GDPR as an opportunity
The European Union has installed one of the strictest privacy regulations worldwide. On first sight, the General Data Protection Regulation (GDPR) seemed like a threat to many advertising players. However, the new rules are turning out to be beneficial for advertisers obliged to seek consent from users before collecting and storing their data. Although the amount of collected data decreases, the quality of data gathered increases as it becomes cleaner and more reliable over time. This means that advertisers will have fewer users to target but more relevant and interested ones. And fewer collected data points can often times be combined with new targeting methods such as contextual or geo targeting.
First-party data also becomes more important for advertisers who must convince users to give them their data. Well-known brands might have an easier time doing so, whereas newer entrants will have to sharpen their profile and show clear benefits before users provide their consent. Once users agree to share their data, advertisers have to make sure that the data is stored and managed safely and analyzed effectively. Services that allow data to be handled according to GDPR regulations will see increased demand in the future. Companies that have set up proper data management measures will also have a competitive edge over competitors from other non-European regions as more countries put stricter data protection laws into effect. Companies in those countries will have to adapt to those new regulations, whereas GDPR-compliant companies already have the necessary measures in place.
Marketing education and automation
The proliferation of marketing channels available today means that companies are often unsure about which channels to choose to achieve their marketing goals. The trend also goes away from broad marketing distribution to more individual one-on-one communication. This is only possible with digital solutions that allow for highly individualized marketing distribution at scale. Some companies hire external agencies that have a reputation for working in the digital world, while other companies create their own in-house agencies.
However, the growing number of marketing channels requires a lot more education on the side of the brands in order to fully harness the power of new advertising technology. Small and medium-sized companies often don’t have a dedicated person responsible for marketing. Although the big ad platforms such as Google and Facebook offer self-service tools that make it easier for small businesses (such as restaurants and local retailers) to advertise online, there is still room for improvement. Companies that help with the challenge of refining or automating clients’ marketing operations will find interesting opportunities in the German advertising market.
German media agencies historically have a strong focus on television advertising and the production of creatives. Therefore some lag behind when it comes to new advertising opportunities. Whereas 43 percent of German agencies state that they are experts in programmatic advertising, only 12 percent of agencies say that programmatic advertising is actually a fixed part in all of their campaigns. It is therefore no surprise that in Germany, only 45 percent of the brands use social and 41 percent use mobile programmatic advertising, compared to 53 percent and 50 percent in the US respectably. But 39 percent of German brands want to learn how to more effectively target their audience, and 24 percent specifically want to use programmatic technology better.
This means that adtech companies that offer programmatic solutions – or enable those agencies or even the brands to better use programmatic advertising – have a high chance of success in Germany. New forms in particular, such as programmatic audio advertising (internet radio, podcasts, music streaming, voice assistants) and programmatic out-of-home will be in high demand in the future as the market penetration of those technologies remains lower in Germany than in other developed countries.