Sociomantic's 'Digital Marketing Deep Dive' series will provide a screenshot over the coming months into the digital marketing trends distinguishing national markets, with a particular focus on programmatic technology. We're staying close to home in the first part, as Gavin Wilson explores the charactertisics of the UK market.
The UK’s advertising ecosystem can be defined by its swift adoption of all things digital. According to eMarketer, 2015 will see the UK as the first country in the world where half of total media advertising spend goes to digital ads.
With that in mind, what defines the UK’s digital ad space?
The IAB UK says 45% of online display ads purchased in the UK in 2014 were bought via programmatic, an increase from 28% in 2013. This high level of awareness of programmatic technologies is partially thanks to the fact that the UK shares many online players with the US, the ‘birthplace’ of real-time bidding and programmatic marketing back in 2009. It’s also in part due to the sheer number of companies populating the market.
A crowded market
From marketer to publisher, the congested path toward the end customer is filled with tech vendors, agencies, trading desks, creative add-ons, ad networks, social platforms and more. With this many participants, the UK has evolved to become a highly competitive arena dictating the rhythm that programmatic advertisers must adhere to. So, what does this rhythm look like in reality, for the players that make up the UK landscape?
A formal and thorough procurement process
The first major differentiator in this market is vendor procurement — the process by which an advertiser or agency chooses which of these myriad partners to work with. Due to a populous digital landscape, UK marketers often manage lengthy tendering processes in order to qualify potential vendors from the numerous others competing for a finite marketing budget.
These tendering rounds are initiated by RFPs (request for proposals), allowing advertiser or agency an outlook of the competitive landscape to learn what’s new and innovative in the market. In many cases, the procurement process can take up to a year or more before an advertiser signs on with a new programmatic partner. These lengthy selection processes are less common in other global markets, allowing them to act more dynamically than their UK counterparts in adopting new and innovative technologies.
Notably, the UK is a market where agencies often have their own trading desks (in-house real-time bidders, either home-grown or white-labelled from technology provider) and own 70-80% of performance budgets. This inclination for advertisers to spend through agencies is paralleled in the US, another agency-driven market.
Outsourced business intelligence
In general, UK brands tend to have small internal business intelligence teams, and it’s common for UK online marketers to adopt a variety of third-party solutions for a queue of tasks. Day-to-day, this may include involvement from the likes of tag management and product data feed providers - solutions that might still be built and managed in-house in neighbouring or far-flung markets.
If all the data required to drive intelligent marketing is available from the start within these tag management and product data feed systems, then setting up to programmatic campaigns (via code integration) becomes a quick and straightforward process. Multi-vendor integrations can produce an opposite effect: any updates or changes, such as choice to adopt a new technology, can lead to extensive and complicated implementation processes - which in the long run drives up costs for advertisers. Advertisers also risk becoming so removed from the intelligence processes, creating more room for misunderstanding than insights.
Less international e-commerce competition
The channel of water separating the UK from the rest of Europe tends to protect its e-commerce companies from continental competition. Global advertisers who don’t have warehouses in the UK are at a distinct disadvantage due to extra shipping costs making them less likely to offer free deliveries and returns. Meanwhile, the lack of competitive pressure mean UK retailers can offer free deliveries after reaching a certain minimum basket size.
Although geography protects UK retailers from aggressive competition, the lack thereof can result in the UK maintaining a less dynamic market, where e-commerce companies may be slower to innovate. Of course it’s also worth mentioning that this is one of the few EU countries operating on its own currency – another differentiator that can have a chilling effect on cross-border e-commerce.
Measuring multi-click, budgeting on last
Like other markets, the UK is still too reliant on the last-click attribution model. That said, some UK advertisers are already taking so-called “assisting clicks” (the clicks leading up the last-click before sale) into account, and some are even capable of measuring the full (online) customer journey. But tracking and measurement is only half the battle — when it comes to actual budget (re)allocation, most adjustments are still made based on the last click. Nevertheless, it’s encouraging to see that UK marketers are interested in advancing their attribution strategies, as noted by conversations on the topic at industry events and in strategy meetings with clients and prospects.
Despite the complexities and conventions that should, by all accounts, hinder the pace by which this programmatic landscape evolves, UK marketers are keen to adopt innovative methods and advanced technologies to grow their marketing efficiency and effectiveness as apparent by the keen eye UK advertisers have kept on digital ads. And, given that nearly half of UK’s online display ads are purchased via programmatic, it’s clear that UK advertisers recognise the value of customisable programmatic solutions, allowing them to run data-driven campaigns for more personalised interactions with their best customers and prospects in one of the world’s most active e-commerce markets.