Iab europe transnational advertising report
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This document examines trans-national online advertising, which refers to advertising inventory purchased in one country for campaigns executed in another. It finds that while centralized international media buying is currently small, several factors indicate it will grow. Reasons for decentralized buying include legacy marketing structures and multiple agencies. However, centralized buying is more common for luxury brands. The document explores trends in international buying and differences between industries.
Iab europe transnational advertising report
- 2. Introduction 20 years ago trans-national advertising was a minor part of total advertising activity, but the strength of online trading is changing all that. This timely report examines how global brands are spearheading a gradual rise in trans-national digital advertising and the benefits this can bring. It looks at how traditional working structures continue to keep most media buying within national boundaries and looks ahead to the market forces that are likely to break down these boundaries. IAB Europe is pleased to work with Vincent Letang and his team at Screen Digest to bring you this report. Alain Heureux Vincent Letang President & CEO Head of Advertising Research IAB Europe IHS Screen Digest Published March 2011 1
- 3. Survey on Trans-national online advertising trading in Europe Trans-national trading is the term used to describe This paper from IAB Europe and Screen Digest sets out to inventory that is purchased in one country for campaigns to explain how trans-national trading works, to give an be executed in another country. The deal can be cross overview of the advantages and benefits, and to indicate national, multi territory, featuring two or more territories the trends that will drive trans-national trading. It is based (e.g. Germany and Switzerland or UK and US), pan on the output of interviews conducted by Vincent L辿tang regional, so featuring a group of territories in a region such and Cyrine Amor on behalf of IAB Europe, March-July 2010, as Europe, or global, featuring a selection of territories from with representatives from key international advertisers, multiple continents. media owners and agencies. This process is of course only practical for media owners, publishers and advertisers that operate in multiple territories, but the ecosystem of digital advertising is well suited to trans-national trading, and it is therefore likely to become an increasingly important revenue stream for some market players. Key findings 1 Centralized booking is a small part of digital of brands, their history and legacy marketing media buying today, even for multinational organisation. Luxury, travel, banking, BtoB advertisers. The bulk of digital media buying brands do a lot of it. FMCG or automotive remains on a country-by-country basis, even advertisers do very little of it so far. when booked with international media owners. 4 However there are signs and reasons to expect more international buying in the short 2 Reasons include the legacy decentralization of and mid-term: centralization in marketing marketing decisions and marketing budgets organisations and advertising contracts, rise of across European markets, and the multiplicity international media owners taking direct of media buying agencies working for bookings, social media and automated multinational advertisers. trading platforms. Media agencies are increasing their international teams to face 3 The amount dedicated to international trading growing demand. is extremely variable depending on the nature 2
- 4. What are we talking about? Centralized international media buying includes: l Cross-national media buying. For instance: a French online publisher or a specialist international sales house selling display inventory on a French website to a German company, and billing a German address or a non-European address. l Pan-European media buying: a brand centralizing part or all of its European internet media buying, either directly or through an agency, with a specific centralised budget and a dedicated team, on top of its country-by- country media buying activity and national marketing budgets. For instance, a global brand managing its online advertising budget from London through the international team of a media-buying agency. International media trading in the value chain Multinational brands (eg: Coca Cola) Demand Buying Side Media agencies (eg: Mindshare, OMD, Zenith) International depts Supply Selling Side International reps (eg: Publicitas) Multinational media owners pure players: Google, Yahoo, Microsoft, Orange National media properties multi-media brands: CNN, BBC WW (eg ITV1, El Pais, Google Spain) digital aggregators: ad networks Source IHS Screen Digest/IAB Europe 3
