PubMatic – an independent technology company delivering digital ad supply chain – commissioned the company to survey 200 U.S. advertisers and 100 UK advertisers between June and July this year. These advertisers spend a minimum of $25 million annual in the U.S. and £8.3 million in the UK on video ads and “influence programmatic CTV/OTT ad strategy.” Advertiser Perceptions also conducted four phone interviews about CTV and OTT video ad buying, transparency and Content Object signals.

Data signals such as Content Object give brands information about the content and context of media placements bought programmatically, and the study says that publishers who provide this additional transparency enjoy increased demand.

The survey finds that 62% of U.S. brands and 82% of UK brands agree that they would increase their spend with partners that provide data such as Content Object signals. Additionally, 57% and 64% of U.S. and UK brands respectively stated they would pay a premium for the transparency Content Object signals gives them.

According to Advertiser Perceptions, in-depth interviews with advertisers suggested Content Object signals are critical for advertisers to understand what they have already purchased, however only about half of U.S. advertisers and six in ten UK advertisers, current use Content Object in their media buys.

Nicole Scaglione, VP of CTV and OTT Business at PubMatic, said: “This study proves the critical value of transparency to increase demand for programmatic CTV. The supply chain of the future uses data to bring advertisers closer to their audiences, in turn creating more demand for publishers. In particular, Content Object provides a key path for publishers to share signals that give media buyers the contextual information they need to meet campaign goals and spend more in CTV.”

Nicole Perrin, VP of Business Intelligence at Advertiser Perceptions, commented: “Programmatic CTV gives advertisers more targeting options, better measurability, and real-time decisioning. Our research shows that adding signals such as category and genre drive brands to increase spend, shifting from linear and other channels.”

The research company surveyed 500 marketing decision makers or influencers in the UK, France, Germany, Italy and Spain in July this year, and found that UK respondents showed more caution about raising their overall marketing investments compared respondents in the other markets.  However AudienceXpress notes that most will not ‘go dark’ and 53% plan to at least maintain their current levels of spend or increase it.

The report also found the customer acquisition is now the top marketing priority for 43% of UK respondents. The second most important priority for UK advertisers is revenue growth (38%) while fore UK agencies it is customer retention (34%).

Among UK respondents, 45% believe that reach is the number one driver for marketing success, with advertisers ranking targeting as the second most important (26%) and agencies choosing media channel selection (32%) and tailoring creative (30%).

The survey found that the audience targeting methods Advanced TV offers is considered the top driver of spend (28%) followed by the ability to connect with viewers across screens (25%). The biggest barrier to investing more in Advanced TV for UK advertisers was a lack of awareness (45%), however UK agencies (at a rate of 30%) state that it is an unwillingness on the part of clients to experiment with Advanced TV, that is inhibiting spend.

Stefanie Briec, Director, Head of Demand Sales UK & International AudienceXpress at FreeWheel, said: “Optimism for AVOD and FASTs among UK marketers closely reflects the collective enthusiasm of the EU5 markets, with on average almost nine in ten survey respondents planning to increase their levels of spend in these channels.

“Continuing to meet marketers’ demand for advanced technological capabilities, such as data-driven and audience-based targeting, will drive additional growth. These findings also highlight the importance of raising awareness, as well as the need to quantify Advanced TV’s performance and prove the value of adopting these impactful channels.”

However, approaching CTV media buying in exactly the same way you would with digital formats such as display, could have some detrimental impact affecting access to premium video inventory.

Critical conversations are now happening backstage about the best ways to deal with the convergence of the digital and TV landscapes. In our recent panel session at the Future of TV Advertising Global event we posed the question: CTV is Great, But Can TV (Really) Re-Invent Itself? By exploring the growth of CTV to date and the expectations broadcasters now face, we focused on what needs to happen in the next season of TV’s evolution.

The rising star

There’s no doubt CTV has made a name for itself. US ad spend for CTV grew by almost 60% in 2021 to total $14.4bn, making it something of a blockbuster. Meanwhile in Europe, 84% of marketers who participated in a FreeWheel survey* expected advanced TV spend to rise in 2022, with CTV in particular growing in double-digits in the UK, France, Italy, Spain, and Germany.

Now, the industry needs to prepare for what this growth means, as the rise of CTV will have significant ramifications for all stakeholders. In fact, for the value of premium video inventory to truly shine, some points must be carefully considered:

• The promise of “unique” demand: Many think that simply connecting platforms, selling premium video programmatically, and enabling header bidding will attract new buyers who are keen to purchase TV inventory similarly to digital display. In practice it’s more complicated and requires a collaborative approach between the buy and sell sides. For example, broadcasters that can make additional first-party data available to inform marketing decision-making will boost their appeal to media buyers.
• The call for supply path optimisation (SPO): There has been much discussion around SPO which attempts to minimise the many intermediaries and ensure the most direct access to publisher inventory. This has been a key TV strength, and while SPO might be needed in a complex and nebulous display environment, it hardly does in a premium context. Broadcasters such as Channel 4, ITV, or Sky have built their own advertising platforms and operating their private exchange prevents the dilution of value and ensures that buyers have an almost direct, transparent and optimal access to their inventory. In a sense, the TV industry invented Supply Path Optimization.
• The pot of gold at the rainbow’s end: There is often a view that, if display-like buying (ease of auctioning and high competition) can also be brought to linear TV, then broadcasters, through premium scarcity, stand to profit with CPMs remaining high. While this may look appealing, it goes against basic economic principle, as the fundamental behind programmatic trading need to change to be embraced by the TV industry and one must talk more about standardization than competition.  

