EUROPEAN RTB INSIGHT REPORT SPRING 2012
The Defragmenting Digital Media Market The big RTB news this quarter has to be Facebook s recent announcement that it is opening up its Marketplace inventory to external real time bidders. This move is indicative of a growing momentum towards the consolidation of major inventory sources and channels into the RTB ecosystem. As consumers, we engage with digital media seamlessly across mobile, display, video and social, the channel we are viewing is not important, only the content. However for advertisers, serving audiences in a seamless way presents challenges. In-house marketing team structures, and the agencies which service them, are often siloed with little co-operation between them. This fragmented media and advertising industry is at odds with clear, consistent messaging and effi cient campaigns. This is why working in the real-time bidding industry continues to excite me; those of us at the forefront can see a better way. It has been said many times before that buying media via RTB frees prices from relationship buying constraints, and means that each ad shown is highly targeted to an individual; but arguably of more importance is that RTB coupled with smart attribution focussed analytics breaks down the barriers between channels, to intelligently reach consumers across multiple media platforms with a single campaign. Facebook s recent announcement is game changing for RTB advertisers because Facebook controls a large percentage of available online media consumption (1 in every 7 minutes online are spent on the social site), but also because of the effi ciencies inherent in bringing social advertising into the RTB fold. In the near future we ll be looking to Twitter, LinkedIn and other the social sites for a response. We have already seen signifi cant moves in the video market. Research from Forrester predicts a doubling of US RTB video spend in 2012, with RTB to account for 22% of the market in 2013. Mobile and tablet RTB ad-sales have also seen good early growth in the exchanges, with more predicted. However there are still many challenges left for RTB: a measurement that bridges branding and direct marketing; consistent release of premium inventory; CRM collaboration within advertisers; a resolution of the e-privacy question but meeting these challenges will be another step in the balancing of audience fragmentation with media buying defragmentation, which will result in crucial rewards for advertisers. The next Trend Report will be out after summer. Autumn is an exciting time for the industry - we ll be exhibiting at dmexco (please let us know if you would like to meet up there or just drop by the stand - Hall 7, Booth B018), in Cologne, September, and with both ATS London and ATS Paris following soon after, we look forward to seeing you then. Andy Cocker Co-Founder/COO Infectious Media Headline findings Italy and Germany Top CPM Rankings UK CPMs no longer the highest in Europe UK RTB Response Rates at all Time High UK CTR on an upward trend Higher Frequency Brings More Interaction Increased advertising exposures has beneficial effect on CTR Getting the Most Out of your Brand Budget Sweden and Hungary have the longest advert exposure times Google Leads the Way into Eastern Europe Google AdExchange provides two thirds of impressions in Eastern & Central Europe A Publisher s View UK remains the largest European RTB market with 513% Y-o-Y growth Region Spotlight: Central-Eastern Europe Sudden growth inflates prices, with more to come PG 01
Italy and Germany Top CPM Rankings For the first time since the inception of the Trend Report, CPMs (cost-perthousand) for advertising impressions in the UK are not the highest in Europe, with Italy and Germany now taking the lead. This shift has been led by relative price stability in the UK contrasting against rapid increases in Western European markets this quarter. These increases have also led to a strengthening of the East-West divide, clearly splitting the continent into two regions of relatively high and relatively low CPM. Scandinavia particularly saw CPM rise over this period, with Sweden and Finland approaching the levels of the more mature markets of Germany and Italy. Within the Eastern European region Turkey has by far the highest CPM, outstripping its nearest CPM neighbour by 277%. Portugal and Belgium once again have the lowest CPMs seen in Western Europe. Increasing CPM in Central and Northern Europe may demonstrate an upward spiral of demand in this region. This would signal an opportunity for publishers to profit by making more inventory available. However, an alternative interpretation would be an influx of premium inventory onto these exchanges. If this is the case then it represents a key opportunity for advertisers by bringing the efficiency of RTB (real-time bidding) campaigns to premium advertising sources in these regions. UK RTB Response Rates at all Time High In the last Trend Report UK click-through-rates (CTRs) had doubled between November and February. At the time it was unclear as to whether this was a sustainable increase or a seasonal anomaly. The good news for advertisers is that UK CTR has