• by Tobi Elkin  @tobielkin, May 11, 2016

New research from U.K. research firm MTM and commissioned by Ooyala shows that programmatic trading is poised to become ubiquitous for premium video across Western Europe and the U.S.

The research -- based on the perspectives of buy-side and sell-side executives representing major advertisers, agencies, ad-tech intermediaries, publishers and broadcasters -- identifies major market enablers and barriers to the growth of programmatic video.

To supplement its primary research, MTM conducted interviews, forums and surveys to gather insights on the state of programmatic as seen by hundreds of senior industry participants. The findings suggest that the industry is moving into a new growth phase in programmatic in which emphasis will shift toward quality, transparency, control, flexibility and collaboration.

The report also reveals how key markets compare with regard to their place in the transition. Among the report’s findings:

• The U.S. and the U.K. are the most progressive in adopting programmatic, currently trading 25% and 23% of all online video programmatically, respectively. Both countries see a 42% year-over-year growth in online video. This is driven largely as both regions see significant audience fragmentation and confirms that programmatic is an efficient means to attain on-par reach as pre-fragmented TV audiences.

• Sweden shows significant promise, as it has seen 59% year-over-year growth in online video with 12% of it currently sold programmatically. It has the largest growth potential, especially as Swedish audiences evenly split their time between online video consumption and traditional TV, whereas in other countries TV viewing usurps online by nearly double or more in some cases.

• Germany is lagging, trading only 9% programmatically today, with the lowest year-over-year growth in online video at 28%. Respondents suggest there is little pressure from the industry for change as limited key players own the majority of premium inventory in the region. Furthermore, there is notable rejection to adopt real-time bidding (RTB) in order to safeguard traditional models.

• While year-over-year growth of online video in France is close to Germany at 29%, the region has adopted programmatic more rapidly, currently trading 19% of all online video.

Walled-garden inventories from YouTube and Facebook are seen as a major barrier to the growth of programmatic, especially in the U.S. and U.K., a release stated.

Commenting on Google’s recent opening of AdX to outside exchanges, Braley said: “Google has trimmed the hedges to let more light through, but the wall remains. Header bidding is a publisher's effort to work around DFP (DoubleClick for Publishers) to increase demand and ultimately yield, but it compromised Google's ad exchange. It's not an end-all solution, but it is notable to see Google changing their ways due to pressure from publishers, and this is a step in the right direction,”
Scott Braley, general manager of Ad Tech at Ooyala, told Real-Time Daily via email.

Braley said private marketplaces (PMPs) continue to be a dominant method to trade programmatically, especially from Ooyala’s customers.

A few things surprised Braley about the research findings: For one, “seeing the juxtaposition of programmatic in varying countries: what's holding it back, what's allowing it to flourish, etc., was very interesting,” Braley said. In Germany, for example, a select few hold the key to the majority of premium inventory and don't have the pressure to change their ways. In addition, the notion that the relationship between buyers and sellers is adversarial was completely debunked in this report and process. In conversation after conversation, we saw true collaborative thinking and alignment rather than opposition,” Braley explained.

Braley said he's seeing buy-side and sell-side executives agreeing that programmatic is inevitable. “It's simply being cognizant of and recognizing the different motivations and incentives from various constituents in the industry, and having a transparent and respectful approach to find value for both parties.”