There is a great deal of uncertainty - not only among publishers here, but also around the world, operators of ad-financed websites are faced with the question of how to deal with automated trading processes (often referred to as real-time bidding/advertising, RTA/RTB). Even those who have not yet fully grasped the topic realize that this is accompanied by far-reaching changes in the advertising industry. It is therefore not surprising that the Werbewoche survey of publishers in Switzerland on RTA was far from being met with a response everywhere (including from a nationally known company with a lavishly expanded media office) and that the other responses (see separate text) were markedly different. It is hardly a question of whether RTA should be introduced in Switzerland or not. After all, a significant proportion of the advertising space available on the Internet has long been traded in this way: Google certainly does, but also foreign providers with a Swiss presence, such as Microsoft's MSN platform. In addition, there is the so-called cross-border traffic, i.e. all the hits from Switzerland on websites abroad that are monetized via RTA. Media agencies in particular are hoping that this will lead to more efficient purchasing processes (see WW 20/ 9.11.2012, p. 30 f.) However, it remains to be seen how prices and revenues will develop if advertising space is allocated to the best bid within fractions of a second across a wide area.
When it comes to RTAs, publishers can be divided into these categories:
The conservatives: They fear that RTA methods are not sufficiently geared towards marketing their premium placements, but that they are primarily used to sell off remaining seats at low prices. This is often influenced by past experience, as investments in online solutions failed to achieve the hoped-for success, if not leading to steep losses and falling prices. These publishers secretly hope that if enough publishers fail to adopt RTA, this trend will collapse and the status quo with the familiar processes will continue to thrive. If they can no longer do without the earnings potential of RTA trading, they risk having to act hastily and disadvantageously if they change their strategy due to a lack of experience and knowledge.
The exclusives: They have what many conservatives dream of: they are positioned in a vertical niche in such a way that they can not only promise advertisers that they will reach their target groups accurately, but can also deliver this at good prices. Those who pursue this strategy and achieve sustainable good returns are not dependent on RTAs. This group includes the Economist, for example, whose online boss says (see "Advertisers make content") that he has not yet tried RTA because no inventory remains unsold. Due to the curse of the small market, such a strategy can hardly be implemented on a large scale in Switzerland.
The progressives: Where conservatives shy away from risk, they venture forth. They invest in infrastructure and build up expertise with the intention of taking a leading role from the outset and thus defending and expanding their position. They hope for higher sales at higher prices and are willing to accept the risk of cannibalizing their direct sales and selling premium seats at low prices.
The pragmatists: They try to find a middle way in order to be able to use RTA as controlled as possible. However, this requires considerable investment in time and management resources and the absolute intention to be successful. According to the American specialist literature, these success methods are at the forefront:
1 Optimize blocking: One of the biggest fears publishers have is around protecting premium inventory and preventing conflicts with their own sales team's direct sales. This can be prevented by entering blacklists in your own RTA system (a so-called sales-side platform, SSP). However, this is not enough, as these lists must be constantly maintained so that they are always up to date and reflect your own deals with new customers, for example.
2 Evaluate reports. RTA systems provide extensive amounts of data, the analysis of which can lead to market advantages. For example, if new customers can be identified who book in via RTA and can be approached directly by your own sales team. Sellers can also recognize what prices buyers are willing to offer and possibly adjust their own prices accordingly.
3 Test prices. Before parts of the inventory are released for RTA trading, trials can be run with deliberately high prices. As a rule, this will hardly lead to large sales, but price sensitivity can be sounded out and it can be recognized which advertising customers are willing to buy at which prices. In this way, the pricing policy and blacklists can be optimized.
4 Explore closed trading platforms. Anyone who has gained experience in the open RTA landscape will be able to draw conclusions from this in order to set up or participate in closed trading platforms. In this way, market participants and the traded inventory can be well controlled and the efficiency benefits of automated trading can be realized for all participants. Obviously, this step is reserved for the heavyweights of the industry. One example of such an approach is French publishers, who announced the founding of "La Place Media" at the beginning of September, through which more than 80 media sites can currently be booked using RTA methods.
