By Barry Flynn, Contributing Editor
Programmatic real-time bidding (RTB) and dynamic ad insertion (DAI) are the two advertising technologies that currently attract most media agency interest in Europe, according to a new study from strategy and research consultancy MTM London, sponsored by Adobe.
Presenting the findings at Hubble Media’s Future TV Advertising Forum in London, Jon Watts, MTM’s director and co-founder, noted that there was also high interest in DAI into VOD and ‘programmatic direct or private exchanges’ (where, unlike RTB, there is no auction process and the link is directly between the buyer and the publisher’s ad server). However, interest in other innovative technologies such as ‘telescoping’, audio watermarking or content recognition, and interactive TV tailed off rapidly after that, he said.
“I guess that the big finding from the depth interviews is that these other formats […] just are really difficult to scale,†said Watts. “I think agencies have real difficulties trying to find enough quality inventory that they can buy quickly and easily to get what they want.â€
MTM also asked respondents where agencies were planning to spend more money on adtech in 2015, and found that over 80% expected to increase their investment in programmatic – either through direct or private exchanges or RTB.
“It’s pretty clear that programmatic is what’s driving the next wave of investment,†noted Watts. While in the UK, programmatic video was the least well developed of the video formats, “it is growing very fast and […] you can see what agencies envisage to be a year of even more significant growth.â€
By contrast, around 20% fewer respondents anticipated spending more in 2015 on DAI into VOD or DAI into linear TV.
“We think, having spoken to some of the agencies, that’s mainly because they’re still in a test and learning phase,†said Watts. “Obviously in the US now we have some very big deployed dynamic ad insertion systems on big cable networks. But in the UK we’re really at a much earlier stage. It’s the same across much of Europe.â€
The study showed that 75% of respondents were already investing in DAI offerings, and over half in both linear and VOD DAI, but just 6% were only buying linear.
Watts concluded that it remained “very hard to buy linear TV ad insertion [in Europe] at this point. There’s just no inventory out there, the platform is still not mature. It’s coming but there’s a way to go.â€
Looking forward, on average respondents believed that 18% of the TV advertising market would shift to DAI by 2017, but estimates ranged from 2% of TV ad spend to 30% by that date.
Respondents considered there were still important barriers to DAI adoption, particularly on the ‘sell’ side – i.e. the TV platforms, Watts indicated.
“I think the big message that came away from the in-depth interviews is that the buy side [i.e. the agencies] is ready,†said Watts. “As and when there is dynamic advertising inventory available at volume and the ROI is proven, agencies will spend – we’re pretty confident of that. Certainly, when you look at the US, that’s the story. But the sell side isn’t yet ready to deliver the kind of volume that agencies are really looking for.â€
The MTM research, which was conducted in November 2014 for distribution at the Future TV Advertising Forum, comprised two separate elements: a qualitative one in which interviews were carried out with experts from major media agencies, covering TV, digital, strategy and research; and a quantitative one, in which an online survey was distributed to senior executives at major media agencies in the UK, France and Germany. 44 respondents completed the survey. Download the full report here