The RTB wave rolls
Fundamental changes are about to take place in the digital advertising market - but there are still many questions to be answered.
Prices stable at a high level - pressure from abroad
The defining feature of the Swiss digital advertising landscape in the fall of 2012 is actually how differently these new techniques are assessed and applied. This can be seen when assessing the price development. On one side, for example, is Remo Prinz, partner at Serranetga: "Since we've been consistently handling media buying via Real Time Bidding, prices have become massively cheaper." While customers still had to pay an effective price per thousand contacts (CPM) of around 25 Swiss francs for an online media plan in 2010, today CPMs can be offered that are five to ten times cheaper, depending on the performance target. On the other hand, the majority of survey participants report stable prices, both in the display and performance areas, as volumes continue to rise. Some even mention slightly rising prices in individual areas. It is acknowledged that prices in Switzerland are high compared with European benchmark markets, which is why a downward adjustment is expected. There is an important argument why both prices will continue to come under pressure and automated trading platforms will prevail: Cross Border Traffic, especially from Germany. Because there are no or only a few offers on various niche topics in Switzerland, Swiss surfers with a corresponding need for information soon end up on foreign sites. However, these sites are not equipped to actively market traffic from Switzerland themselves, which is why it is sold via automated trading platforms. Since, from the point of view of these publishers, a little money is better than no money at all, the prices are comparatively low. Swiss publishers with a high-quality and well-known brand can, as before, refer to the high quality and also defend the higher prices against cross-border traffic via automated RTB sales. Thus, especially platforms with easily replaceable target groups and a weak brand suffer from foreign competition. It is reported that prices for cross boarder traffic are between 30 percent and 80 percent below Swiss price levels, depending on the environment and size of formats and placement. "The volume going abroad will certainly be around 10 to 20 million," estimates Roger Baur of NetProfit GmbH. For the large ad networks and media agencies, this often involves a profitable arbitrage business, which is now disappearing as modern trading systems become more widespread. Because, as Philipp Semmler of Mediaschneider points out, cross-border traffic can also be qualified on the basis of data-based real-time targeting, visibility measurement and heatmap analyses. In this way, the wheat can be separated from the chaff, and good traffic on foreign sites will be on a par with domestic sites in terms of quality - and thus depress their prices.
Swiss publishers fear RTB
And that is exactly the fear of many publishers when it comes to the topic of RTB. Very few have opened up their online inventory to automated trading by means of an SSP solution. One example of this is the Premium Publishers Network, PPN, launched by the major publishers in Zurich (see box). The technical system used for this is easily capable of handling automated bidding, but the PPN operators do not want to make use of it. They claim not to want their high-quality inventory to be associated with questionable low-cost inventory, as is often associated with RTB. But in fact, fears that prices could erode uncontrollably will be at least as decisive. But the RTB wave is rolling, and Hans-Georg Bardohl, Head of Digital Buying at OmnicomMediaGroup, sums up the possible dimensions: "Theoretically, it would be possible to sell all traffic automatically, specifying the minimum price."
Mobile still in its infancy
When it comes to mobile, all survey participants agree: although mobile penetration in Switzerland has exceeded the population for years, the use of this channel for advertising is still in its infancy. The mobile advertising market is unanimously judged to have a very promising future. At the same time, it is acknowledged that the associated requirements are significantly higher than for classic online advertising, which is why development comparatively (still) requires more time. Reasons for the slow implementation are the more difficult technical integration, especially the lack of mobile landing pages, as well as the lack of know-how, which also explains why mobile is still rarely included in marketing concepts. Hendrik van Dyck, Head of Online at Mediaxis-MPG, analyzes it like this: "In the mobile sector, we have to pay for the fact that we still haven't managed to generate trust in the online sector." Thus, even in mobile advertising, the vast majority of available advertising space comes from abroad, as Remo Prinz of Serranetga confirms. For him, it is clear that this form of digital advertising will also develop in the direction of RTB in the future. For the time being, it seems likely that many companies are now focusing more on online advertising and want to get a complete grip on the stationary elements before they are ready to take the step to mobile.
Investing in training and young talent
This addresses one of the crucial success factors that was also asked about in the survey: The industry needs to educate itself with open communication and confidence-building measures for digital advertising. This includes investing in research and case studies to show advertising clients that branding also has its place in digital media. In addition, everyone agrees that there is an urgent need to invest in training and young talent. This is because the increasing complexity of online advertising is placing ever greater demands on market players and their employees. This leads to a high demand for specialized workers, who are very difficult to find in the Swiss market. Remo Prinz of Serranetga sums up the situation: "There is a clear 'run of talents'. Only those who recruit the 'fittest' people for the digitalized advertising market will play at the front in the future." As a result of digitization, he said, the advertising market is increasingly determined by technological progress, so that today's communications planner will soon be replaced by the communications engineer. Hans-Georg Bardohl of OmnicomMediaGroup has a specific demand in this regard: "The efforts on the part of one or the other association are certainly very welcome, but they should also be implemented and massively deepened at the major marketing academies and even universities."
