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Closing the Programmatic Gap the Changing Digital Advertising Closing the programmatic gap The changing digital advertising ecosystem in Germany Closing the programmatic gap | The changing digital advertising ecosystem in Germany Closing the programmatic gap | The changing digital advertising ecosystem in Germany Executive Summary 3 Programmatic in Germany on the rise? 4 Consolidation everywhere? Executive How to navigate the heterogeneous ecosystem 7 The hunt for data, analytics and real-time technology 10 Summary Play to win – Leverage audiences and scale (together?) 12 Players have to act rapidly to win in a fast-changing Glossary 14 environment The programmatic market in Germany analytics capabilities and real-time enabling End notes 15 is expected to kick off and to grow to technology stacks. Those capabilities are EUR 2.8 bn by 2019, offering a significant set to be acquired externally. Cooperation market opportunity. New players enter across Media Houses and other players in a dynamic market dominated up to now the ecosystem could be a lever against the by hot shots like Google and Facebook. In two advertising heavyweights, but the win- order to succeed, traditional Media Houses dow of opportunity is closing fast. Telcos and Telcos have to seize the current and Media Houses have to act quickly to opportunity to capitalize on the tremen- capture their value share in programmatic. dous data assets via a combination of 02 03 Closing the programmatic gap | The changing digital advertising ecosystem in Germany Closing the programmatic gap | The changing digital advertising ecosystem in Germany Programmatic in Germany on the rise? Programmatic advertising is the current hype in advertising, and a shift towards trading inventory programmatically has a tremendous impact on the advertising market. Looking abroad (but here in Germany too), The German market is Fig. 1 – Programmatic maturity across markets a strong tandem has crystalized. Digital advertising is increasingly dominated by behind the US/UK markets Uncertainty Development Maturity walled-garden players like Google and by two to three years. Regions Facebook, and these players are writing a unique success story (for example, Looking over to the US the market is Facebook’s advertising revenue grew significantly ahead in the development of APAC & LATAM Germany, France & Rest of Europe UK, USA from USD 11.5 bn to USD 17 bn in 2015, the mobile advertising landscape. Mobile Typical duration driven mainly by advertising via mobile digital advertising spending overtook online 1–2 years 2–3 years 2–3 years devices). The reasons for their success are spending in 2015, reaching USD 32 bn rather simple. Firstly, both players have a (online USD 28 bn) according to eMarketeri. Activity vast set of customer data. Due to log-ins, Programmatic already dominates display The first phase of development in As the market matures programmatic In mature markets the mutual benefit of the information they have about their advertising buying and with regard programmatics is characterised by a expands to more channels (esp. mobile programmatics is firmly established. audiences and individual users is a real to mobile, the programmatic share is disorderly market with very low CPMs. and video). A greater variety of measure- Offerings across all channels are deve- Multinationals enter as one of the first ment tools becomes available and loped and programmatic is leading in advantage. Secondly, they have developed already at almost 70 %ii. The top three players and companies with quantitative volumes of premium inventory traded non-customized content. Players can of corresponding analytics capabilities walled gardens (Facebook, Google and offerings develop fast. Publishers hesita- programmatically grow significantly. execute campaigns across platforms to turn this data into real insights and Twitter) have made up over 43 % of digital te primarily as they fear cannibalization Programmatic Direct may also act as and also carry out brand ad- thirdly they have all this backed by a strong advertising spending in the USiii. of existing products. Private exchanges a temporary arrangement. vertising. technology base. are just starting to develop and thus have low liquidity. Facebook and Google Source: Deloitte analysis capture half of the digital advertising market So the question is: will Facebook and Google be the only winners or can traditional Media Houses (and others) with their various online and mobile activities compete successfully in the German market? 