continued on an upward trend. This increased response to RTB advertising has offset the marginal increases in CPM precipitating a relatively flat cost-per-click (CPC). European CPM has increased dramatically recently, more than doubling in the last three months. This increase can be attributed to large CPM inflation in Germany, Italy, Sweden, Switzerland and Austria, with the rest of Europe more stable. And with the European click-through-rate CTR dropping between April and May, this has led to a significant CPC price rise. Increased CTR in the UK market could have many causes: increased data leading to better optimisation, better quality inventory; improved creative; or even more receptive audience. No matter the cause this is good news for advertisers in the UK. The drop in European CTR may represent a momentary blip or signal some more fundamental issues, a question which will require more time to resolve. EU-UK comparisons by month The UK s slow growth in comparison to the rest of the continent could show a maturing of this market, with publisher inventory supply and advertiser demand currently relatively balanced. Regions by CPM PG 02 $0.00 $1.00 PG 03
Higher Frequency Brings More Interaction The graph below shows how the number of exposures to an advert affects response across different European regions. The frequency of advertising impression per user is shown against CTRs in UK & Ireland, Eastern Europe & Germany and Western Europe. Across all regions the strong positive relationship between CTR and frequency of advertising exposure strongly suggests increased exposure has a substantially beneficial effect on CTR when buying through RTB in these markets. This pattern is most pronounced in the Western Europe grouping, followed by Eastern Europe & Germany, with the UK & Ireland seeing the lowest causal effect. These differences could be attributed to variation in audience makeup or inventory quality, for example on-page advertising saturation. However, even in the lowest responding region a user with 12 exposures to an advert was still 6 times more likely to click than one who had a quarter of the exposures. Interaction Rates by Frequency per User Across European Regions Getting the Most Out of your Brand Budget For those advertisers looking to spend their branding pounds/euros the lack of information on advert positioning on-page, or whether an advert is actually seen by the user, is a key inhibitor to growing online display spend. The below graph provides visibility across countries of advert viewing times (blue) and total length of user browsing time per page (green). Longest advert exposure times are seen in Sweden, Hungary and Poland, with the UK and Ireland somewhere in the middle, and Germany, Italy and France trailing behind. On-page user time is the highest in Poland and Finland, and shortest in Iceland. Significant differences can be seen between on-page user time and the time the user is exposed to the advertising message, with Austria and Germany showing the least exposure compared to time on-page. Iceland is at the other end of the scale where the advert is visible for almost the whole time a user views the webpage. Countries with high on-page time and high viewing times represent a great opportunity for brand advertisers as RTB branding campaigns in these regions should provide improved brand awareness per impression in comparison to other regions. Page and Impression Durations by Country PG 04 PG 05
Google Leads the Way into Eastern Europe Currently there are a number of key inventory aggregators across Europe, but their relative importance differs from region to region. The below analysis shows the top five inventory aggregators for the regions of Europe, with the proportion of inventory sold in that region. Comparison of Eastern & Central Europe with Western Europe shows some notable differences. In the former, Google AdExchange represents two thirds of the available impressions, whereas in the latter inventory is more widely spread, with market share for Google AdExchange dropping to 40%. The supplier skew seen within Eastern & Central Europe is perhaps symptomatic of a less mature market. In the west the market could be said to be maturing as aggregators and suppliers continue to bring more inventory to the exchanges. With Western inventory prices more exposed to market forces it is expected they would represent a truer market value. Of particular note is Scandinavia, where a very different picture has emerged. Google AdExchange still holds the prominent seller position but the next three aggregators are home grown and do not feature outside of this region. It appears that regional specialists have gained market share and capitalised on the opportunity RTB brings before large-scale international aggregators have entered the market. The UK and Ireland market exhibits the most competition in inventory sale, with Google AdExchange taking only 22% market share, closely followed by Rubicon and Admeld (a Google company). It could be claimed that the UK has the most mature RTB market and that other regions will tend towards this model over time. However this will depend on the level of