Christoph J. Walther
Hesitant printers
One of the most striking developments in the digital advertising market in Switzerland is the launch of the Premium Publishers Network, PPN, in March 2012. With it, the NZZ Media Group, Ringier and Tamedia want to market their advertising spaces in a joint performance and targeting network and thus build a counterweight to the global advertising networks, especially against Google. Business has gotten off to an "excellent start," PPN management member Marco Billeter told Werbewoche. The partner circle has already been expanded, with Axel Springer Schweiz titles also having access to PPN. And talks are also underway with AZ Medien and a solution is being sought by the beginning of next year. In addition, there are numerous other inquiries from sites that would like to sell via PPN. Currently, 48 sites are marketing their inventory on PPN, including Blick. ch, 20Minuten.ch, Lematin.ch, NZZ.ch, Homegate.ch and Beobachter.ch. According to NET-Metrix Profile, PPN reaches 4.27 million unique users per month in Switzerland, which corresponds to a national certified net reach of 80.6 percent. In August, PPN analyzed around 1.2 billion different page impressions and delivered over 350 million banners. About 70 percent of sales now come via media agencies, Billeter estimates. The rest is sold directly, with bookings in both cases being made manually via an online tool. When asked about RTB in particular and connecting to automated trading platforms in general, Billeter is cautious: "We currently want to focus on the existing product range and the associated direct sales." The company is monitoring market trends very closely and regularly exchanges information with foreign media houses and advertising networks that have had different experiences with RTB. And if needed, they would be technologically "very quickly in a position" to offer the inventory via automated bidding. But Billeter makes no secret of his preference to stay away from such methods for as long as possible. So all those automated trading platform operators who want to resell the PPN residual inventory through their networks will get a discount. Billeter admits to leaving money behind, but considers it more important not to bring PPN into the vicinity of low-quality cheap traffic. And with this attitude, he knows that he is in agreement with his customers, who appreciate being able to operate in a high-quality environment without having to set up fundamentally new processes. The top priority on the development roadmap is the implementation of targeting displays on mobile devices, for which a mobile offering is to be launched in the next few weeks "due to strong demand".
Only Tamedia is fully committed to PPN
In the digital advertising trend survey conducted by Werbewoche, the assessments of PPN are mixed. The protectionist or monopolistic aspects of the project are criticized in various cases. Concrete experiences do not yet seem to be widespread or are not communicated or (in one case) are negative. Hendrik van Dyck, Head of Online at Mediaxis-MPG, puts it this way: "The question arises whether the offer is not based more on the wishes of the publishers and less on the needs of the market." And Andreas Nigg of Adwebster, which claims to be the largest Swiss display ad network, concludes, "The market response regarding PPN is not really positive." He states that his partners (NZZ, Blick, Pro Sieben, Sat 1, GMX, Scout24, Axel Springer, etc.) continue to use various tools within a yield management process, which leads to considerable additional revenues. Meanwhile, only Tamedia (as the driver behind PPN) uses this tool exclusively and thus forgoes additional revenues.
Others move forward
Stailamedia AG, which describes itself as Switzerland's largest independent online marketer, is taking a different approach to PPN. Managing Director Michael Baum emphasizes: "For us, there is no doubt that the future belongs to automated media buying. " Thus, the company recently announced that it is cooperating with App Nexus, the world market leader in real-time advertising technology. And a few days ago, Publicitas also fleshed out its strategy around an automated advertising inventory marketplace. It had already announced a corresponding initiative in June of this year. Now Publigroupe, the parent company of Publicitas, has announced the purchase of a majority stake in the Dutch company Improve Digital. According to a press release, the latter has "multiple award-winning sell-side platform (SSP) technology" and is a "leading European provider in this field." "Together with our partners, we will take a leading role in the creation of a new marketplace where premium advertising inventory is traded," the Publigroupe release continues. Publicitas plans to launch such a marketplace for premium media providers this year.
Is there a need for a Swiss-RTB?
cjw. The RTB wave will be unstoppable. The only thing that remains to be seen is which parts of the market will be handled in this way and by when. The decisive question is therefore how such practices will be widely introduced in the Swiss market. Whether simply foreign companies and their models will be able to spread, or whether there will be a "Swiss-RTB" variety that refers to local conditions. First of all, it will be a matter of promoting understanding for such modern processes. After all, publishers in Switzerland are very cautious about the topic, mainly because they don't know exactly how to deal with it. And that's understandable. The techniques associated with RTB are new, very complex, and require expertise that is typically not available in the advertising business, for example, regarding computer science or mathematics. Add to that the fact that RTB techniques have grown and continue to grow in practice, with failures and mishaps inevitable. These are exploited with relish by counterparts, usually involving the automated placement of advertising messages in unfavorable environments or double bookings across different trading channels. This can be largely avoided if the possibilities of RTB standards (such as those described in the OpenRTB standard of the Interactive Advertising Bureau, IAB) are fully exploited and, at most, supplemented by local aspects. Here, the companies that want to ride the RTB wave first and foremost are called upon not only to engage in market communication, but also to promote the level of knowledge in the industry and thus confidence in the new techniques. In order for RTB technology to function in line with Swiss quality thinking, publishers in particular need to invest in new technology and processes (for example, to ensure that metadata on content is complete and correct). Used correctly and sensibly, RTB can be a good opportunity for publishers to tap into new customer segments (not least abroad or in mobile) and thus increase sales.
PARTICIPANTS
Werbewoche's digital advertising trend survey is based on the assessments of these industry experts (in alphabetical order):
Hans-Georg BARDOHL, Omnicom
Media Group Switzerland AG
Michael BAUM, Stailamedia AG
Roger BAUR, NetProfit GmbH
Alexander HORROLT, Goldbach Audience
Andreas JORGELLA, The House Agency AG
Dominik LÄMMLER, Adextra AG
Andreas NIGG, Adwebster AG
Remo PRINZ, Serranetga AG
Christoph SCHNEIDER, Axel Springer Schweiz AG
Philipp SEMMLER, Mediaschneider AG
Stephan SUTER, Adkey GmbH
Lukas STUBER, Yourposition GmbH
Hendrik VAN DYCK, Mediaxis-MPG AG
Ueli WEBER, Publimedia AG and IAB (Switzerland)
