This fall, Werbewoche once again surveyed leaders in the online advertising industry about the most important trends. All survey participants identified mobile as one of the key trends in the digital advertising market. (The online video trend, which was rated as equally important, will not be discussed further here, as Werbewoche is covering this topic in depth in its current video marketing series.) At the same time, it is acknowledged that the mobile submarket in Switzerland is still small and underdeveloped. For publishers, the conclusion for now is that a mobile user cannot currently be monetized as effectively as a desktop user. Various reasons are cited for this:
– Users find ads on mobile devices annoying and reject them.
– There is a lack of standardized advertising formats, and the advertising formats currently in use do little to attract attention.
– Targeting options are limited; even traditional targeting and capping—limiting the number of ad impressions per user—are technically impossible for some large publishers.
– There are only a few metrics, and they are far from sufficient to capture all campaign objectives. Existing metrics are difficult to compare, making conversion tracking challenging.
So today, the situation is as Andreas Jorgella, a partner at The House Agency, describes it: «Current mobile advertising offerings were developed by website marketers using traditional thinking and are, for the most part, limited to the smallest display formats.» And he adds: «We are very critical of whether this effectively conveys advertisers» messages and brand attributes in a way that’s tailored to the device.« Despite rapid user growth, there is currently a lack of confidence when it comes to investing in mobile campaigns. Thus, there is general agreement that the media industry is called upon to find widely accepted solutions. And that it will still take some time before the topic of mobile is broadly established among clients and agencies. Potential solutions are also being proposed. For example, Alexander Horrolt, Managing Director of Goldbach Audience, highlights the »Audience First« approach, which prioritizes reaching the desired target audience rather than focusing on the specific channel. As the statement by Stephan Obwegeser, who is responsible for Digital Advertising and Services at Tamedia, shows, such strategies seem to be slowly taking shape in publishing circles: »After all, the challenge lies not primarily in the reduced screen space, but rather in the intelligent «Mecano»—how advertising is intelligently integrated into the content to add value. To achieve this, advertisers, creatives, publishers, and users must work even more closely together.” (see “Mobile: Dominated by Google”)
First tests in 2014?
Just as was the case a year ago, opinions on the automation of advertising processes remain divided. While many processes related to online ad placements in the advertising industry are still handled manually today, solutions have been developed that allow the exchange of relevant information between the participating systems to take place automatically. When it comes solely to booking processes, the term “programmatic buying” is used; if pricing processes are also included, the term is “real-time bidding” (RTB). Initially, publishers feared that the auction processes involved in RTB would inevitably lead to a collapse in prices, which is why the three letters “RTB” have been perceived more as a specter than as an opportunity for the future when it comes to premium inventory. And the topic is no less of a concern for media agencies and marketers, because if buyers and sellers can connect directly, their services could become redundant.
Clearly, it will take some time before these technical concepts can be understood and evaluated not only by pioneers but also by a broad audience within the industry. However, there are now early signs pointing to a tangible sense of optimism regarding industry-wide implementation. Taken as a whole, the expert statements in the Werbewoche survey suggest that more efficient handling of booking processes will likely be the subject of serious discussion in the coming year. Alexander Horrolt of Goldbach Audience reports: «We’re seeing many publishers engage much more intensively with the subject and make serious efforts to test or introduce automated trading in 2014.» Viktor Zawadzki, CEO of Spree7—a trading platform belonging to Publigroupe—also confirms this trend: «We’re seeing more and more Swiss websites trading their inventory programmatically. TPVs rose by 21 percent between July and September.» These signs point to a solution similar to the one media companies have already established in foreign markets such as France, Denmark, or the Czech Republic—and certainly in the U.S. They have set up their own trading platforms, known as private exchanges, where they can set and control the terms themselves. This allows media agencies to continue negotiating prices bilaterally with publishers, but the booking and delivery process will be automated; a wide variety of booking criteria can also be specified, and individual agencies or clients can be approved or blocked. (See also the article on page 26.)
