Socintel360 reported that programmatic video revenues will nearly double from now to 2018, hitting $15 billion. Yet growth challenges persist, and some markets are maturing at a much faster pace than others.
In a recent report by Ooyola and global research consultancy MTM exploring the programmatic video landscape in the U.S., U.K., Germany, France, and Sweden, four factors stood out as impacting programmatic development in these markets:
1. Consumption shifts. Ad agency executives in France and Germany identified the lack of a consumer shift to multiscreen and on-demand viewing as the most significant obstacle to future programmatic video progress. The report cited several research sources indicating that France and Germany, as well as Sweden, all lag in overall daily online hours compared to the U.K. and U.S.
The report also noted that the three markets also fall behind the U.K. and the U.S. for non-linear, VOD viewing on TV. However, the report cited research data indicating that Sweden’s Millennial population is moving away from linear TV viewing at a faster clip than all of the other markets, so expect the country to catch up to the U.K. and U.S. more quickly.
In Germany, a small number of broadcasters dominate the video ad market, and with their market position they have been able to maintain traditional direct ad sales. The country’s risk-averse culture is also seen as inhibiting experimentation with programmatic video versus other markets. However, the greater digital video consumption that is sure to come is seen as a catalyst that will help overcome these issues and push the market deeper into using programmatic video technology.
2. Digital access. Underpinning all of this is the availability of broadband to push consumers away from traditional TV experiences into the digital video space. The report cited numerous research sources that Germany currently has a much lower penetration of fixed broadband and smartphones than the other markets, inhibiting adoption of multi-screen video viewing and the subsequent programmatic video ad market.
France is not much further ahead, but it stepped into programmatic early.
Meanwhile, the report cited research that among the five markets, Sweden (the smallest) enjoys the highest penetration of smartphones and fixed broadband; it also has the fastest growth rate in its
online video market and the largest programmatic growth potential.
3. Data, privacy, and regulation. Meanwhile, research participants in the U.K. and the U.S. cited data, privacy, and regulation as more important components influencing programmatic video uptake. The report noted that ad blocking has risen in part due to data and privacy concerns.
The 2018 General Data Protection Regulation (GDPR) that will become law in the European Union will have major implications on the use of data and the expansion rate of programmatic video. Germany’s strict privacy laws could spur the country to develop even tighter controls on consumer data collection.
Conversely, France’s Sapin Law is seen as propelling greater transparency over ad data and transactions, setting the stage for further adoption of programmatic. Ultimately, the study participants saw data, privacy, and regulation issues as potential drivers of innovative approaches to delivering a higher-quality video ad experience for consumers -- enabled by programmatic methods.
4. TV and video ad market convergence. Overall, executives across the five markets believe the converging TV and online video market is also going to drive programmatic video expansion over the next few years, particularly in the more advanced U.K. and U.S. markets. Buyers are demanding the same guaranteed volume in digital that they receive in the linear world, and sellers want the flexibility to maximize their revenue opportunities across channels. This all foretells greater integration between linear TV and digital video transactions, with more programmatic gains to come.
Programmatic video is the future. Companies with vested interests should keep their eyes on regulations, technological advances and consumption trends to stay ahead of the curve. Think about new ways to improve the viewer ad experience and optimize programmatic and data-driven advertising through fresh creative approaches. And, expect to see all markets continue to move towards the more holistic transactional capabilities that programmatic technology supplies and demands.