CTV and retail media push European digital ad spend past €100 billion, as search falters
Illustration by Dave Cole / Getty / Shutterstock / The Current
Europe’s digital ad market has hit a major milestone, surpassing €100 billion in annual spend for the first time last year. The growth was largely driven by connected TV (CTV) and retail media.
That shift — outlined at IAB Europe’s Interact conference in Brussels last week — is coming partly at the expense of search budgets, according to Daniel Knapp, chief economist at IAB Europe.
The news landed against a backdrop of economic uncertainty. Ad leaders from the likes of GroupM, Kraft Heinz, Axel Springer and even the European Commission gathered under a shadow of “wait and see,” “short-termism” and “peak uncertainty” — phrases that defined the mood.
But the €100 billion milestone marked a turning point, as marketers sharpened their focus on measurable, performance-driven channels, with transparency a top priority.
“In any time of uncertainty, what you really want is transparency and partnership. What I value most is when [partners] listen to the needs of advertisers,” said Alison Keith, global head of media excellence at Kraft Heinz.
“Brands could also be more curious about how partners work, to feel confident about where you’re putting your media dollars,” Keith said.
Dig deeper: Video ad spend is a key driver
CTV is winning because it represents what marketers need right now: transparent, brand-safe performance at scale.
Video was a major driver of European ad spend growth with a 24.5% increase last year, said Knapp, with broadcast video on demand (BVOD) standing out.
Local streamers like ITVX and RTL+ have notched double-digit increases in ad revenue this year, on par with their global competitors, underlining advertiser appetite for regional streaming ad inventory.
“I’m very excited about how the traditional media outlets are reinventing themselves to become more digital,” Keith said. “I’m very much a believer that TV, and thus CTV, works.”
Dig deeper: Retail media taking spend from search
Retail media spend also had a breakout year, growing 22.2% and topping €10 billion in Europe for the first time, while taking a share of ad spend from search, Knapp said.
Still, some cautioned marketers should pay attention to their brand investments for retail media to really work. “You still have to build desire for your brand, it’s not enough to just put it on Tesco and hope for the best,” Keith said.
Colin Lewis, co-founder at Retail Media Works, illustrated that maxim with data from further afield: Australia’s leading cheese brand did not show up in the top 10 “cheese” searches on Coles’ website, one of the country’s biggest grocers. “This is a brand that everyone in the country has in their fridge,” he said.
Looking ahead: Growing pains
When asked to vote for the area of CTV they were most excited about this year, marketers at Interact named shoppable CTV ads as their first choice.
But many indicated that retail media’s infrastructure still had some way to go before cross-channel innovations could achieve their full potential.
“The opportunity of commerce data infiltrating the rest of the industry is hugely exciting, but the work has to go into the infrastructure to make that work,” said Marie-Clare Puffett, industry development and insights director at IAB Europe.
Still, the excitement for shoppable CTV ads points to a key item on marketers’ wish lists in today’s economic climate: the combination of retailers’ shopper data with CTV’s scale to achieve branding, performance and closed-loop measurement in one neat — and transparent — package.