Remo Baumeler, Head of Digital Advertising at Neue Zürcher Zeitung AG, comments: «I certainly see some positives in this development. For premium providers, however, the open bidding market isn’t the best option; focusing on private marketplaces is the better approach here.» At Tamedia, Stephan Obwegeser echoes this sentiment: «From our perspective, models that prioritize more efficient processing and smarter placement options—rather than primarily seeking a price advantage—have a chance of succeeding.» On the path toward a potential Swiss solution for programmatic buying, a major hurdle will likely be determining which solution providers should be selected and, above all, what trading commissions they should be granted. The focus here is on trading premium inventory. Those who want to sell leftover inventory as profitably as possible can also use existing RTB marketplaces for this purpose, as has been the practice with Google AdSense to date.
Skeptics fear that automated bookings will lead to the loss of face-to-face consultations, during which customers can often be offered more creative and lucrative options. Stephan Suter, CEO and partner at ADKEY GmbH, puts it this way: «The great thing is that in our small country, we can often still be in direct contact with providers, and together we can create the best possible outcome for the customer. The more this is handled by technology, the more of that is lost.» In addition, concerns have been repeatedly raised that any gains in operational efficiency achieved through automated processes are simultaneously lost due to increased complexity. This is because effectively implementing such new systems requires not only investment but also better-trained—and thus more expensive—staff. However, this is precisely where the opportunity lies for agencies, brokers, and marketers: Those who master automated processes can win over customers by relieving them of the burden of dealing with new and more complex systems.
No Letup on the Talent Front
The term «skilled workers» highlights a problem that has been plaguing the online industry for years and will continue to be a source of concern. Arend Hendriks, Country Manager for Advertising & Online at Microsoft Switzerland GmbH, sums it up: «The shortage of young talent in the digital sector could slow our continued growth even in the medium term.» And Catrin Rubenson, CEO at Admazing, quantifies the scale of the problem: «There is a shortage of around 2,000 specialists in the industry.» The courses offered by IAB Switzerland for career changers are widely recognized and welcomed. IAB Switzerland Managing Director Roger Baur reports: “The courses are going very well; this year we’ve once again trained over a hundred people and conducted two courses in collaboration with the agency association BSW.” Next year, the program is set to be expanded to include a course for advanced learners.
But that’s not enough, says Hendrik van Dyck, CEO of Adisfaction, who takes it a step further: «From our perspective, the problem isn’t a lack of talent. There’s a lack of time and the ability among experts to pass on their knowledge on a broad scale. This fast-paced industry needs hands-on training from industry experts who share their knowledge to nurture the next generation.» It’s clear to everyone that what has long been neglected cannot be made up in just a few years, and so it will take several more years before such measures have a broad impact on the job market. Yet there are already several voices pointing to a silver lining on the horizon. Take Roger Wassmer, CEO of Zanox Switzerland: «There’s a slight easing in the Swiss market, although good people are still hard to find.»
Billboard Boom
In the traditional display advertising business, there are reports of a boom in large-format display ads. Take Michael Baum, Managing Director of Stailamedia AG, for example: «Our billboard network, for instance, is fully booked through the end of the year.» And Matthias Kern, Head of Display Advertising Sales at Tamedia subsidiary search.ch, reports that the share of large-format campaigns has more than doubled within a year. Consequently, there has been a massive decline in standard advertising formats—a trend that media company representatives do not address—but Michael Baum comments: «Major publishing houses say these formats now account for only three percent of total online revenue.»
Other key trends are seen in the areas of search, social, and content—and in how they intersect. Search engine advertising remains a major driver, and Google, the market leader, is setting the tone in mobile and video advertising. Similarly, social media is dominated by Facebook, which is becoming increasingly important in the marketing mix. This is true both as a direct communication channel between brands and their customers and as an effective sales channel. With the launch of Facebook Exchange, Facebook opened itself up primarily to retargeting. To succeed on social media, you need good content, which is why content marketing—and thus native advertising—is becoming increasingly intertwined with social media.
Cross-border: A Blessing or a Curse?
