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Sharp Growth in Connected TV Ad Spend Seen for EU-5 Markets

UK should remain leader, but others will see faster growth

September 14, 2017 | Media Buying | Media & Entertainment

Connected TV ad spending is expected to at least double in each Europe’s five largest economies by 2020, with France and Italy seeing the most robust gains in investment compared with 2016’s spending levels, a new forecast finds.

Overall, the UK will continue to lead the EU-5 in connected TV ad investment, with annual outlays there swelling to €250 million ($277 million) by 2020, according to a report by MTM London for SpotX, a video ad serving platform.

At that pace, connected TV ad outlays in the UK would double vs. 2016 levels, the report said. Strong as that growth rate is, it pales in comparison to the gains projected for France, Germany, Italy and Spain, where the volume of ads served to smart TVs, streaming media devices and game consoles connected to the open internet has been less robust—and therefore still has the most to gain.

Connected TV Ad Spending in Select Countries in Western Europe, 2016 & 2020 (millions of €)

Italy will see the strongest surge in the coming years, with investment rising tenfold from the relatively paltry €10 million ($11 million) recorded in 2016 to pass €100 million ($111 million) by 2020, according to SpotX’s study. France will rank second for growth with a nearly 600% increase by 2020 to €240 million ($266 million)—just €10 million shy of the UK’s total.

In all, total connected TV ad spend in the EU-5 is expected to top €825 million ($913 million) in 2020, compared with €265 million ($293 million) last year.

Industry insiders queried for the study generally believe that increased ad investment will come in conjunction with rising ownership of connected TVs and increased viewing of ad-supported, over-the-top (OTT) TV services on TV screens.

According to Office of Communications (Ofcom) – UK figures cited by SpotX, two-thirds of UK households had a connected TV in 2016, and respondents to MTM’s research estimated that figure would grow to about 75% by 2020.

In France, connected TV penetration was 57% in 2016, according to Médiamétrie figures cited by SpotX, and like in the UK, respondents to MTM’s queries about France predict the figure will reach 75% by 2020, largely driven by sales of new smart TVs.

Connected TV penetration in other EU-5 markets was lower than in the UK and France, but growing nonetheless.

A June 2017 study by die medienanstalten found connected TV penetration in Germany was around 40%, with smart TVs the most common device type.

Connected TV Penetration Among TV Households in Germany, by Device, June 2017 (% of TV households)

Connected TV penetration is relatively low in Spain, at an estimated 28% of households last year, according to Comisión Nacional de los Mercados y la Competencia (CNMC) data cited in M2M and SpotX’s report. However, industry insiders polled by MTM expect it will grow to around 50% by 2020 as consumers upgrade to smart TVs.

Italy’s level of connected TV device penetration is much lower—around 15% in 2016, according to MTM’s estimate, but respondents to its study expected that number to double by 2020.

Cliff Annicelli

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