The digital ad market in Europe has achieved a significant milestone by surpassing €100 billion in annual expenditure for the first time last year. Connected TV (CTV) and retail media were the primary drivers of growth.
Daniel Knapp, chief economist at IAB Europe, has indicated that the shift, which was delineated at the Interact conference in Brussels last week, is partially coming at the expense of search budgets.
The announcement was delivered amid economic uncertainty. The mood was defined by the phrases “wait and see,” “short-termism,” and “peak uncertainty,” which were used by ad executives from GroupM, Kraft Heinz, Axel Springer, and even the European Commission.
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However, the €100 billion milestone was a pivotal moment, as marketers redirected their attention to performance-driven, measurable channels, with transparency serving as a primary concern.
“Transparency and partnership are the primary objectives during periods of uncertainty.” “I am most appreciative of [partners] who are attentive to the requirements of advertisers,” stated Alison Keith, Kraft Heinz’s global director of media excellence.
Keith also suggested that brands may be more interested in the workings of their partners in order to feel more secure about the allocation of their media budgets.
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Investigate further: Video advertising expenditures are a significant factor. CTV is succeeding because it embodies the current requirements of marketers: transparent, brand-safe performance at scale.
According to Knapp, video was a significant factor in the development of European ad spend, with a 24.5% increase last year. Broadcast video on demand (BVOD) was particularly noteworthy.
This year, local streamers such as ITVX and RTL+ have experienced double-digit increases in ad revenue, which is comparable to their global competitors. This highlights the demand for regional streaming ad inventory among advertisers.
Keith expressed his enthusiasm for the process by which traditional media outlets are transforming themselves to become more digital. “I firmly believe that television, and consequently, cable television, is effective.”
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Knapp also reported that retail media spend had a breakthrough year, increasing by 22.2% and surpassing €10 billion in Europe for the first time. Additionally, it absorbed a portion of ad spend from search.
However, there were those who advised marketers to prioritize their brand investments in order to ensure that retail media is truly effective. Keith stated, “It is not sufficient to simply place your brand on Tesco and hope for the best; you must continue to cultivate the desire for your brand.”
Colin Lewis, co-founder of Retail Media Works, exemplified that maxim with data from another region: Coles, one of the nation’s largest grocers, did not feature Australia’s primary cheese brand in the top 10 “cheese” searches on its website. “This is a brand that is present in the refrigerators of all individuals in the country,” he stated.
Future Prospects: Growing Pains
Shoppable CTV ads were the top choice among marketers at Interact when they were asked to vote for the area of CTV they were most enthusiastic about this year.
However, a significant number of individuals suggested that the infrastructure of retail media had yet to be fully developed, which would prevent cross-channel innovations from reaching their maximum potential.
“The potential for commerce data to permeate the rest of the industry is incredibly thrilling; however, the infrastructure must be developed to facilitate this,” stated Marie-Clare Puffett, the industry development and insights director at IAB Europe.
However, the enthusiasm for shoppable CTV ads indicates a critical item on marketers’ wish lists in the current economic climate: the integration of retailers’ shopper data with CTV’s scale to accomplish branding, performance, and closed-loop measurement in a single, efficient, and transparent package.
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