This year has seen consumer viewing on connected TV shoot up in Europe; now the ad industry has to make sure all the right pieces are in place to capitalise on the opportunity. Here Emma Newman, chief revenue officer EMEA at PubMatic, highlights key learnings from upcoming VideoWeek research to outline the lay of the land for CTV in Europe, and makes the case for programmatic trading’s role in CTV advertising.
The European TV industry is at a critical juncture. This year will be remembered as the year when global over the top (OTT) subscriptions have been forecast to overtake pay TV subscriptions in 2020, according to Omdia, whilst connected TV (CTV) represents the area with the most growth potential for digital advertising in the coming years.
However, that market will have to be built. In order to create an effective CTV advertising market we first need to understand the individual components driving the growth and how they fit together.
Consumer Behaviour
The explosion and adoption of ad-funded streaming platforms has established that CTV advertising has the potential to reach consumers at scale. However, the market is highly fragmented which means that while the scale is there, consumers are scattered across multiple access points such as native smart TV applications, TV content apps, and streaming media devices.
Take this a step further, many consumers regularly use more than one device or app and often in shared environments. For media buyers this creates two challenges: managing multiple deals simultaneously and measuring incremental reach. To an extent these challenges will be resolved as consumers develop preferences for individual devices and apps and the market consolidates. Until this happens, we need technology solutions that enable media buyers to buy CTV across all supply paths, from a single interface, and measurement solutions that can ingest and analyse audience data and translate this into actionable insights.
Standardisation
As an industry we need to standardise the nomenclature we use globally to ensure that everyone is talking about the same thing. As things stand, there is too much confusion in the market and there’s no standard definition of CTV advertising. For example, a buyer seeking to run a CTV advertising campaign across Europe would encounter a variety of definitions not only in each market, but within markets. For some it refers to catch-up only, for others it’s mostly referring to smart TVs, and in trading deals it sometimes isn’t differentiated at all. The good news is that we can solve this quickly as there’s so much collaboration driven by independent bodies with experience of creating the standards required for advertising to scale.
Shortened media buying cycles
During the COVID-19 pandemic we’ve seen media buying cycles shrink from quarters to weeks, and in some cases days. The digital side of the advertising industry has been able to rapidly develop innovative data, targeting, and creative solutions. When combined with flexible commercial agreements, they have been well-received by brands and it seems unlikely that we’ll return to long media buying cycles. The opportunity here is for platforms to form deeper relationships with agencies and brands and innovate collaboratively which will help accelerate the maturation of CTV.
Regional differences
Respecting the nuances of various European markets will be key and should be factored into all business decisions. Discussion of regional differences and how they impact CTV advertising buyers and sellers warrants a whole separate article. PubMatic has commissioned a new research ‘Future of CTV Advertising in Europe’ from VideoWeek Research that will be released in the coming weeks. The research objective was to gauge the industry’s outlook for programmatic CTV/ OTT across the EMEA region, and better understand what key levers are facilitating and prohibiting the supply and buy sides from embracing programmatic CTV ad trading. Some of the early findings show:
- The UK is by far the most advanced market in Europe and the most similar to the US and will act as a barometer for change. Germany has the most consolidated sales house structure and could emerge as a model market, with both HbbTV and a thriving CTV app ecosystem acting as drivers. France has been extremely influential in pushing the programmatic display market forward and is on the cusp of lifting the regulatory constraints that have so far held back the growth of addressable TV and CTV advertising in France – definitely one to watch over the next year or so.
- Progress on CTV advertising in Spain has been relatively slow, due in part to the heavily concentrated TV advertising market, although buyers are seeing a growing number of access points via various DSPs, ad networks and through players like YouTube. Amazon will also be making their CTV inventory available via their DSP in the Spanish market in the near future.
- In Italy, agencies are increasingly investing in DMPs to combine broadcaster/app-owned and brand owned first-party data for audience addressability at scale. Because of this, most CTV buys are direct deals. Sweden is the least mature of the European markets with a relatively small amount of CTV advertising activity and the vast majority of the inventory that is there is sold direct and is usually bundled with linear TV.
Will programmatic CTV take off?
Firstly, we need to appreciate CTV for what it is – and at the moment it’s closer to linear TV than it is to digital advertising. As programmatic capabilities improve and as we see more liquidity when it comes to CTV inventory, it seems likely that we’ll see a shift, but we’re still in the early stages of a transition phase. So, for now at least, traditional broadcasters are adopting direct sales strategies and bundling CTV inventory with linear to create scale that is not possible with programmatic alone.
In the UK we have seen a variety of programmatic CTV offerings launched over the last couple of years, but – outside of the walled gardens – in most European markets the pipes are still being laid and we’re unlikely to see these scale until there’s more liquidity in supply, which could take a year or two.
However, programmatic advertising had an important role to play in 2020 as advertisers required agility during the pandemic and are likely to continue to require it into 2021. As media plans were scrapped and creatives were adapted, advertisers were able to rapidly change tactics as their circumstances demanded it.
The buy-side has the potential to disrupt the sell-side strategy but it will depend on how the role of CTV is defined. If digital teams take responsibility for CTV buying they will push for programmatic solutions in order to be able to incorporate it into cross-channel performance measurement. If ownership falls to linear TV teams there will be less demand for programmatic solutions as performance will be measured using audience figures that are aligned with linear TV.
From a brand perspective, there’s a huge desire to move away from the display and video walled gardens, and while CTV is still in its infancy, if the content owners don’t go down the programmatic route they’ll be creating their own micro walled garden which will detract brands from investing in CTV. Programmatic is the connective infrastructure that can unite these micro walled gardens and if CTV wants to be part of a broader media mix (which it should be) then we will need programmatic infrastructure that supports CTV.
What needs to be done to maximise the CTV opportunity?
There is so much to lose if we get CTV wrong, but so much to gain if we get it right and we must learn from the mistakes of the past because the CTV prize is potentially bigger than any we’ve seen before. Alliances need to be set up with clear governance and a collaborative, not competitive mentality. We need to let CTV evolve at a natural pace, not jump headlong into trying to make CTV one thing or another based on past assumptions. The heritage of TV needs to be respected in order to preserve the consumer experience, advertising needs to be creative, visually appealing, engaging, and non-intrusive. On the data side we need to look at how we analyse and make insights available collaboratively to minimise the risk of investment in CTV advertising and avoid the pitfall of keeping data in silos.
If we can avoid the mistakes of the past and work together we will be in a position to leapfrog some of the hurdles from the past and avoid a prolonged struggle which will ultimately benefit everyone.