- 5. International media buying trends Today centralised trading accounts for a small part of total Benelux - are now empowered with marketing and digital media buying by multinational advertisers. This is advertising budgets for multi-country campaigns. mostly due to the prevalence of decentralised marketing decisions and organisations across Europe, and the On the other hand, most FMCG brands are historically multiplicity of media buying agencies working for decentralised in terms of operations and marketing. multinational advertisers. Marketing and advertising budgets are decided and managed locally for all media, and internet even search The amount dedicated to centralised trading is extremely is no exception. There might be global framework deals variable depending on the nature of international brands, with global media owners like Youtube on discount rates, their history and legacy marketing organisations. Some according to annual volumes, but there is no centralised industries are showing a lot more centralization in digital buying. Some international brands have no need of campaigns: luxury, travel, hotels, banking companies with centralised international media buying policy because brands such as HSBC or Rolex often mentioned. adspend is not big enough to generate economies of scale or because there is too much variation in advertising LOr辿al combines local and international buying, especially regulations across markets (e.g. alcohol). for luxury brands, although planning remains local and campaigns are rarely simultaneous. But things are changing Some multinational companies have a marketing and slowly. European marketing organisations are being media team in each country and European co-ordination simplified or revamped. In some cases, Pan-European when it comes to digital marketing. Their focus is not only, headquarters by product categories or regional or not primarily, to centralise media buying, but to provide headquarters - covering for instance South Europe or co-ordination, guidelines and best practice. Degree of media buying centralisation across industries For a company operating over multiple territories, there are many levels of centralisation between fully local and fully centralised digital media buying. The degree of centralisation is closely correlated to the nature of the brand and the activity sector. In the table below, we split advertisers into three categories: Degree of Description Examples centralization Budgets, planning and buying are decided and FMCG and automotive companies, reflecting decentralised LOW managed by local marketers in each market where marketing organisations the company operates MEDIUM A part often small - of total European advertising Banking, travel, technology, media-entertainment. BtoB and goes into centralised operations, often through the corporate brands (pharmaceuticals, energy etc.). Any brand international team of a media buying agency. These targeting business executives on the move budgets focus on corporate or branding campaigns more often than products (making them more volatile) Some FMCG companies starting to reduce the numbers of marketing directions in Europe and creating regional (multi- Does not always entail media buying territory) directions, or Pan European divisions for some product lines Execution is still mostly localised (at least translated into local languages) HIGH A large proportion of European advertising is Luxury. Tourist boards. Online retail. Direct Response. centralised, with dedicated budgets for centralised Non-European brands with little or no buying (not only strategic planning or co-ordination) local marketing operations in Europe Source IHS Screen Digest/IAB Europe 4
- 6. Pros and cons, drivers and obstacles From an advertisers perspective there are pros and cons characterized by stop-and-go fluctuations. This is because associated with centralised media buying that are related to international campaigns are frequently corporate ones, scale and transaction costs. aimed at building brand awareness or company profiles, rather than selling products, and that type of For big campaigns conducted in several countries at the communication is the very first to be cut in tough times same time, it might be cost-effective to buy media market- like 2009 when online display advertising growth was flat by-market because local buyers can leverage their across Europe. purchasing power and expertise locally. Besides an advertiser can have international framework agreements However it is more likely to happen for digital media simply with international media owners like Yahoo, Youtube or because there are Pan-European and global media owners Facebook on volume and pricing, while still decentralizing to deal with. By contrast, to launch large co-ordinated advertising decisions and campaigns. These deals are international campaigns across traditional media is a becoming more common. logistical challenge: an advertiser generally has to rely on the international team of an ad agency Mindshare, OMD On the other hand, when an advertiser runs rather small and Zenith have such teams in hubs like London and Paris campaigns in each market (perhaps big Europe-wide but and the agency will often deal with an international sales thinly spread across multiple territories), the economies of house like Publicitas to do it in a cost-effective way. scale made through international buying become significant, as opposed to the addition of local transaction In traditional media, few properties are offering multi- and operational costs for a relatively small media value. territory reach. These are international TV brands (CNN, Then the support of international buyers like Mindshare or MTV, BBC Worldwide, Eurosport), international business OMD and the role of international ad sales houses like news publications (The Economist, International Herald Publicitas or World Web Networks can make a lot of sense. Tribune). Several of these international properties are already making the majority of their sales centrally There is no certainty as to whether multinational advertisers (including with non-European clients) and their digital sales are going to spend more trans-nationally in the future. Until represent more than 15 per cent of total ad revenues. now, international media buying has been volatile, Pros and cons of centralised buying PROS CONS l Economies of scale l Some brands and agencies have leverage locally l Maximise bargaining power with international media owners l Significant local specificities l Time-to-market l Not all agencies are equipped l Logistical & organisation costs Source IHS Screen Digest/IAB Europe 5