   

  How will the narrative progress?

  Central to harnessing digital-like capabilities is data. In an industry that may soon be lacking identifiers (IDs), first-party data holds renewed importance. As Katie Coteman, Vice President, Advertising and Partnerships at Discovery says, “we need to have much more of a direct relationship with our consumers”, following not only the need for privacy-compliant data, but also how audiences are engaging with premium video content across platforms such as CTV, broadcaster video-on-demand, and subscription video-on-demand.

  To navigate a fragmented market, broadcasters require technology that enables data connections while protecting both consumer privacy and the value of first-party data. In the words of Paola Colombo, General Manager at Publitalia ‘80, “defining the rules of the game, the standards for addressable TV” are vital steps for market growth. Alongside standardisation, the ad industry needs a sustainable approach to identity resolution, data sharing, and data usage rights in the TV landscape.

  Against a backdrop of consistently developing user privacy regulations, it will be necessary to create tools and frameworks specifically designed for the future of TV. Broadcasters must ensure they continue to lead the way in building new and effective techniques, as well as trusted relationships. Veriça Djurdjevic, Chief Revenue Officer at Channel 4, shared how the broadcaster’s business strategy encapsulates this approach, through “shifting how we think about ourselves in terms of ‘pivoting to digital’, to ‘[prioritising] digital growth ahead of linear ratings’.”

  Although CTV has accelerated the evolution of the TV landscape, it is so much more than just a digital screen. It shares the premium quality, high engagement levels, and immersive content of TV, making it a standout performer when combined with its strong potential for data-driven capabilities. By building solutions that enable the use of data at scale, retaining ownership of their assets, and generating value for both buyers and sellers, the ad industry stakeholders can transform the premium video ecosystem and ensure that TV and CTV work in symbiosis.

  * ​The study was conducted between 23 July and 2 August 2021 with 577 marketers surveyed (comprising primarily of advertisers and agencies) in key European markets:  Italy, France, Germany, Spain and the UK, in collaboration with independent research company CoLab Media. Details available here.

   

Last year the UK experienced a £1.8B decline in ad spend, dropping by 34.1% in Q2 2020 during the first national lockdown. However, if ad spend in the UK continues to grow along the lines predicted by AA/WARC, it will signal the strongest ad trade recovery of any major European market.

Current figures already suggest a strong recovery, with spending on advertising reaching £7.7B in Q2 2021 – an increase of 86.5% from the previous year. With AA/WARC forecasting this figure will rise to £7.9B in Q4 2021 – the all-important Christmas season – the UK could experience its highest ever ad spend increase during this quarter, with an incremental rise of £929m on last year. Updating prior predictions for 2022, this latest report forecasts a 7.7% ad spend increase year-on-year.

Breaking the data down by media, AA/WARC reveals that TV ad spend saw a year-on-year change of +85.9% for Q2 2021 and +31.5% for H1 2021, with a forecast +22.9% change for the whole year. They also forecast an additional 0.6% year-on-year change for the whole of 2022. Notably, a significant portion of the increased spend comes from VOD, with +112% year-on-year change from Q2 2021 and +42.3% for H1 2021. The VOD ad spend year-on-year change is forecast to reach +34.1% for the whole of 2021 and +8.6% for the whole of 2022.

The speed at which the UK’s ad trade is recovering is made even clearer when compared to global figures. The predicted percentage increase in UK ad spend for the whole of 2021 is double that of the equivalent global figure (12.6%) forecast in WARC’s Global Ad Trends report. Compared to the global rise in ad spend of 23.6% in Q2 2021, the 86.5% UK rise during the same time, is astonishing.

Despite growth being forecast globally, WARC notes that only three regions – North America, Europe, and Asia Pacific region –  are predicted to have larger ad markets than they did prior to the pandemic, by 2022. The year-on-year growth for ad spend globally is forecast to be 8.2% in 2022, bringing the total global advertising market to above $700B.

James McDonald, Head of Data Content, WARC commented: “The latest data demonstrates bullish trade in the UK’s advertising sector despite potential inflationary headwinds and supply chain disruption in the run up to Christmas. Strong fourth quarter projections for TV – a medium heavily leveraged by retailers during the golden quarter – and search, which encompasses activity on ecommerce platforms, suggest it will be largely business as usual for the industry this year.”

