EU-5 for programmatic video ad buying in 2012, IHS found, describing it as “one to two years ahead” of France, Germany, Italy and Spain. One reason for the UK’s lead in automated video advertising is the size of the digital video audience. eMarketer estimates that more than 34 million people in the UK will watch video content on digital platforms this year—and by 2017, around 40 million will do so. Naturally, advertisers who produce video campaigns are keen to trial automated ad serving in a sizeable, relatively mature market.

UK Digital Video Viewers, 2012-2017

Thanks partly to this head start, the UK is expected to remain the largest European market for these buys through 2017. And major brands are helping to fuel the trend. In late July, Kellogg’s digital director for Europe, Matt Pritchard, told industry source The Drum that he planned to place more of the firm’s UK video ads this way, as part of an attempt to make the company’s marketing more precisely targeted.

Programmatic Video Ad Spending Share in the EU-5, 2012-2017 (% of total video ad spending)

UK-based advertisers may be spending more, but France and Germany will see the most rapid uptake in programmatic buying of video ads, IHS predicted, with compound annual growth rates (CAGRs) of 95.6% and 95.0%, respectively, during the forecast period.

Though France and Germany will show nearly identical patterns of sales growth, they present very different contexts for online video advertising, according to IHS. In France, researchers found that many proactive broadcasters and publishers were welcoming these ad-buying options, and forming advertising technology alliances that encourage programmatic buying in “a controlled environment.”

By contrast, most video ad inventory in Germany is handled by just a few big players, IHS noted. To date, these powerful “gatekeepers” haven’t shown much enthusiasm for programmatic buying of video ads, and IHS expects the practice to become widespread only after 2016.

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