Q2 2016 in the United Kingdom
The United Kingdom market is our third-biggest market, after the United States and Canada, respectively. We officially established our EMEA base in May 2015 and opened our London office later that year in September. It’s been incredibly helpful to have a team solely focused on building the European business and bringing the marketplace to our neighbours across the pond.
Each month we study trends in our three biggest markets; check out the post on June in the United States here. Today, let’s take a look at what happened in the UK over the course of the second quarter.
The second quarter of 2016 was a period of solid growth for the UK. Spend was 28% higher than spend in Q1 2016 and from April to June publisher revenues grew 44%.
The Second Quarter’s Biggest UK Spenders
The graph above depicts the top ten spenders in the UK market during Q2 2016. As you can see, 60% of the brands are UK or European natives – Telefonica, Tesco, Sky, Shop Direct, British Telecommunications, and Betfair. The international brands that emerge on the list are Microsoft, eBay, Walmart, and American Express.
In order to protect the financial privacy of the brands we call out in reports like this, we show all spend on an index. So, during Q2 2016, Telefonica spent the most, and all subsequently ranked spenders’ figures are shown as relative to Telefonica’s total spend. The top five spenders after Telefonica weren’t far off from that brand’s total spend. Teso, Sky, and Microsoft, all spent at least 90% as much as Telefonica did.
As you can see, seven of the brands on the top ten list are either technology or telecommunications companies: Telefonica, eBay, Microsoft, Sky, Quantcast, and British Telecommunications. This is interesting to us – US’s top ten reflects myriad industries and Canada has high automotive and CPG representation.
We also take a look at average CPMs and the relationship between total spend and impressions (see table below). Walmart took the top spot when it came to average CPMs – the company’s CPMs were approximate 3x times higher than the lowest average CPM on the list (Sky’s). Walmart’s use of shopper data through WMX is likely responsible for its top spot – as brands use more and more data to find users they have more insight into a users’ value and can price users higher overall, and eliminate waste. The second-highest average CPM in the top ten brand buyers in the UK came from UK-based multi-brand retailer Shop Direct.
Seat Types – Who Physically Directs The Spend?
Compared to other markets, the UK has a high proportion of spend executed through managed service providers or networks – 49%. This suggests a strong reliance in the UK market on experts to direct programmatic budgets.
Also, interestingly, the UK market has a higher proportion of spend through in-house marketers than we’ve seen in the US market – 13% of total UK spend came from marketer owned seats.
The Rocket Ship Has Lifted
In addition to brand spend, we follow how much publisher revenue accrues in header tag auctions versus in a waterfall/tag-based set up. This is where things get really interesting. From January 2016 to the end of June 2016, header tag brand spend (or publisher revenue) increased 307%. Tag-based spend lifted 55% during the same period. In January 2016, header tag spend in the UK was 1.28x higher than waterfall spend. In June 2016, header tag trumped waterfall by 236%.
Much like we’ve seen in other markets, header tag spend is growing significantly. That’s not too surprising, it’s clear publishers have identified header-based selling as a strategic priority and brands are pouring spend into these types of auctions. What is most exciting about this is the alacrity with which header tag spend has taken off during the first half of 2016 in the UK – it really pulled away in March 2016 and has been on a steep trajectory upwards ever since.