Daniel Knapp (IAB Europe) on developments in digital and Belgium's role

What is the current state of the digital media and advertising landscape? 

Daniel Knapp: ‘We first published the IAB Europe AdEx Benchmark in 2007. This provides an overview of digital advertising spending in Europe. In that first year (2006, ed.) the market was worth 6 billion euros. In 2023, the amount reached 96.9 billion euros, and we will probably have passed the 100 billion mark in 2024. So, we have made an enormous leap in less than twenty years.’ 

‘Digital advertising used to be a secondary option, but now it is the standard. The market has a digital-first mindset. On average, 65% of all media investments in Europe are now digital.’ 

What are the consequences of this evolution?

Daniel Knapp: ‘This naturally presents challenges for media companies. The linear core business of TV and radio companies, as well as magazine and newspaper publishers, is eroding, making digital revenues enormously important. But it is not easy to let digital revenues replace non-digital revenues.’ 

‘In addition, advertisers are also looking at advertising differently. It used to be a performance channel, but nowadays it has to account for an increasingly larger part of the funnel. This also means that data targeting, data measurement and demonstrating ROI and outcomes are becoming increasingly important. There is a lot of pressure from finance to demonstrate the financial impact of investments. CMO metrics are becoming increasingly financial.’

‘Channels that supply data to demonstrate that it can lead to business growth have the most to gain from this. We see that transaction data is becoming increasingly important. That explains the love for Amazon that we are currently experiencing.’ 

‘By the way, it's not just about the bottom of the funnel, but also the top of the funnel. We see how data is used to measure the impact that the interaction between TV, connected TV and streaming video can have on business outcomes. As a media company that simply sells eyeballs, it is becoming increasingly difficult.’ 

In addition, we cannot ignore the regulatory initiatives. How does the market deal with them? 

Daniel Knapp: "For a long time, the industry had to follow developments in the field of regulations and failed to be proactive. With the disappearance of third-party cookies, we are at a tipping point.’ 

‘By emphasising privacy-enhancing technologies and contextual and other signals, we are seeing a complete shift in the way the audience is packaged, targeted, measured, etc. I think the industry is doing very interesting work by showing that privacy and innovation can be two sides of the same coin and do not logically oppose each other, as often seemed to be the case in the past.’

‘The industry has done itself a disservice with its obsession with cookies. For the first time, the industry is ahead of the regulations, although a risk remains. After all, it is not yet evident that we will agree to do more than the absolute minimum, while the regulations are becoming increasingly strict.’

Is advertising not particularly in the eye of the regulator?

Daniel Knapp: "Absolutely. Advertising is the first industry where big data collides directly with the consumer experience. Other sectors such as financial institutions and healthcare have much more sensitive data, but consumers often don't see what happens to that data. In advertising, the screen is the mirror.’ 

‘This means that the industry receives a lot of feedback about what consumers do and do not want. And that is very interesting. The advertising business can use this to develop new technologies that can serve as a blueprint for other industries in the future.’ 

‘We must not forget that advertising is an industry where boundaries are constantly being pushed. A lot of R&D capital is being invested in making advertising experiences safe and private. Probably more than in any other industry. I therefore hope that the market realises this and expects policymakers to appreciate this too.’

As you already mentioned, the role of data within digital advertising has also changed. What impact does that have on the market?

Daniel Knapp: "There are numerous programmatic companies. 14 of them are listed on the stock exchange. They experienced an average growth of 13.2% in 2024. This means that infrastructure and connections are crucial. But this business is changing very quickly. In the past, it was only about facilitating buyers and sellers. Now the sector is more in the world of post-party cookies to get smarter signals for customised bidding algorithms or to build up its own signals to better understand and segment target groups than others do.

‘You also see this in recent mergers and acquisitions in the sector, where those on the data and signal side want to buy media activation opportunities and those on the media activation side want to buy data and signals. So a lot of pawns are being moved on the digital infrastructure chessboard at the moment.’ 

Is this the biggest evolution you have seen in the sector since 2007?

Daniel Knapp: "It is a fundamental shift. In addition, of course, you have a closer integration of data signals between creation, media planning, media buying, optimisation and other feedback loops everywhere. Those who are furthest ahead in this are the players who have a data-rich and closed environment. Just think of social media such as TikTok and Pinterest.‘ 

How should players who do not have a closed environment respond to this?

Daniel Knapp: ’How can we replicate something like this? That is the question they are asking themselves. As a market, we now focus on demographic data for targeting, among other things, but creative parameters are also crucial.’ 

‘In the 1990s, we had the artificial split between creative production and media buying, driven by mergers and acquisitions. We are now increasingly seeing how creative capacities, media planning and buying capacities are coming back together again. It is therefore very interesting to see how these business models will evolve, especially under the influence of AI, which is already putting the underlying business model of agencies to the test.’

What impact will AI have on digital advertising?

Daniel Knapp: "Many companies are asking themselves how they can reduce production costs. A company like Klarna saw its marketing agency costs drop by 25% thanks to AI. But that is a race to the bottom; you end up in a kind of mediocrity that benefits no one.’

‘Fortunately, on the other hand, you see an increase in the number of companies that continue to recognise the value of the creative sector. I don't think it will destroy the creative sector, but rather provide it with new tools. Compare it to the first Godzilla film, when papier-mâché figures gave the human imagination a helping hand. That also gave the film industry a boost rather than destroying it.’

Final question: how far along is Belgium in terms of market developments? 

Daniel Knapp: "Belgium has a number of advantages: it is located in the heart of Europe and is therefore at the centre of it. But the evolution here can certainly accelerate. Better data about the market is crucial for this. We hope that the collaboration with BAM will contribute to this.’