Ultimately, publishers are not interested in preventing RTA. Above all, they want to ensure that they do not cannibalize their direct sales. And ultimately, they want RTA to become a seller's market rather than a buyer's market.
Christoph J. Walther
Thomas Moll, Head of Online Development/Projects Tamedia AG:
Swiss market participants are increasingly talking about real-time advertising instead of real-time bidding with regard to automated trading in online advertising. Tamedia very much welcomes this development. We are also very interested in more efficient order processing. We can also imagine opening up to automated buying and selling of online advertising in the near future, with the focus on process optimization rather than price dumping, and would also be prepared to pass on transaction cost savings to advertising customers. However, we would demand a concession from media agencies and intermediaries, to whom we currently pay 15 percent commission for each order for the additional work involved in booking online advertising. In any case, Tamedia's role as an active marketer of its own advertising space remains central, as we are not aiming for a market in which third parties trade Tamedia's advertising inventory in their own name and put together their own products.
Branko Radosevic Russo, Head of Advertising Market Digital Media Blick Group:
We at the Blick Group consider RTB in Switzerland to be problematic. In particular, we find it negative that the focus is no longer on quality, but only on price. Also, RTB cannot generate additional income from abroad in the long term. Although additional budget will be generated in the short term through one or two customers, in the long term RTB in its traditional form will lead to a price collapse of the thousand-contact price (CPM) in the Swiss market. This is because RTB providers will be able to book more and more cheap crossboarder websites in order to reduce their purchase price. The logo of the Swiss premium publishers would merely be used to give customers the impression of better quality. However, the campaigns could still be delivered on cheap, international websites. If RTB is ever to be an issue for the Blick Group, then only in a closed network without various other (foreign) sites. We cannot support the current system in this way, as it does not provide the quality that is decisive for the customer, but only focuses on quantity at a low CPM. In order to optimize RTB and networks accordingly, we have been successfully working closely with media agencies (e.g. Omnicom Media AG) for years.
Michael Baum, Stailamedia, on behalf of the Sportal Group:
We see the development towards real-time advertising as a groundbreaking opportunity for the entire online display market. The direct line between advertiser and publisher and the automated handling of booking processes reduce transaction costs. This means that online display advertising money will be invested more efficiently in the future. This will increase the demand for display advertising, which is ultimately in the interests of publishers. Of course, cross-border traffic and the trend towards automated buying via RTB are influencing the price structure in Switzerland. However, we firmly believe that high-quality Swiss environments are essential for Swiss campaigns and that the associated higher prices are justified. With RTB, publishers can establish their own networks. As soon as the demand side is fully equipped with DSPs, intermediary networks will become superfluous. Publishers take back control of their own inventory.
Remo Baumeler, Head of Advertising Market NZZ-Net:
The importance of RTB is still low in Switzerland, as the most important publishers have not yet offered their advertising inventory via such systems. In addition, there is still too little know-how in the industry. RTB will certainly become more important, but it won't happen overnight. It is important that we are very familiar with all market-relevant technologies, which is why building up expertise is a priority for us. As mainly behavioral advertising is booked on RTB platforms, the environment no longer has the same significance. As a result, price pressure is increasing, as most Swiss sites cannot keep up with the cheap inventory from abroad. Indirectly, therefore, quality news sites in particular are weakened, which can have an overall negative impact on the perception of online advertising. An international RTB system for premium sites is one possible solution. Publicitas is moving in this direction with its marketplace, and we will examine this possibility more closely. I see the real advantage of RTB systems above all in the efficient booking process, which is why we prefer to speak of real-time advertising rather than real-time bidding. A self-booking process reduces administrative costs and justifies slightly lower CPMs. At the same time, however, there is also a trend towards qualitative online advertising. The demand for complex site integrations, individual branding formats and various PR opportunities is increasing. However, these campaigns cannot be traded with RTB systems.