- 7. Looking forward There are signs and reasons to expect more centralised as France allows European operators to advertise across international buying in the mid-term. On the supply side, multiple territories), direct response (insurance, price three factors provide a better environment and more comparison engines). incentives to centralise international media buying: FMCG brands are not moving so fast but many of them are l The rise of automated trading platforms for display (Ad engaged in re-centralising some marketing decision and Exchanges) may deliver further display cost optimization budgets sometimes at regional level rather than country- and incentives to centralise for large advertisers and by-country. Besides there is a general trend towards large campaigns. More generally, display media buying consolidating accounts and budgets among fewer is becoming more data-driven and the growing use of advertising agencies among multinational companies. behavioural targeting justifies larger scale campaigns. Finally, a number of iconic multinational advertisers (P&G, However, perhaps counter-intuitively, the most Unilever, LOr辿al, ABI) have recently and publicly pledged a automated form of media buying paid search is not significant shift to digital advertising. very centralised either. This is due to the fact that search behaviour varies a lot from country to country and there These convergent trends and expectations from supply side are less obvious opportunities for international deal with and demand side will create the right conditions and media owners. opportunities to dedicate more budgets to centralised, Pan- European or Pan-regional mediabuying, but it will be l The rise of international media properties is providing gradual and limited. reach and the ability to target in every European market. Although international publishers like Yahoo, Microsoft For more information contact: and Youtube do have local sales teams, there are more opportunities for centralised bookings too. Besides the Catherine Borrel, Research Manager IAB Europe coming of age of social media advertising now Research@IABEurope.eu increasingly used by mainstream brands allows them to www.iabeurope.eu target demographics, national or linguistic communities across borders efficiently. Vincent L辿tang, Senior Analyst HIS Screen Digest Vincent.letang@screendigest.com l More international advertising agencies are setting up www.screendigest.com international departments to offer centralised European services to multinational clients, typically in London. However there is still a chicken-and-egg situation between agencies offering such services to their clients and agency customers deciding to centralise budgets and campaigns. Some advertisers told Screen Digest that their agencies and their online publisher partners - were not fully equipped to deal with centralised planning/buying anyway. Among the advertisers that have an account with one of the international departments in agencies, the international support is often limited to strategic planning and co-ordination. At present, only a few have a definite budget for centralised buying, although agencies are sensing a growing trend in that direction. On the demand side, some categories are already increasing media buying on a trans-national or Pan European level: online betting (recent liberalisation in various markets such 6
- 8. About IAB Europe About IHS Screen Digest IAB Europe exists to promote the growth of Europe's Screen Digest is the pre-eminent firm of industry analysts interactive advertising markets through events, partnerships covering global media markets including film, television, and communications activity, to protect the interests of the broadband media, mobile media, cinema, home industry through an active programme of public affairs and entertainment, gaming, and advertising. to prove the value of the market through research and Screen Digest was recently acquired by iSuppli Corporation education. and together iSuppli and Screen Digest offer the most complete and insightful analysis of the global technology, The power of IAB Europe comes from its extensive media and telecommunications (TMT) sector. membership at both country and corporate levels. Our national membership of 26 countries spans the entire Vincent L辿tang, 41, is a senior analyst and head of continent - not only the mature markets of Western Europe, advertising research with IHS Screen Digest. Vincent has but also rapidly evolving markets including Croatia, Czech been a leading advertising expert for ten years. He is a Republic, Romania, Russia, Slovakia and Ukraine. Our regular voice at international events, bringing an informed corporate membership includes advertisers, major media and insightful mind to strategic advertising questions. groups, publishers and portals, agencies, research companies and technology and service providers. Daniel Knapp, Senior Analyst and Cyrine Amor, Analyst worked with Vincent on this report. The Egg Communication Nest Bara Street 175 1070 Brussels Belgium Phone +32 (0)2 526 5568 coordination@iabeurope.eu www.iabeurope.eu 7