Programmatic advertising in Europe: Six trends for 2016

January 22, 2016 — by Louise Quan    

Viktor Zawadzki, MediaMath’s Regional Manager, DACH (CEO of Spree7 before its acquisition) provided his predictions on the future of programmatic in 2016. Viktor predicts that there will be an increase in consumer-centric campaigns, programmatic TV will be on the rise and programmatic advertising will be even more widely used in Europe. Furthermore, he expects more players to enter the market and more mergers and acquisitions in the industry. This article originally appeared in German via iBusiness – below is a translated version.

1) Consumer-orientated campaigns with the Marketing Operating System
Advertisers are becoming increasingly professional at leveraging first-party data from their own CRMs, website visitors and offline events. For example, FMCG companies are co-operating with retailers, and tour operators with their service providers, all with a view to underpinning the quality of their own data sets. Which is why, for the foreseeable future, programmatic is no longer just a path or method in the marketing plan. Rather, it has become the Marketing Operating System, the very foundation of marketing campaigns. It is an approach that allows campaigns to be increasingly consumer- and user-centric, regardless of the channel or the motivation of the advertisers. The result is that target groups are being addressed in a manner that is not only specific, but that also goes beyond conventional channels.

2) Programmatic goes premium
About 50% of the trade in premium inventory in the UK is now programmatic. This number is representative of other European countries as well, with Germany also confirming the trend. By the end of 2016, we expect up to 40% of trade in premium inventories to be programmatic.

3) Programmatic TV is just the beginning
Compared to other channels, Programmatic TV remains relatively insignificant. However, we can still assume that the overall trend is towards automated campaigns, which also applies to TV, print, and out-of-home. Magnifying this development is the fact that data sets are not only larger, but are improving in quality at the same time. Programmatic TV could be “old hat” as a topic as early as next year. By then we may well be coming to terms with the Internet of Things from an advertising perspective, in particular with a view to connected cars and other connected devices.

4) New business and the entry of strong new players
The coming year will increasingly see major brands taking advantage of automation technologies and establishing these internally. This opens up a new field of business for small, lean and consultancy-orientated providers. After all, brands need partners to help them design and implement their projects. We will also see the rise of data-driven publishers: Amazon, eBay and Rakuten already operate highly successful, data-driven online stores. We expect to see other candidates from the online business entering the stage, but also the brick-and-mortar retailers as well. Apart from monetising their data, retailers could position themselves well with the help of co-operations. This may well be realised through an acquisition, for example the way the supermarket chain Tesco bought-up the Berlin start-up Sociomantic, or Zalando together with Metrigo. Major TV stations such as Pro Sieben Sat 1 are also muscling-in on the market and will be shaping the programmatic business models of the future.

5) Attribution models as a central tool for advertisers
The trend towards multi-channel and multi-device campaigns requires advertisers to perfect their attribution models. It won’t be long before anybody unable to identify the touch-points on a customer journey, especially where budget comes into play, will start to fall behind the competition. In particular the campaigns for merchandise or money transfers with a high demand for security reveal that desktop purchases are often preceded by research on mobile devices. The success of advertisers will depend critically upon the effective valuation and remuneration of their pitch touch-points in their media planning, in order to secure conversion rates. The forthcoming developments in the area of attribution should finally initiate the rise of mobile, which in recent times has merely been a question of getting attribution right.

6) Expect more takeovers by global players
Given the global demand for shopping pleasure, the market for programmatic providers in Europe is sure to consolidate further. Even today, locally active programmatic service providers who experience interest from media and commerce are confronted by global operators with a focus on marketing technology. The independent trading desks who produce a continuous flow of innovation are particularly attractive for acquisition by global players.