CMA Raises Concerns Over Adevinta-eBay Deal; UK: PMPs Bloom Whilst Open Exchanges Falter

In today's ExchangeWire news digest: the Competition and Markets Authority warns that Adevinta's plan to buy eBay's classified unit could stifle competition; the UK sees private marketplaces eclipse open exchanges for the first time; and streaming TV stays in the top spot in the US's consumer subscription space.

 

CMA voices concern over Adevinta-eBay deal

The Competition and Markets Authority (CMA) has expressed concern that a proposed deal for ecommerce firm Adevinta to acquire online marketplace Gumtree “could reduce consumer choice, increase fees, or lower innovation” in the online selling space. The Norway-based owner of Shpock has offered to buy eBay Classifieds Group business, under which Gumtree operates, in a £6.5bn deal that would lead to the creation of the largest classified ads business in the world.

The CMA has warned that the deal could erase competition within the online marketplace space, as it would undermine contention between Shpock, Gumtree, and eBay, leaving Facebook’s Marketplace as the only significant rival. According to the watchdog, the sale would give eBay a 33.3% voting stake in Adevinta, as well as positions on the company’s board, enabling the US-based firm to exert influence over business decisions relating to Gumtree and Shpock.

Initially agreed last July, the deal would generate annual revenues of USD $1.8bn (£1.3bn) for Adevinta, making it the biggest classified ads business in the world. It was the firm’s offering of a substantial stake in the business that clinched the eBay bid over rivals Naspers and Prosus.

Adevinta and eBay now have until 23^rd February to provide legally binding resolutions to address the CMA’s qualms. The industry body will then have 5 working days to decide whether to approve the offer or to subject the deal to an in-depth investigation.

 

UK programmatic blooms as open exchanges stutter

Research by eMarketer has found that ad spending in programmatic digital display increased by 12.2% in 2020, despite the unprecedented challenges of the year. Much of this growth can be attributed to ad buying on social media, according to the report, which generally increased throughout the year as consumers turned to platforms like Facebook and Twitter for socially-distanced interaction.

Programmatic direct and private market places (PMPs) both saw their stocks rise even after the start of the COVID-19 crisis. Programmatic direct ad spending in the UK climbed almost £500m to £4.55bn by the end of 2020, whilst PMP ad spending grew £12m to £1.2bn.

At the opposite end of the spectrum sit open exchanges, which saw spend drop 2.4% by the year’s end. The result meant that the once dominant method of purchasing real-time bidding (RTB) inventory saw less investment than its private counterpart for the first time ever.

Analysts expect open exchanges to continue to wane, projecting that spend will grow by just 2.9% in 2021 and again by 1.3% in 2022. The shift comes as marketers prepare for the post-cookie landscape, which will see a greater reliance on alternative targeting solutions, such as contextual and programmatic direct.

 

Streaming TV remains in top spot in US consumer subscription space

98% of US consumers are currently subscribed to one or more streaming service, with 75% subscribing to at least 2. That’s according to a survey by consumer retention software company Brightback, which has found that TV streaming currently ranks highest amongst consumer subscription services, with Netflix leading the pack.

The research indicates that streaming’s success stems from a combination of the ease of the sign-up process and the desire for escape as lockdown made out-of-home entertainment and social gatherings off-limits. Around 80% of the survey’s 1,088 respondents said that they were more likely to buy a new subscription if they have the option to cancel it online.

Despite streaming’s popularity, a number of premium services have reported low subscriber retention rates, with even industry-leader Netflix managing to increase the number of subscribers they held on to by just 2.7%. The results correlate with a Gartner report which projects that whilst 75% of direct-to-consumer companies will offer a subscription service by 2023, only 20% will manage to grow their customer retention levels.