IAB Europe Press Release: Latest IAB Europe research reveals in-house is now the favoured model for advertiser programmatic buying and two thirds of display ad spend in Europe is now traded programmatically

Cologne, 12 September 2018 – AT DMEXCO today, IAB Europe released two new research reports providing insight into the programmatic advertising landscape in Europe.

The IAB Europe Attitudes to Programmatic Advertising Report¹ shows that advertisers continue to demand transparency, greater control, access to quality environments and inventory and are developing in-house strategies to achieve these. According to the research, in-house is now the favoured advertiser model with nearly 40% executing their programmatic trading via in-house operations. It also remains the primary model for publishers (50% now have an in-house model) and agencies (62% now have an in-house trading desk).

Now in its fourth year, the research highlights four key findings:

1. Programmatic in-housing continues to increase and is now the favoured model for advertisers
2. Whilst programmatic trading is becoming the norm for most stakeholders, issues such as ad fraud remain key barriers to increasing investment
3. Private marketplaces are the dominant trading mechanism used for programmatic
4. Investments in programmatic are set to continue to increase

The amount of display, mobile and video inventory that agencies and publishers trade programmatically has continued to increase whilst the level of investment from advertisers has seen weaker growth. However, more than 90% of all stakeholder groups state that they think their programmatic investment will increase over the next 12 months.

In actual terms, the European Programmatic Market Sizing Report produced in collaboration with IHS Markit revealed that the total programmatic display advertising market in Europe experienced another year of double-digit growth jumping 27.1% to €12bn in 2017. Pertaining to this growth, 62% of European display ad spend was traded programmatically in 2017. Mobile continues to be the ‘most’ programmatic format as more than 80% of mobile was traded programmatically whilst video catches up – 74.1% of video was traded programmatically. Further, programmatic video is the force behind the growth as it saw 64.6% growth followed by programmatic mobile at 53.2%.

Whilst CEE is still small in size it continues to make large gains and grew by 65% compared to Western Europe which grew by 24%.

Programmatic revenues by format:

• Mobile – €6.8bn
• Video – €3.9bn

Programmatic revenues by region:

• Western Europe – €10.8bn
• Central and Eastern Europe – €1.2bn

In spite of the positive outlook, there are potential warning signs that could impact growth in the future such as not having access to the necessary resources. The attitudes research highlights that advertisers, agencies and publishers all see challenges around recruiting people with the right skill-set as well as providing relevant training to drive their businesses forward.

The ongoing challenges around campaign measurement for advertisers and a focus on sales KPIs for evaluating programmatic investment are also highlighted. This suggests that brand-specific metrics important to advertisers are still not being adequately addressed in a digital environment such as programmatic that has traditionally been direct-response led.

In terms of transaction mechanisms, private marketplaces are being used by the majority of stakeholders. Automated guaranteed is also making progress, utilised by agencies looking to secure more inventory at locked-in pricing, while being less of a focus for advertisers and publishers. As quality inventory increases in demand and becomes harder to identify in a world of auctions, headers, and exchanges, a need to safely procure inventory and guarantee its delivery is emerging.  Indeed, programmatic direct dominates with just over half (53.3%) of programmatic spend transacted in this way.

Attitudes to Programmatic Advertising

European Programmatic Market Sizing

Simon Halstead, Chair, IAB Europe Programmatic Trading Committee and Head of Open Demand, International at Oath said: “In its fourth year, the IAB Europe Attitudes to Programmatic Advertising research demonstrates how automated buying is quickly becoming the mainstream way to buy digital advertising. Investment levels continue to rise, and more advertisers than ever are becoming directly engaged in the process – moving to new ways of buying and working with partners on hybrid models to give them more understanding and control over their spend in this channel, as we see in the growth of private marketplaces. There are still challenges facing the industry, among them GDPR which of course was heavily prevalent on people’s minds as the survey was in field, with the need for greater transparency still top of mind for many as progress is made with initiatives like ads.txt and the IAB Europe Transparency and Consent Framework to provide the groundwork for consumer consent for publishers. Talent is also highlighted as a key challenge, with the changing role of programmatic buying and selling within brands, agencies and publishers putting greater demand on marketers and planners to understand the process and benefits of programmatic more readily as bigger, brand-led advertising is brought together with the capabilities of the algorithms and analytics within platforms to drive greater ROI.”

