As OTT (over-the-top) video services like Netflix, Youtube, and Amazon Video are penetrating into more European households, cord-cutting has become a prevailing phenomenon that is not only limited to the US. According to eMarketer, digital video viewers will represent over half of the total population of Western Europe this year. For now, the largest digital video penetration rate is seen in English-speaking countries, as a large majority of online content is still coming from the States. But as the European market continues to adapt to this quickly growing trend, we expect to see digital video advertising become as prevalent as it already has become in the US – where digital advertising has already surpassed TV, and video ads are preferred over traditional display with 2.2 times higher CPMs. Based on recent industry data and our own expertise on the video advertising market, we came up with 5 predictions that we expect to see in the European media space in the coming year:
1. Increasing video consumption drives digital video ads spending
According to IAB Europe, online advertising grew 13.1% to a market value of €36.2 billion in 2015, which surpassed the European TV market of €33.3 billion for the first time in the history. This increase hasn’t shown any signs of slowing down in the coming years due to the surge driven by video, which grew 35.8% to €2.3 billion. For the foreseeable future, we expect to see more investment in the creation and distribution of video content, which will lead to more video ad inventory and more opportunities for revenue.
2. Programmatic will reign
Programmatic online video advertising has grown over 16 times from €22 million in 2012 to €375 million in 2015, and is expected to reach €2 billion in 2020 – 51.4% of the total video ad revenue. While a majority of programmatic investments are coming from UK, Germany, France, Italy, and the Netherlands, we expect to see more European countries like Ireland, Bulgaria, and Poland to catch up as more programmatic video inventory becomes available.
3. Short, in-stream pre-roll ads will be the norm
The Q1 2017 survey conducted by IAB among 700 European publishers, agencies and advertisers reveals that in-stream pre-roll, out-stream in-page, and broadcast 30 second spot are the three dominant formats across all devices. In particular, in-stream pre-roll video ads seem mostly likely to be favored – over 80% of surveyed advertisers and agencies confirmed that they increased their use of pre-roll in the last 12 months, especially on mobile devices. To cater to mobile viewers’ consumption habits, we’re looking forward to seeing more short-form mobile video ads – 10 seconds, to be more specific, according to our recent report on consumer video ad preferences.
4. Standardized metrics will make viewability a top priority
When it comes to video ads, the demand for a standard to define viewability metrics is worldwide. IAB determines that 50% of video ads’ pixels must be visible in the browser window for a continuous 2 seconds. But for social media like Facebook, Instagram, a view has to be longer than 3 seconds. Marketers and advertisers reply on metrics to measure viewer engagement and campaign effectiveness, so having a set of standards for metrics including viewability, site quality, loading time, and bounce rate is much needed for a more transparent and regulated communications environment. Once there is more regulation in what justifies a viewable view, we expect to see more publishers experiment with different placements for digital video players to improve viewability and user experience on their desktop and mobile sites, such as implementing above-the-fold and sticky video players.
5. More videos on mobile means less ad blocking
The majority of video revenue is ad-supported, and this model is increasingly under threat due to the rapid rise of ad-blocking technologies. However, European publishers have actually noticed a drop in ad-blocking rates thanks to their increasing presence on mobile, where ad blocking is less prevalent and viewers are giving mobile videos their full attention. Therefore, investing more in mobile video advertising and creating video content and ads that are optimized for mobile screens will be the key assist in the ad blocking battle.