Across the Atlantic, advertisers and marketers are following viewers online as video advertising in Europe becomes increasingly digital. But don’t count television out: It’s still the king for the foreseeable future.
Reports Indicate Resilience
Data from the “AdEx Benchmark 2016” study compiled by IHS Markit for the Interactive Advertising Bureau (IAB) Europe, published in mid-2017, revealed a 2016 online ad market value of €41.9 billion.
It suggested that, having overtaken TV ad spending for the first time in 2015, online advertising was leading TV by more than €7 billion across Europe in 2016.
“Mobile and video are the powerhouses driving the European online advertising market as we enter a post-desktop banner advertising world,” said Daniel Knapp, senior director TMT at IHS Markit with the release of the annual “AdEx Benchmark” study.
Ask a different lobbying group and you’ll receive a different answer. Thinkbox, funded by UK commercial broadcasters, fielded a study from the Global TV Group suggesting that TV accounts for 90 percent of the average viewer’s video time and that, among millennials, TV is also the largest proportion of their video time at around 73 percent.
Most pertinent to Thinkbox is a stat that says TV accounts for 93.8 percent of video ad viewing, with the average person in the UK watching more than 20 minutes of commercials a day.
Sample findings of the survey say that in Spain, the average amount of time spent watching on a TV set has increased over the past decade to 3 hours and 51 minutes, and that millennials’ TV viewing increases as they get older and have kids. In Italy, 16- to 24-year-olds watch 2 hours, 13 minutes a day, and 25- to 34-year-olds with children are watching 3 hours, 23 minutes.
“Over the past decade, TV has proven remarkably resilient in an era of immense disruption,” says Matt Hill, Thinkbox research and planning director. “Despite the emergence of new SVOD services and online video platforms, TV consumption has remained steadfast around the globe. Life stage also continues to be a significant driver of TV viewing.”
A November report from Ampere Analysis appeared to back this up. While it identified the most valuable and fastest-growing type of consumer as “Content Connoisseurs” who tend to be of a younger generation and want to curate their own set of services, an equally key group of so-called “TV Traditionalists” should not be ignored.
Preliminary figures from Dovetail, BARB’s (the Broadcasters’ Audience Research Board’s) alignment of online viewing with traditional panel-based TV viewing data in the UK, also supports the trend. Almost 70 percent of online viewing is among people age 35 or older, it found, with those over 55 viewing more than any other age groups. Even then, online views were marginally incremental to total TV viewing, which remained dominant across all age groups.
While its figures do not yet take into account smartphones (only PCs and tablets), which might significantly affect the profile, BARB concludes that these devices are certainly not a replacement for TV.
Media investment agency GroupM’s data also shows that, for now, TV remains king with advertisers when global data is aggregated. It stated that TV’s share of ad investment was largely stable at 42 percent in 2016, with a small decline to 41 percent predicted across 2017.
Whichever side of the fence you sat on, however, there is convergence at play, with the following issues identified as requiring special focus to grow the total advertising pie:
- Cross-media measurement
- Viewability and brand safety
- Integration with programmatic tools
This has been a massive issue for some time. Stakeholders on the buy-and-sell side want to be able to measure TV and digital more than any other media combination, according to the September 2017 “Digital Measurement Priorities Report” from IAB Europe.
“[T]he gap between ad models for linear TV and digital video is closing. The industry is getting closer to integration,” wrote Thomas Bremond, GM, international, advanced advertising, FreeWheel, in an article for Digital Marketing Magazine. “The greatest challenge remains measurement,” he said
The majority of those FreeWheel surveyed called for a new measurement solution, while 70 percent said they thought there would eventually only be three or four third-party measurement providers in the industry.
“There is clearly a need for a more unified approach that goes beyond viewability, to also look at ad performance and value,” Bremond added in an interview.
There are signs of change, with companies such as Médiamétrie calling for new measurement criteria. BARB’s Dovetail Fusion reports are to be published regularly from March 2018 (compiled by Kantar Media) and will deliver the UK industry’s first cross-platform measurement—although it is considered long overdue.
“Many media agencies have developed their own systems to estimate the combined reach of TV and BVOD,” said Hill in a November blog post. “But we’ve been in urgent need of an industry standard and I’m happy to say we now have one, and a very credible and revealing one it is too.”
Thinkbox debuted IPA TouchPoints in September, a planning tool aggregating data from a 5,000-strong media diary and questionnaire intended as a stop gap before Dovetail launches.
“The absence of close substitutes means that for now, those advertisers seeking this young adult TV audience can be willing to bear price inflation in proportion to its rising scarcity,” GroupM reported in “Interaction 2017,” its assessment of digital advertising worldwide.
VIEWABILITY AND BRAND SAFETY
Broadcasters made hay in 2017 with the notion that advertising online was a risky business outside of the safety net of a managed environment.
Everyone seems to agree that a move toward viewable rather than served impressions is important. In terms of contact quality, measuring the length of time an ad is viewed, particularly for video, is top.
