Alex Brownsell, WARC’s Senior Editor, Media, takes the temperature at IAB Europe Interact, the premiere gathering of Europe’s digital advertising industry.

Maybe it was the blistering sunshine soaking the smart boulevards of Warsaw city centre. Or perhaps it was the sense of positivity permeating the Polish capital, as the country celebrated 30 years since its leaders tore down the Iron Curtain and opened the door to democracy.

Either way, an event that was supposed to see internet advertising’s finest furrow their brows and ponder correctional measures for digital marketing ended up a surprisingly feel-good affair.

Over 600 delegates convened at the cavernous Multikino cinema complex, atop a shiny new shopping mall in Warsaw’s bustling central business district. The city, dotted with high-rise property developments, was a fitting choice for an industry enjoying its own breakneck growth. Yet a quick glance at the opening sessions warned that all is not well with Europe’s digital ad market.

Daniel Dalton, a former European parliamentarian and one of many British Tory MEPs to lose their seats in the recent elections, delivered a keynote bemoaning the “missed opportunities” of the European Union’s much-heralded Digital Single Market.

Despite some successes, including scrapping mobile data roaming charges and ensuring the portability of digital subscriptions across member state borders, Dalton argued that an internal war is being lost to the EU’s most hawkish data privacy campaigners. It is a situation he predicts will worsen still with the likely increased influence of the Greens/European Free Alliance, and comparative demise of Anglo-Saxon laissez-faire, in the new parliament.

“The environment is now harder for small [European technology] businesses to scale up or even get started than it was five years ago,” he complained.

A similarly sombre note was struck by Stephen Woodford, Chief Executive of the UK’s Advertising Association, who outlined the body’s recent research suggesting that trust in the ad industry is collapsing among British consumers as a result of dodgy data practices and “bombardment” levels of campaign frequency.

Even the world’s largest advertiser had stern words for delegates. Echoing CMO Marc Pritchard’s call to revolutionise the media supply chain, Taide Guajardo, Procter & Gamble’s Brand Operations Director for Europe, dismissed efforts by digital media players to get their houses in order as simply “not enough”, and argued that brands must be more “courageous” in calling out bad behaviour among suppliers.

And yet.

If Europe’s digital ad market is supposed to be reeling from a vicious left-right combo of a collapse in consumer trust around the issue of privacy and the far-reaching implications of the implementation of GDPR, the numbers appear to paint a very different picture.

The continent’s digital ad market reached €55.1bn last year, an increase of 13.9% - its fastest rate of growth since 2011 – according to IAB Europe’s annual AdEx Benchmark Study. Out-stream video and mobile were key drivers of the continued surge in spend, and ensured that 21 of the 28 states enjoyed double-digit growth rates.

Numbers from GroupM, delivered by EMEA CEO Dominic Grainger, painted a broadly similar picture. The WPP media agency group predicts that European digital ad spend will reach €54bn in 2019, and then €58bn in 2020, despite concerns around regulation and brand safety.

Announcing the results of the AdEx Benchmark report, IAB Europe’s Chief Economist, Daniel Knapp, looked almost sheepish when observing that GDPR had made “no impact” on digital ad spend. The organisation had anticipated total digital ad spend nearer €50bn, and a significantly more modest growth rate of around 3% to 4%.

It seems even those championing the industry are shocked by its continued buoyancy.

Transparently opaque

Given the digital ad market’s acceleration in the face of so many headwinds, participants would be forgiven for questioning the need for reform of any kind. If it ain’t broke, why bother working up a sweat?

Advertising professionals are certainly not helped by the spiralling complexity of Artificial Intelligence and machine learning systems underpinning today’s media ecosystem. A person may have a particular fondness for the colour blue, but they would be hard pushed to clarify that choice, observed Jochen Schlosser, Chief Strategy Officer at AdForm. “The more complex something is, the harder it is to explain why. Sometimes AI can’t give you that transparency,” he said.

That is not to say everyone agreed. In a sometimes spikey panel debate on the subject of ‘Unlocking the programmatic black box’, moderated with mischievous intent by Exchange Wire CEO Ciaran O’Kane, participants urged the industry to adhere to obligations, and bemoaned the inconsistent impact of GDPR across European markets.

While O’Kane proffered that the data collection and exploitation made notorious by Cambridge Analytica has been commonplace in commercial media (“everyone was doing it, let’s be honest”), Thomas Duhr, Vice President of BVDW, the body representing Germany’s digital economy, put forward his vision of a more muscular regulatory landscape. “We have to build systems and binding rules to increase transparency,” he said.

Yet those rules must be implemented in a manner which creates a level playing field, insisted Joerg Vogelsang, Managing Director, DACH, Central and Eastern Europe at IndexExchange. With GDPR test cases reaching the courts in the EU’s member nations, Vogelsang claimed Europe is sleepwalking towards a “Balkanised” regulatory ecosystem, with “28 different interpretations, not one standard” – something that would create much uncertainty among the continent’s “open web” players.

Open or closed web

This comment went to the heart of the issue for many seated in the auditorium.

While both Google and Facebook’s logos shone brightly on the big screen among the event’s list of sponsors, the majority of speakers went on the attack on the subject of the duopoly. There is a nagging sense that, while GDPR has ridded Europe of some of its most unscrupulous data actors, its prime beneficiaries have been the major platforms – Amazon and Apple included – which have achieved user consent at mass scale. Various theories were put forward regarding how non-walled garden publishers could collaborate to form a “universal ID” capable of challenging ‘GAFA’, including Germany’s ‘NetID’ alliance, but no silver bullets were identified. Put simply, it remains quicker and easier to run campaigns on Google and Facebook, and the quality of the data leaves other publishers’ claims looking flimsy at best. Hence why the remainder of the digital ecosystem has focused so keenly on the few chinks in the armour, such as brand safety and third-party measurement.

Yet, again, despite so many potential woes on the horizon, optimism shone through once more. Nigel Gilbert, Chief Market Strategist EMEA at AppNexus, now part of AT&T’s Xandr tech stack, insisted that digital media is ready to renew itself with a “second wave”.

Programmatic advertising, Gilbert argued, had reached an “untenable situation” after eight years of unceasing growth, and this had marked the “culmination” of the industry’s first wave. “We’ve got a chance to re-set,” he said.

Everything that can be automated will be, he added, pointing to developments in addressable TV and digital OOH. Even GDPR, the supposed slayer of ad tech, has in fact created a new tranche of opportunities, with dozens of new Consent Management Platforms having flooded the market over the past 12 months.

However, there will be one fundamental difference, said Gilbert: while data was the battleground of the first wave of programmatic, the second wave will be dominated by an arms race to assemble the greatest stockpile of content.

Europe’s digital ad market is reaching the end of the line in a number of respects. GDPR and the EU’s upcoming ePrivacy directive will change the game, perhaps even ending cookie-based data collection methods once and for all. While consumers worry about privacy, brands bemoan failings in measurement, ad fraud and brand safety.

Yet, even with these clouds looming overhead, it could not dampen the industry’s optimism in Warsaw.