The changing role of programmatic in Europe, a buy-side perspective
By Alison Fennah, Executive Business Advisor at IAB Europe and Paul Coffey, Director CSI Platforms EMEA at Google.
The future’s bright: Programmatic adoption in Europe is growing
Digital advertising has shown consistent growth in recent years despite volatility in macroeconomic factors. Figures from IAB Europe’s AdEx Benchmark 2014 report show a year-on-year increase of 11.8% in gross online advertising revenues to €30.7 billion – the fifth consecutive year of double-digit growth. Programmatic advertising, a more recent trend within digital, shows a sharper growth curve with an increase of 71% to a market value of €3.65 billion, or 33% of the European display market in 2014, according to IAB Europe (European Programmatic Market Sizing Study, IAB Europe, September 2015). Advertisers in EMEA are optimistic about the future of programmatic, estimating that roughly 34% of their digital media will be bought programmatically next year. More than half of organisations in a Google study said they were using programmatic today (57%) with a more than a third expecting to use it in the next two years (38%) (Google Internal Research, April 2015).
Though programmatic isn’t currently used to full potential, its benefits are clear
Advertisers and agencies across Europe have clear views on the perceived benefits of programmatic. In a recent IAB Europe study, advertisers cited targeting efficiencies, lower cost of media, the opportunity to deliver brand advertising at scale, competitive advantage and more granular control of media as their top five reasons to invest in programmatic. Audience is also a top priority for agencies with targeting efficiencies at the head of their list. Trading and operational efficiencies came in second place, which perhaps reflects agencies’ specific operational needs. Agencies also see competitiveness and cost as important reasons to invest, with these coming third and fourth respectively. The fifth reason to invest in programmatic was the ability to deliver brand advertising at scale. (Attitudes towards Programmatic Advertising Survey Report, IAB Europe, August 2015).
While many advertisers acknowledge the benefits of programmatic, this doesn’t always line up with current usage. The main barriers advertisers say they face in rolling out programmatic include the need to test before going live with a campaign (39%) and training (31%). Consequently, the current approach in place across EMEA tends to focus on core capabilities: control through real-time optimisation, site-based targeting and dynamic creative. This means there’s still considerable room for improvement when it comes to the programmatic ad experience. (Google Internal Research, April 2015).
Even though advertisers admit to not using programmatic to its full potential yet, they do appreciate the advantages it brings. For example, it’s widely understood that when advertisers and their agency partners employ programmatic practices, efficiency soars. A recent study with BCG found that a comprehensive approach involving integrated tools and processes helped agencies realise staff time savings of up to 33% in their campaign operations. (BCG report sponsored by Google: Cutting Complexity, Adding Value, 2013).
Taking efficiency a step further, unified technology platforms provide a single user interface and make it possible to source data from a single pool, eliminating the need to reconcile, consolidate and transfer data from multiple sources. The result is that targeting and control become much more effective, delivering an end result of improved customer experience. (BCG report sponsored by Google: Cutting Complexity, Adding Value, 2013).
Agencies lead the way in adoption, extending programmatic expertise to advertisers
The digital advertising industry has always been ROI driven. But as the drive for efficiency and effectiveness continues, advertisers are responding by increasing their focus on quantifiable objectives and accountability. In this climate, the ability to measure and track what matters becomes vital. At 53%, the majority of advertisers in a recent Google study said that ad management platforms helped them achieve this. However, not all EMEA advertisers can claim strong levels of familiarity with programmatic buying. More than half (52%) said they rely on an agency to manage their ad management platforms (Google Internal Research, April 2015).
The fact that advertisers say they need support in measuring, quantifying and tracking campaigns underlines the importance of the advertiser-agency working relationship. Advertisers see the benefits of programmatic and ad management platforms, but most depend on agencies to help them get there.
IAB Europe’s Attitudes towards Programmatic Advertising report also gives a view of the relative importance of programmatic as a priority area for agencies and advertisers compared with other business issues. For example, 77% of agencies place programmatic in top five priority areas versus 41% of advertisers. It also quantifies adoption with more than half of agencies (56%) stating that programmatic trading is already in-house, whilst 54% of advertisers are not considering bringing it in-house and indeed see themselves as late adopters. This confirms that in many cases advertisers are happy for agencies to take the lead for them in strategy and operational support.
Programmatic adoption among advertisers: The drive to bring data in-house
Advertisers know that data can give them a huge competitive advantage and cite control of data as the primary reason for wanting to bring programmatic in-house. (Attitudes towards Programmatic Advertising Survey Report, IAB Europe, August 2015). The journey to manage and use their own data effectively can be a long one, so strategy formulation and implementation and operational efficiency can bring significant benefits for brands.
Advertisers with rich pools of first-party data are reluctant to share it, as they know that it can give them an edge over the competition. For these advertisers, the decision to bring elements of programmatic buying in-house makes sense, as it means that they can take advantage of that data in buying execution. Having real-time access to the data makes a big difference, as it enables them to target consumers at specific stages of the purchasing journey in ways that those using standard techniques cannot. The results are higher conversion levels and, ultimately, a competitive edge. However, this is not practical or relevant for all clients. (BCG Report sponsored by Google: Adding Data, Boosting Impact, 2014).
Most companies are not yet taking full advantage of the advanced technologies currently available to improve targeting, engagement and performance. But advertisers that are quick to implement these techniques and use what they learn in the process will make huge strides ahead of subsequent adopters of programmatic.
Securing future success through programmatic
With programmatic-focused advertisers and agencies starting to move past the competition, here are some key recommendations for securing future success:
- The majority of advertisers don’t have the desire to completely manage programmatic operations in-house. With that in mind, an open relationship between the advertiser and agency is critical to the conception, management and overall success of programmatic campaigns.
- Cross-functional advertiser-agency teams must work together to define priorities, implement campaigns, understand results and make the most of learnings and opportunities.
- Programmatic brings significant advantages: better targeting leads to better audience engagement, which in turns leads to better campaign performance.
- Data is king. Advertisers and agencies that can streamline operations and organise their data into a single source will be more efficient, and will gain greater opportunities for advanced targeting and learning from their programmatic campaigns.
For more information and insight into developing a buy-side strategy watch the IAB Europe Road to Programmatic Buy-side webinar here.