IAB Europe’s annual Attitudes to Programmatic Advertising Report is a comprehensive analysis of the European programmatic landscape, covering trends, drivers of and barriers to growth, and forecasts for the future for 31 markets. If you are working in programmatic, we recommend that you read this report. To make it easier, we’ve put together the key findings here:
- Most buyside decision-makers agree that data and targeting efficiencies drive their programmatic investments.
- With the rise in advertiser investment in programmatic, ads.txt inventory purchasing is increasing, as is awareness.
- The trend of in-housing that the industry was talking about is now moving in the opposite direction as advertisers with an in-house model have decreased from 38% (2019) to 20% (2020).
- Now, the buy-side continues to evolve towards hybrid models. In 2019, 15% of advertisers stated that they had a hybrid model for programmatic trading. This has increased to 30% in 2020.
- When looking at barriers to programmatic investment, supply chain transparency is a primary concern for advertisers.
- There is a continued push for a safe, quality advertising environment.
- Advertisers wish more transparency and clarity on technology costs.
- Advertisers appreciate lower costs, while agencies appreciate the availability of premium inventory.
- The impact of data protection regulations and browser cookie controls contextual targeting and the use of first-party data have become more common.
Investments and strategies
Digital advertising budgets continue to increase, with programmatic once again benefitting from greater investment. The outlook is also positive with the majority of all stakeholders expecting an increase in investments over the next 12 months. The growth is likely to come from areas other than display; Digital connected TV stands out as the clear winner in the study. Although investment in it is relatively low so far, 70% of advertisers and 61% of agencies expect Connected TV to be one of the most important programming growth areas over the next 12 months.
The trend of in-housing that the industry was talking about is now moving in the opposite direction as advertisers with an in-house model have decreased from 38% (2019) to 20% (2020). Now, the buy-side continues to evolve towards hybrid models. In 2019, 15% of advertisers stated that they had a hybrid model for programmatic trading. This has increased to 30% in 2020. In-housing challenges reside around skill sets and technology, which the hybrid model seems to address. Programmatic investment has grown rapidly in recent years, which has made it difficult for advertisers to find the expertise they need in their own team. Two out of three advertisers say the hybrid model is driven by a desire to take control of operational level as well as cost savings.
Publishers are also concerned about sufficient in-house expertise, but also optimizing campaigns and valuing and mapping technology partners were seen as barriers for in-housing. Technology challenges prevail with publishers as more than two thirds (67%) of those without an in-house strategy, and not considering one, cite both difficulties in understanding the technology requirements and keeping up with changing technology as the key reasons.
Drivers & barriers
As first reported last year, most buyside decision-makers agree that data and targeting efficiencies drive their programmatic investments. Among advertisers, ‘better use of data’ was the number one reason. Since last year it has become much more impactful. Jumping from 69% in 2019 to 80% in 2020. Better targeting, cheaper inventory, and flexibility were other main factors mentioned by advertisers and agencies. Among publishers, efficiency was also a significant factor, but programmatic also helped them get more revenue from their inventory, thus increasing the value of the media.
Buyers see the challenges of supply chain transparency as the most significant barriers to growth. Inventory management, costs and brand safety also point out among advertisers. Privacy requirements as well as cookie changes are a concern; more than half of advertisers already see privacy concerns as a barrier to buying (2019, 14%). There is also a growing concern among publishers about the implementation and reporting of campaigns in the future without cookies. The most significant obstacle to growth among publishers was the restriction of cookies. In addition to cookies, publishers see technology costs as a barrier to investment.
Measurement and data
Programmatic measurement continues to align with non-programmatic. The majority of all stakeholders use the same success metrics for programmatically traded display campaigns as those traded non-programmatically. Sales KPIs continue to be the key metric for evaluating programmatic campaigns. 49% of agencies cite sales KPIs as the top metric used for evaluating programmatic campaigns. Brand metrics such as brand awareness and purchase intent have also increased in use amongst advertisers and agencies suggesting more brand campaigns are being delivered through programmatic means. Programmatic buyers are taking advantage of efficient programmatic pricing to optimise toward conversions. For the first-year advertisers and publishers’ primary focus for programmatic campaigns has shifted to viewability, with agencies also viewing this as a high priority.
First party data continues to dominate. Nearly 90% of agencies are currently using first-party data compared to 80% in 2019. There has also been an increase in the use of third-party data amongst agencies; 84% in 2020 compared to 77% in 2019. The number of agencies looking at contextual targeting as a solution given the impact of data protection regulations and browser cookie controls has increased from 57% in 2019 to 71% in 2020. This is also the case for advertisers - 70% in 2020 compared to 62% in 2019. Three quarters of agencies are also looking at leveraging first party data whilst 45% are considering identity solutions. For publishers, the key solution is leveraging first party data (71%) followed closely by contextual targeting (68%).
Future of programmatic
From an advertiser perspective, there are clear signals of the uncertainty of the times. Year over year optimism relative to an increase in their programmatic investment in the next year is down to 40% this year (from 74% in 2019). That being said, fully half (50%) of them are still forecasting maintaining the same spend levels. Similarly, agency confidence in increasing programmatic investment in 2020 has dipped down to 58% (down from 92% in 2019). Almost a quarter (24%) think their investment levels will stay the same. There are still bright points in the ecosystem, specifically in the realm of publishers. Publishers’ positive outlook is reflected in the fact that 83% of them foresee an increase in revenue from programmatic trading in the next 12 months.
As far as growth areas are concerned, one clear winner stood out across all others: Connected Television (CTV). The rapid growth and staying power of CTV has also been identified as a trend in a recent Adweek article, which showed how usage remained high, even as COVID-19 restrictions eased. 2020 has certainly been a year full of unexpected developments. There is no doubt the global pandemic has played a significant role in these forecasts, especially as it relates to a decrease in DOOH (digital out of home) and an increase in CTV and audio, which have been accelerated by COVID 19-driven consumer behaviour.
Source: IAB EUROPE: Attitudes to Programmatic Advertising -report. You can find the full report here.