When it comes to price trends, prices are under pressure, but the trends vary widely. This is because online inventory is now available at CPM rates of 50 rappen, 5 francs, or 50 francs. This isn’t always easy to explain to clients when the associated differences in quality—and thus the value for money—aren’t immediately apparent. The distinction between performance-based and traditional advertising activities has become even more pronounced. There is more than enough display inventory, and it doesn’t matter where the traffic comes from. As a result, prices remain under pressure, partly due to competition from international inventory, including that from international agencies« in-house networks. In this context, so-called cross-border traffic is often demonized, even in this survey. But Stephan Suter of Adkey sees it differently: »We simply have to acknowledge that this allows us to achieve high reach and, in some cases, high-quality audience affinities at lower prices.”
While prices for standard formats are falling, most customers are still willing to pay a mid-double-digit CPM for high-quality, effective, and simple products featuring premium inventory. This is where the future opportunities for publishers lie, as NZZ-Baumeler confirms: «I am convinced that higher prices will continue to be paid in the online advertising market for high-quality ad placements.» In this area, an alignment with lower foreign rates is not currently foreseeable. The top placements are very stable due to the limited domestic supply. The majority of the available, original premium traffic is controlled by a relatively small number of large publishers who refrain from special offers with steep discounts or clearance sales via real-time advertising. Catrin Rubenson of Admazing comments on this situation as follows: «There is a shared desire here not to put too much pressure on price levels. Given the cost structures relative to the available traffic in a small multilingual country, this is also understandable.»
Christoph J. Walther
Mobile: Dominated by Google
While the Swiss advertising industry is still grappling with how to handle advertising on mobile devices, publishers’ arch-enemy has long since established a dominant position in the U.S.: According to estimates by market research firm eMarketer from August, Google accounts for nearly half of all revenue in this sector, while Facebook has captured nearly 10 percent market share just one year after entering the market. Both companies have decisive advantages: They know their users’ preferences inside and out and can therefore tailor advertising messages to be well-received by the audience, as they align with their interests and needs. Furthermore, such advertising messages can be seamlessly integrated into their respective products (for example, based on the user’s location on Google Maps) on small screens. There is no reason to doubt that these advantages will be leveraged just as dominantly in this country as well. Anyone who wants to make money from advertising on mobile devices must also accept that many advertisers have long since found their own way to connect with their customers’ smartphones and tablets: Apps allow for a very rich dialogue with customers, increase customer loyalty, and enable transactions to be processed directly.
And here, too, Google is leading the way: At the end of October, the search engine giant launched «Google App Indexing.» This allows app developers to make their app data available to Google for indexing. When relevant search results appear, a link is displayed that lets users open the corresponding app directly at the appropriate location. If domestic publishers—especially traditional ones—don’t want to fall behind here, they’ll have no choice but to either convince the journalistic “guardians of the holy grail” in their own ranks or ignore them and take the plunge. After all, to ensure that advertising content isn’t perceived as disruptive on small screens, it must be presented in a multimedia format, intelligently integrated with editorial content, and presented on largely equal footing. The buzzwords for this include “native advertising” and “content marketing,” which essentially refer to advertorials. (cjw)
Participants
Werbewoche's digital advertising trend survey is based on the assessments of these industry experts (in alphabetical order):
Michael Baum, Managing Director of Stailamedia AG
Remo Baumeler, Head of Digital Advertising, Neue Zürcher Zeitung AG
Roger Baur, Netprofit & IAB Switzerland
Hendrik van Dyck, Managing Director of Adisfaction GmbH
Alexander Horrolt, Managing Director of Goldbach Audience (Switzerland) AG
Andreas Jorgella, Partner at The House Agency AG
Matthias Kern, Head of Display Advertising Sales at search.ch
Michel Lazecki, CEO of adwebster AG
Stephan Obwegeser, Head of Digital Advertising & Services at Tamedia
Remo Prinz, Partner at Serranetga AG
Catrin Rubenson, CEO of Admazing
Stephan Suter, CEO/Partner, ADKEY GmbH
Pascal Urscheler, Head of Media & Product Management at Publicitas
Roger Wassmer, CEO of Zanox Switzerland
Mike Weber, Head of Strategic Projects at PubliGroupe
Stefan Wirth, CEO of Instanz Tbd Spree7 & Improve Digital