04 05 Closing the programmatic gap | The changing digital advertising ecosystem in Germany Closing the programmatic gap | The changing digital advertising ecosystem in Germany Abb. 4 – 2,5(10) -spaltig, Breite 154,417 mm Abb. 4 – 2,5(10) -spaltig, Breite 154,417 mm • La Place Media is a JV of five of France’s biggest media players • LaAudience Place Media Square is isa JVa cooperationof five of France’s between biggest eleven media French players media houses (incl. Les Echos, M6 Group, Group Le Monde) • Audience Square is a cooperation between eleven French media Fig. 2 – Programmatic share of display advertising across selectedhouses markets (incl. Les Echos, M6 Group, Group Le Monde) The situation is quite similar in the UK. Fig. 2 – Programmatic share of display advertising across selected markets Digital mobile advertising spending is expected to overtake online in 2016iv. US (in %) UK (in %) DE (in %) Consolidation US (in %) UK (in %) DE (in %) Compared to those impressive numbers, 70 both mobile and programmatic are still 64 70 behind in Germany (mobile accounting 64 everywhere? for 31 % of digital advertising spending in 2015) but potentially catching up in 2017v. 49 49 Total programmatic share is at ~23 % but 45 49 49 How to navigate in the heterogeneous we expect the programmatic share also to 45 ecosystem catch up in the next three to four years. 23 Consolidation everywhere? The programmatic market However, we see the German market at 23 is highly dynamic and many players (traditional Media an inflection point now with significant Houses and new entrants) see their chance by eng- growth potential projected for the coming aging in programmatic and securing their portion of years. The German programmatic market Abb.2015 4 – 2,5(10)2019 -spaltig,2015 Breite2019 154,4172015 mm 2019 the above-described opportunity. However, as the is expected to grow by 39 % p.a. by 2019, Abb.2015 4 – 2,5(10)2019 -spaltig,2015 Breite2019 154,4172015 mm 2019 market matures, players will have to reap economies of to EUR 2.8 bn and thus catching up with • La Place Media is a JV of five of France’s biggest media players Abb. 4 – 2,5(10) -spaltig, Breite 154,417 mm scale to stay profitable and a consolidation process will the US and UK markets, creating significant Source: Deloitte analysis • Audience Square is a cooperation between eleven French media houses (incl. Les Echos, M6 Group, Group Le Monde) set in. Possessing unique data assets such as log-ins is opportunities for all players the share of Source:Fig. 3 – Deloitte Programmatic analysis advertising market DE across selected regions Fig. 2 – Programmatic share of display advertising across selected markets decisive in such an environment as it enables players mobile could increase significantly, reading Fig. 3 – Programmatic advertising market across selected regions to occupy niche markets in the ecosystem. The mere ~37-59 %vi. US (in B€)UK (in B€) DE (in B€) accumulation of inventory on its own is not as critical for building complete and universal data sets around Programmatic in Germany is expected to USUS (in (in%) B€29,4)UUK (in %) K (in B€)DE (in %) DE (in B€) CAGR customers and audiences. kick off since Media Houses have overcome +33% 29,4 47% CAGR their reluctance: 9,5 +33% 47% 70 Existing collaborations 9,5 64 3,3 Abb. 4 – 2,5(10) -spaltig, Breite 154,417 mm 69%ExistingEmerging collaborations collaborations Fig. 4 – Programmatic value chain • Media Houses understand that 3,3 2,8 2,8 EmergingNo identified collaborations collaborations • La Place Media is a JV of five of France’s biggest media players 69% CAGR 43% programmatically traded inventory 49 +34% 49 2,8 2,8 • Audience Square is a cooperation between eleven French media No identified collaborations CAGR 53% CAGR 41% houses (incl. Les Echos, M6 Group, Group Le Monde) 45 43% +39% must not necessarily be cheaper than +34% 63% 53% CAGR 41% inventory sold directly 31% +39% 63% Fig. 2 – ProgrammaticMaturity share of displayMedia advertising Agency across selected markets Marketer Media house 1,0 +/– 22% 31% 57% 0,8 • (Supply-) technology has become mature, 1,0 59% +/– 22% 77% 37% allowing not only for auction-based deals 57%23 88%0,8 Print Print 77% 23% 12% 59% Print (as in early days) but also for private deals 88% 37% US (in %) UK (in %) DE (in %) 2015 2019 2015 23% 2019 2015 12% 2019A 2019B marketer publisher as well as other forms of transaction 2015 2019 2015 2019 2015 2019A 2019B 70 • The industry has developed a commonly- Radio Radio 2015Online2019 2015 2019 2015 2019 Radio 64 used set of standards (OpenRTB marketer station standards from IAB), making it easier to OnlineMobile integrate with the ecosystem Source:Mobile Deloitte analysis 49 49 TV Advertiser Agencies TV station 1 Source: Deloitte analysis 45 Source: Deloitte analysis 2 Out of OoH home 23 inventory Digital Digital DSP Exchange SSP 3 inventory Existing collaborations 2015 2019 2015 2019 2015 2019 Emerging collaborations 4 No identified collaborations Source: Deloitte analysis 5 Source: Deloitte analysis 06 07 Existing collaborations Emerging collaborations No identified collaborations Closing the programmatic gap | The changing digital advertising ecosystem in Germany Closing the programmatic gap | The changing digital advertising ecosystem in Germany The ecosystem is 3 Agencies move downstream into Norwegian’s Telenor acquired Tapad, a characterized by five AdTech models Verizon absorbs cross-device re-targeting provider, to Ströer’s shopping former Internet “take a position within the rapidly growing spree key developments.
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