IAB Europe Reveals Advertisers With Programmatic In-House Models Are Declining

The latest findings from IAB Europe’s Programmatic Advertising Spend Research reveal that revenue from programmatic advertising models grew by 23% in 2019, topping €23bn -- with 77% of display and more than 50% of video now traded via programmatic methods.

Despite the increase, brands are relying more on experts and outside companies to drive performance. The trend of bringing programmatic functions in-house continues to decline, as advertisers with in-house trading desks fell from 38% in 2019 to 20% in 2020.

IAB Europe also released the Programmatic Advertising Study 2020. The survey received 350 responses between May and July 2020 from advertisers, agencies, publishers and ad-tech vendors in 31 markets. These companies have pan-European and global active models.

More than half of the respondents manage annual advertising budgets of €1m or more.

An online survey was used with the help of the national IAB network to ensure a representative sample across European markets to gain results for the IAB Europe Programmatic Advertising Study 2020.



The reason for the decline may be a lack of expertise in this area. Some 64% of agencies without an in-house model cite difficulty in hiring people with the right skills. Many see this as the key barrier to not developing an in-house model.

Half of advertisers do not consider an in-house model, citing as key barriers the difficulty in hiring people with the right skill set and difficulties in training people adequately.

Publishers, at 40%, also are concerned with hiring the right skill sets, but 40% see campaign optimization and 40% see assessing and vetting technology partners as equal challenges.

Some 67% of publishers without an in-house strategy, or not considering one, cite difficulties in understanding the technology requirements and keeping up with changing technology as the key reasons.

Advertisers continue to move toward a hybrid model. In 2019, 15% of advertisers stated that they had a hybrid model for programmatic trading. This percentage has increased to 30% in 2020. 

Advertisers found that better use of data provided greater results and performance for dollars invested in programmatic media.

Brands said that better use of data was the top driver for programmatic investment for European companies.

The impact increased from 69% in 2019 to 80% in 2020, according to data released by IAB Europe. The majority of agencies cited targeting efficiencies as the number one driver. 

Still, barriers to programmatic advertising exist, with supply-chain transparency rated as the primary concern for advertisers.

They also reported a need for greater control of inventory at a lower cost and are demanding transparency and clarity around technology fees from partners.

To alleviate cost concerns, nearly two-thirds of ad-tech vendors report making investments to offer a fully transparent business model.

There are growing concerns around connected television (CTV).

The report showed that currently, investment in CTV remains low, with 60% of agencies and advertisers saying they are investing less than 20% of their overall programmatic budgets, but more growth was cited for 2021.

For the first time, respondents were asked about the percentage of their overall programmatic advertising budgets invested in CTV. Some 60% of agencies and advertisers said they were investing less than 20%. Some 73% of publishers said they were not investing anything.

Despite the relatively low investment in CTV as a percentage of overall programmatic investment, consumption of OTT content is on the rise, and CTV is one of the fastest-growing environments for consumers to access this content.

In fact, 70% of advertisers and 61% of agencies believe CTV will be one of the key programmatic growth areas over the next 12 months, according to findings of the study.

Publishers are divided between audio at 46% and CTV at 46%. Some 40% of advertisers believe audio will drive growth. Digital out-of-home continues to gain momentum, with nearly one-third of agencies believing DOOH will drive growth.

Brand safety was cited as “significantly less” -- of a barrier to programmatic investment in 2020 compared with the past. It dropped from 34% in 2019 to 10% in 2020 for advertisers and 27% in 2019 to just 9% in 2020 for publishers.

IAB Europe cites industry advancements and an increase in fraud protection as reasons.

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