Broadcasters are controlling the European Connected TV market, but a better understanding is required in order to unlock the full potential. Dr Oliver Vesper, Co-CEO, MD Media & Operations at smartclip, looks at the challenges and opportunities for the CTV advertising market.
Further development of Connected TV (CTV) across Europe is possible
The rapid transformation of the television advertising market, driven by the increasing fusion of traditional linear and digital spheres, offers entirely new opportunities for data-driven TV advertising and innovative new advertising formats. CTV has become a trending topic within this new market and represents enormous possibilities. Yet, if you take a closer look at the current European development of CTV, you will see a different picture. The market is fragmented, as is always the case for a multilingual continent with differing business practices and TV ecosystems. Currently, the CTV market in the United States is well ahead of its European counterparts. Regardless, CTV is undoubtedly gaining traction across Europe. So, how can we continue to grow CTV throughout the continent?
Advertising-funded video content is booming
There are reasons to be optimistic. As is the case in most parts of the world, the consumption of video content has been growing rapidly for years. 2020 saw a boom in online video content consumption in the seven largest European markets on SVOD, AVOD, and broadcaster catch-up platforms. Ad-financed platforms and the VOD segments of European Broadcasters have particularly seen continued CTV growth throughout 2021. The SVOD sector, however, is increasingly saturated and remains highly competitive. Since they don’t require monthly subscriptions or even sign-ins, AVOD platforms have a significantly lower access barrier than SVOD platforms. Users can switch back and forth between multiple services. This, in turn, promotes AVOD growth. While AVOD consumption is still at a relatively low level compared with other media distribution systems, users in all major European markets are starting to embrace digital TV-like content and are increasingly likely to accept advertising in exchange for free access to high-quality video. But users in Europe stick to local content and offerings. To scale the advertising opportunity across national borders, marketers and content providers need to collaborate.
CTV is far more than just streaming
CTV advertising formats are not just limited to streaming. CTV includes all video ad formats that are targeted digitally but are similar to TV in form and content. They are predominantly consumed on smart TVs. Thanks to the HbbTV standard and Addressable TV (ATV), this also includes linear TV programming in Europe. But new digital environments – including broadcaster catch-up platforms and AVOD services – play an important role in the development of the CTV market, especially when streamed via smart TVs. Since last year, the TV set has become the most popular user device for consuming VOD. While ATV aims to digitalise advertising in the context of linear television, CTV environments that are accessed digitally are generating entirely new advertising environments and thus additional ad space.
OPPORTUNITY ACROSS
NATIONAL BORDERS,
MARKETERS AND
CONTENT PROVIDERS
NEED TO COLLABORATE
We are significantly promoting CTV. Special interest offerings such as Tastemade, cater to specific audiences, as do the streaming provider Pluto TV and the two music TV offerings Xite and Clubbing TV. They all exemplify the rapidly growing entertainment range in the CTV sector. Gaming products – which are not necessarily thought of as TV environments but are mainly consumed via smart TVs – also play an important role in the CTV market. This includes providers such as Playworks, the world’s largest CTV provider, and Couchplay, Europe’s biggest smart TV gaming centre, which can also be found on RTL’s German TV stations VOX, NTV, and RTL. To offer CTV at scale, we are in the process of expanding many of these content and marketing partnerships across European markets.
Individual target groups are growing together within a diversified CTV advertising inventory. Through these special interest offerings, we can address target groups that are considered difficult to reach, such as young men or women running households. Incidentally, integrated advertising hardly differs from that in original video content. The spots run in full-screen view. All of these players create a diverse CTV market but are not scalable on their own. To scale CTV, a sizable amount of potential impressions need to be accumulated effectively.
APPROACH THAT IS
EMBEDDED IN THE
RESPECTIVE MARKETS
AND FOCUSES ON
THE NEEDS OF LOCAL
MEDIA AND ADVERTISERS
US players have experience, European stations control the content
In the streaming segment, major US companies are massive drivers of the CTV discussion and initiatives to integrate the ecosystem. They have the necessary edge and experience with CTV advertising. However, US players often lack insight into the intricacies of local markets. US-based colleagues and CTV experts often tell us that they have already successfully introduced CTV in Europe. When asked where in Europe, the answer is often Great Britain. For continental Europe, there are still no concrete plans.
If international advertisers want to gain a share in the European CTV market, they must tap into large markets such as France, Germany, Italy, and Spain. All European markets have one thing in common: the CTV value chain is controlled by television companies that maintain the vast majority of ad-supported VOD services in their portfolios including RTL+ and Joyn in Germany, MyTF1 in France, or ITV Hub in the UK. Broadcasters are understandably cautious about sharing access to their inventory and data with US players, leaving the drivers of recent CTV discussions without sizable CTV inventory. Inventory is managed locally, making it difficult to scale CTV campaigns.
CTV “Made in Europe”: closer collaboration in the ad tech and marketing sectors
Broadcasters are in control of both inventory and relevant data when it comes to CTV. To effectively combine broadcaster offerings with special interest players and scale the ecosystem across Europe, technology companies that know the differing markets well need to take the lead and organically develop an adaptable and scalable CTV solution.
CTV needs an ad tech approach that is embedded in the respective markets and focuses on the needs of local media and advertisers. This approach needs to bring together streaming, ATV, gaming, and digital short video ad formats, and must make them available across all user devices from a single source. The cooperation of local media companies is essential for this. A joint CTV offering by multiple European broadcasters, combined on one ad tech platform with consistent metrics, covering several European markets at once, and bundling high-quality, TV – like advertising inventory – would revolutionise TV advertising in Europe by offering CTV at scale. /