The conversation began with a reflection on how the pandemic affected brands and the advertising trade. Patel emphasised the deficit of initial insight which could help brands navigate uncharted territory. He said: “I think the pandemic for many clients was tough, and rightly so. You didn’t know whether to stick or twist. There was little to no insight into how you deal with spending during a crisis.” Freedman highlighted the difficulties facing certain brands, when greater ad spend could not translate into increased sales in the short-term. Automotive manufacturers, for example, faced the dilemma of needing to maintain their brand, but simultaneously, retailers were closed, customers could not test-drive vehicles, and consequently, ad spend would have little effect on car sales. She posed an important question: what do marketers do when they can’t simply spend in order to sell product?

Happily, the plummeting of ad spend appeared to have been a short-term phenomenon. Grimmer referenced the recent WARC report that showed strong recovery for the UK ad trade, with spending on advertising reaching £7.7B in Q2 2021 – an increase of 86.5% from the previous year. He asked the panelists what factors they believed drove this remarkable bounce back. Nasr said that, while spending on Twitter by media buyers in Q2 2020 took a nosedive, the recovery was much quicker than he had anticipated.

One reason for this was brands’ greater access to information, insight, data and established econometric tools. This gave advertisers more confidence to spend, as well as time to test and experiment with advertising strategies in new market conditions. Another factor was the trade’s dawning realisation that there did not appear to be an end to the pandemic in sight, and no one was sure when the global economy would return to a state of normality.

Patel echoed this point, speculating that a greater number of companies understood that constricting their marketing budgets would have long-term detrimental effects on brand health. In the case of Sky Broadband, he said, “We haven’t been on brand for a year, so we knew if we continued, it would be a big problem.” Freedman recalled how the “fear of silence” became felt acutely not only by marketers, but the C-suite, who recognised that while savings could be achieved easily by cutting ad spend, the performance of their brands in the long term might be endangered.

Aside from the fear of silence, Patel explained that ad spend increased partly because the media cash that brands would have usually spent, but had saved instead, was released into the market as the pandemic progressed, and media buyers had access to lower entry points. He also praised marketing teams for building the case that ad spend during a crisis, when other brands are more reluctant to invest, gives initiative-taking brands a disproportionate share of voice in the market.

The view that advertising is an investment and not a cost was perhaps put most emphatically by Stacey, especially in the case of brands who are not only attempting to secure market share, but also to create a market from scratch. She said, “We should be arguing with FDs [Finance Directors] that the amount of money spent on advertising launch should be discounted over a certain amount of years like any CapEx. That’s a job for all of us.”

In October  last year, Nielsen – a data and market measurement firm – released a report estimating that, on average, it takes companies three to five years to recover equity lost because of halted advertising, and long-term revenue can drop 2% for every quarter a brand continues to stay silent.

Virginie Dremeaux, Vice President of Marketing and Communications International of FreeWheel commented, “The research findings reinforce the continued positive trend toward advanced TV identified in FreeWheel and CoLab’s 2020 survey, with a third of TV ad budgets reportedly being assigned to advanced TV channels in 2021 compared to a fifth last year”.

Breaking down advanced TV advertising spend into VOD, CTV and OTT spend, the study reveals that UK advertisers expect an increase across the board over the next year, by +15.1%, +8.8% and +14% respectively, while agencies forecast an increase of +5.2%, +9.5% and +6.2%.

While both UK advertisers and agencies foresee dedicating more budget to advanced TV, they rank the key drivers behind the spend growth slightly differently. 53% of agency respondents chose linear TV reach extension as a main factor, and 50% ranked ad effectiveness. Advertisers focused on advanced TV’s targeting capabilities across audiences (66%) and platforms (56%).

Across all UK marketers, the ability to measure ROI remained of signal importance – with 42% of those surveyed affirming it as a major factor in securing buy-ins, and 39% ranked the ability to gather data to optimise campaign performance in-flight, as highly important. Agencies and advertisers differ slightly in the weights they assign to the drivers that will unlock further budget, with agencies (47%) more concerned with access to deterministic exposure data as a basis for measurement, and advertisers prioritising data integrations (41%) and trusted third-party certification (37%).

Despite these minor differences, Virginie Dremeaux highlights the shared conviction among UK marketers, about the indispensability of advanced TV for advertising: “Critically, there’s increased recognition from both groups of advanced TV’s potential to reach highly engaged audiences in premium video environments through effective ad campaigns. With greater education and experience, I’m confident advertisers and agencies can continue to achieve the return on investment they need from these channels.”

Methodology: The study was conducted between 23 July and 2 August 2021 in key European markets:  Italy, France, Germany, Spain and the UK, in collaboration with independent research company CoLab Media. In the UK, the survey was completed by 102 marketing decision makers or influencers – 40% of respondents comprised advertisers and 29% agencies, with the remainder being media owners or others. A variety of agencies took part in the survey, from small independents to larger conglomerates: 27% of the agencies surveyed in the UK had over 500 employees.