demand, the inventory being released and the potential rewards for new aggregators entering the market. Top Aggregators Eastern and Central Europe Top Aggregators Western Europe A Publisher s View The UK remains the largest European market for real time bidding spend with 513% Y-o-Y growth on Rubicon s REVV platform. Most premium UK publishers are now exposing their inventory in open auctions or private marketplace scenarios, giving preferential or exclusive access to selected buyers or opening up new inventory segments that were previously only available for direct premium campaigns. France is seeing strong month-on-month RTB growth in 2012 with the RTB market currently about half the size of that in the UK. Both Italy and Spain are also showing signs of maturity with double-digit month on month growth. Attitudes towards programmatic trading in Germany appear to be shifting with more premium publishers starting to develop and rollout their RTB strategies. Top Aggregators Scandinavia Top Aggregators UK and Ireland The Scandinavian market has shown strong signs of progress over recent months with the launch of various local agency trading desks. Growth should accelerate in the coming months as more local publisher inventory is launched. The recently announced partnership between Rubicon Project and Stockholm-based Netric Sales will see 1.2 billion local publisher impressions per month become available in these markets. Predictions for next three months: More local publisher inventory becoming available through RTB in markets such as Germany, Spain, Italy and the Nordics. Over the coming months we can expect to see publishers starting to expose first party data segments in the bid stream in private situations that will command much higher CPMs. Continued growth in Private Marketplaces with publishers exposing more premium ad placement inventory. Luke Fenney, Yield Management Specialist, UK & Europe, The Rubicon Project PG 06 PG 07
Region Spotlight: Central-Eastern Europe CPMs and CPM Growth by Region In the below analysis some of the emerging RTB economies of Central- Eastern Europe (Poland, Hungary, Czech Republic and Slovakia) are brought in to focus by comparing them with other European regions. The graph shows that prices in Central-Eastern Europe are consistently lower than the other two regional groupings with prices in the UK & Ireland in the middle, and Western European prices significantly higher. Growth in each of the markets can also be seen, with CPM increasing between the beginning and end of the period in all three regions, although not necessarily in a linear fashion. Central-Eastern Europe shows the least stability in prices, with an initial dip in CPM followed by a doubling between March and April. Western CPM sees strong growth in the middle of the period, with relatively stable prices at the beginning and end. The UK & Ireland shows the most stability with only marginal changes throughout the period. Central - Eastern Europe In this analysis the emerging RTB markets of Central-Eastern Europe can be seen in relief against the maturing Western European market and the mature UK & Ireland market. The analysis demonstrates how sudden growth can quickly inflate prices, and it can be expected that as the Central-Eastern European market grows there will be more price inflation to come. UK and Ireland Methodology This report was researched and written by Infectious Media using aggregated and anonomysed campaign data from Impression Desk. The findings, whilst specific to Infectious Media, represent work carried out for clients spanning all industry sectors with differing objectives, budgets and target audiences, which may be indicative of industry wide trends. Western Europe PG 08 PG 09
About Infectious Media Specialists in intelligent online display, and Europe s leading independent trading desk, Infectious Media is focused on making online display deliver consistently great results across the whole of the sales and marketing process. Using proprietary technology, Impression Desk and unparalleled expertise, the company deciphers data to power RTB display campaigns. These campaigns reach targeted audiences at scale, with zero wastage, and use dynamic creative messages to tailor the ads in real time. Impression Desk Social is directly integrated into the Facebook Ads API, and integrates audience performance insights from Facebook and RTB display campaigns to enable portfolio management between them. About Impression Desk Built on top of core class-leading RTB, data and ad-serving infrastructure, Impression Desk integrates into all major real time ad exchanges and SSPs. A powerful data management and analytics platform able to trade dynamically across an immense global pool of advertising inventory, Impression Desk delivers the end-toend campaign workflow, content classification, dynamic creative and advanced data visualisation tools needed to meet the needs of today s sophisticated advertiser. intelligent online display Infectious Media Ltd 3-7 Herbal Hill London EC1R 5EJ Tel: +44 (0)20 7775 5606 Fax: +44 (0)20 7775 7705 info@infectiousmedia.com www.infectiousmedia.com Follow us on Twitter: @infectiousmedia