“Improved standards certainly need to be agreed in the OTT space, but this plays to the broadcasters’ strengths and the reasons for their enthusiasm are clear: delivering a true premium QoS is their ace card— not just in terms of viewer experience, but for advertisers too,” says Tim Sewell, CEO, Yospace. “It’s the key differentiator between broadcasters and the likes of Facebook and YouTube, where 3 seconds is enough to count as an ad view.”
Unsurprisingly, Sewell points to dynamic server-side ad insertion (SSAI) as the as the most reliable and user-friendly method of delivering ad-supported online video, especially in the case of live channels.
“The leading providers of the technology are proving that SSAI works at scale, to audiences counted in millions, with the reliability that broadcasters demand,” asserts Sewell. “But achieving reliability is not quite as easy as you might think, especially when you consider that live events make up 70 percent of live online viewing in the UK, predominantly made up of sports coverage and ‘appointment’ TV—events in which very large audiences typically join the stream over a very short time period.”
IAB Europe is working on a cross-industry European Viewability Initiative that aims to improve the accuracy and consistency of measuring the viewability of delivered impressions. It thinks this will help to make digital advertising more directly comparable with TV where “opportunity for the consumer to view” or “opportunity to see” an advertisement is the accepted tenet for brand advertising.
“It is now more critical than ever to reinforce the quality of the digital advertising environment to ensure that advertisers have strong confidence, and underpin the delivery of free content,” said Townsend Feehan, CEO, IAB Europe, in a press release accompanying the September report. “Ensuring that viewable impressions are measured correctly and consistently across all markets in Europe is a key first step.”
GroupM downgraded its expectations on pure-play internet growth from 15 percent to 11 percent in 2017 after seeing some large advertisers pause investment on unmoderated user-generated platforms.
In a blog post, Lindsey Clay, Thinkbox CEO, defended TV as a trusted, high-quality environment for advertisers that is proven to work. “It has a huge variety of premium programming across every genre and can satisfy the demands of many thousands of advertisers simultaneously and for the long-term. Now more than ever these are crucial distinctions between it and a lot of other types of video.”
INTEGRATION WITH PROGRAMMATIC TOOLS
Programmatic (automated) advertising continued its strong growth and was an €8.1 billion market across Europe in 2016, jumping 42.7 percent from €5.7 billion in 2015. According to IAB Europe/IHS Markit, half (50.1 percent) of European display ad revenue was being traded this way.
Additionally, programmatic video grew by an exponential 155 percent and now accounts for more than 45 percent of total online video ad spend. Mobile continues to be the “most” programmatic format, with 65 percent of mobile ad spend traded programmatically in 2016.
Western Europe dominates this market with €7.5 billion programmatic revenues compared to €0.6 billion in the combined region of Central and Eastern Europe, although this figure represents a growth of 53 percent year on year.
However, Bremond says, “2017 has been a difficult year, with many questions raised about the brand-safe nature of programmatic video inventory. Programmatic needs rules and should be about automation—not simply be automatic. Publishers should focus on premium video content, where there is a direct relationship between the buyer and seller, and transactions take place in a saleable, brand-safe environment.”
The UK remains Europe’s market leader in programmatic. By the end of 2017, advertisers were expected to spend £3.39 billion on programmatic trading, up 23.5 percent from 2016, according to eMarketer data. This represents 79 percent of all UK digital display ad spending, and that proportion will reach 84.5 percent by 2019, eMarketer estimates.
DAI Boost for Broadcasters
The rise of connected TVs, VOD, and mobile video has breathed new life into the broadcast industry’s ability to monetize its audience reach. Sky’s AdSmart product is a trailblazer, delivering a 75 percent return rate for the pay TV giant. Channel-switching during a targeted advert reportedly reduces by 48 percent, based on 2015 numbers provided by Sky.
A pact between Sky and Virgin Media in June to integrate AdSmart into Virgin STBs gave the two companies access to 30 million targeted viewers in the UK and Ireland, and sufficient combined scale to compete with social media networks. (Facebook has around 35 million UK users.)
BT Sport has expanded its dynamic ad insertion (DAI) during football and rugby coverage with Yospace. The new deal runs until the end of the 2018/2019 Champions League.
Yospace made similar deals in 2017 with Sky in Germany, TV4 in Sweden, and Scotland’s STV, where the broadcaster was the first anywhere to provide targetable DAI in live streaming on Amazon Fire TV (after being the first in the UK to use the technology across live simulcast programs).
For commercial broadcasters like STV, the need to address targeted ads is more pressing than for pay TV operators, where subscriptions comprise the bulk of revenue. In the UK, on the back of an 8 percent fall in advertising in the first 6 months of 2017, ITV said it would introduce targeted trading. It had yet to do so at year end, with fellow broadcasters Channel 4 (C4) and STV driving this charge.