Daniel Knapp, Executive Director TMT, IHS Markit said: “While programmatic was an exciting exception just a few years ago, it has now become ubiquitous as the standard way to transact digital advertising. Our data shows that programmatic captures the lion’s share of market growth. It is already dominant in mobile, and growing strongly in video as more quality inventory becomes available.”

Gerhard Louw, Head of International Media Management and Digital Transformation at Deutsche Telekom said: “Advertisers today are looking to get the greatest possible efficiency, effectiveness, transparency, and flexibility in the way they manage their media investments. As this IAB Europe report clearly shows, Programmatic advertising forms a crucial part of the transformation for large brands to future-proof their media operations in response to the ongoing digitization of the media ecosystem. Although there are still many problems to solve and challenges to face, the report also highlights that advertisers who decide to take more control of the programmatic value chain can enhance the benefits they gain.
With the implementation of our new Media Operating Model (MOM), we at Deutsche Telekom are doing exactly that: increasing active guardianship and control over our paid media placements and outcomes, including in the area of programmatic media. Positioned as a hybrid model, one of the cornerstones of our model include the strengthening the company’s internal competence to ensure media-neutral media strategy, planning & buying.”

Ina Arens, Head of Programmatic Worldwide, MediaCom said: “The programmatic buying of digital inventory still plays a significant role in our client’s media mix. Some of our clients are aiming to invest between 50-70% of their digital media dollars into programmatic. And this year we have seen a welcoming shift towards a focus of transparency, better measurement and quality over quantity.”

David Goddard, Global Head of Programmatic Trading, BBC noted: “Programmatic digital buying has witnessed another year of increased investment and growth, coupled with industry challenges, that have encouraged key publishers and tech partners to pull together in order to overcome. I believe that the IAB Europe Attitudes to Programmatic survey is quickly becoming a crucial piece of research, benchmarking not only how the industry have dealt with previous challenges, but also a useful barometer for the year ahead. Overcoming barriers will allow the programmatic ad industry as a whole to maximise ROI and look forward to continued growth into 2019.”

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For more information, please contact:
Marie-Clare Puffett, Business Programmes Manager, IAB Europe (puffett@iabeurope.eu)

¹ IAB Europe Attitudes to Programmatic Advertising research
In order to understand the status of programmatic adoption across Europe, and the way in which it is being used for strategic competitive advantage on both the buy-side and sell-side of the digital advertising industry, IAB Europe’s Programmatic Trading Committee developed the Attitudes to Programmatic Advertising survey in 2015. Now in its fourth year, the 2018 report shows how attitudes, adoption and strategies are evolving.
The 2018 survey is based on a survey of more than 550 advertisers, agencies and publishers from across 29 markets.

² About the European Programmatic Market Sizing research
The European Programmatic Market Sizing research is produced by IAB Europe and IHS Markit, taking a holistic approach to aggregating the data to ensure all stakeholder perspectives were included. The numbers are based on ad spend reported by IABs, transactional data, statistical and econometric models to infer a European market size and knowledge from industry experts. This programmatic research complements the IAB Europe AdEx Benchmark Report, the definitive guide to the state of the European digital advertising market.

About IAB Europe
IAB Europe is the leading European-level industry association for the digital advertising ecosystem. Its mission is to promote the development of this innovative sector and ensure its sustainability by shaping the regulatory environment, demonstrating the value digital advertising brings to Europe’s economy, to consumers and to the market, and developing and facilitating the uptake of harmonised business practices that take account of changing user expectations and enable digital brand advertising to scale in Europe.
 www.iabeurope.eu |   @IABEurope  |  IAB Europe