C4 has seen use of its All 4 service increase more than 20 percent year-on-year, to more than 60 million monthly viewers, and digital revenues climb 24 percent to £102 million. It began 2018 by offering personalized advertising with All 4 across every channel, including mobile, tablet, games consoles, and smart TVs.
C4’s decision to run commercials across its VOD services is a pushback to Facebook and Google’s duopoly of digital ads and confirms that traditional advertising channels can and will adapt to leverage the successes of digital.
Both STV and C4 require viewers to register their consent. That’s important since broadcasters will need to meet strict privacy rules before the EU’s General Data Protection Regulation come into force in May.
The Digital Video Broadcasting (DVB) standards-making group is attempting to harmonize addressable technologies by building on hybrid broadcast broadband TV (HbbTV), interactive TV software, v2.0. As well as benefiting free-to-air broadcasters, the DVB argues that standardization would make it easier for pay TV operators to deploy targeted advertising. Advantages include streamlining back-office requirements across OTT, broadcast, and service provider platforms.
The current HbbTV specification, on which Freeview Play is based, can support insertion of advertising over IP into broadcast streams, but doing so accurately is a key technical challenge. Nonetheless, the DVB believes a standard can be delivered by early 2019 and could even go global.
TV Alliance Takes on Google and Facebook
WPP—the world’s largest ad company—has persistently argued that Google and Facebook should be seen as media organizations as much as they are tech organizations and claim the duo already eat up 90 percent of every new pound spent on digital advertising.
In a bid to counter the threat from the Silicon Valley giants, a group of broadcasters led by Germany’s ProSiebenSat.1, France’s TF1 Group, and Mediaset in Italy and Spain banded together midyear to launch the European Broadcaster Exchange (EBX). The UK’s Channel 4 joined them in November, each taking a 25 percent share.
The joint venture aims to establish a European video-on-demand exchange to cater to the growing demand for multi-territory video campaigns at scale, initially traded programmatically.
It will be headquartered in London and begin trading in 2018. The combined VOD services of the EBX members (including C4’s All 4) claims to reach over 160 million viewers a month.
EBX aims to forge deeper collaboration between the broadcaster partners, driving forward technological development in online advertising and helping them to compete more efficiently with global competitors like Google and Facebook.
“The demand for multi-territory digital ad campaigns in brand safe and transparent environments is increasing. The video ad market continues to grow exponentially across Europe,” Jonathan Lewis, head of digital and partnership innovation at Channel 4, told the Guardian.
“This joint venture [EBX] is our answer to the current digital video landscape,” said the CEO of Mediaset Group-owned Publitalia 80, Stefano Sala, in an interview with Digital TV Europe.
“Many international companies have a strong demand for high-quality and brand-safe advertising environments in the video sector,” added ProSiebenSat.1 Group COO, Christof Wahl in the same article. “Our joint venture will offer them the opportunity to book pan-European campaigns in the premium video environment of an economic area with a population of over 250 million in an automated, user-friendly manner. This will allow us to gain access to additional advertising budgets that we were previously unable to address on a national level.”
Mobile Video Advertising in Europe
Whichever way you turn, mobile ads are on the up. Mobile advertising is projected to reach nearly $128 billion globally in 2018, per Zenith’s Media Consumption Forecasts report.
Ad views on smartphones (23 percent) and OTT devices (29 percent) continue to steadily increase in Europe, while desktop’s share of views, at 28 percent for 2017, decreased, according to FreeWheel.
IAB Europe figures record global mobile advertising growth accelerating 60.5 percent to reach $83 billion between 2015 and 2016, but with Europe behind North America and APAC at 19 percent (or $16 billion) of that total.
Ooyala’s research showed mobile devices attracting 58 percent of video views for AVOD services in EMEA, with tablets having the highest consumption of any other region at 12 percent.
“One of the best hunting grounds for pay TV and broadcasters is going to be in mobile because of the huge increase in consumption of live TV through mobile apps,” says John Tigg, SVP, Enterprise Solutions EMEA, Videology.
“Mobile continues to be a major growth driver of programmatic in the UK, accounting for more than three-quarters (78 percent) of total programmatic digital display ad spending in 2017; that figure will reach 86.5 percent come 2019,” according to an eMarketer press release. “The numbers for desktop, meanwhile, are declining— both proportionally and in real terms. Just 22 percent of programmatic ad spending, or £743.8m [$993m], will go to desktop this year, and those numbers will fall to 13.5 percent and £609.5m [$813m] in 2019.”
Nonetheless, some marketers are apparently intimidated by mobile programmatic. According to a study by Iotec, one-third of respondents find mobile programmatic just as confusing as on desktop, but 41 percent found it more complex on mobile. Half (50.4 percent) identified transparent pricing as their primary focus. Despite these concerns, more than 60 percent of marketers plan to increase their ad spends in mobile programmatic over the next year.
[This article appears in the Spring 2018 issue of Streaming Media European Edition.]