Why RTB technology could not conquer the advertising market in Europe

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    The technology for purchasing real-time advertising based on auction (Real-Time Bidding - RTB) in the US is very popular and very common. However, on the other side of the Atlantic - in Europe - the situation is not so optimistic. Despite the large advances and high expectations that accompanied the appearance of RTB in the Old World, this technology has not yet been able to take on the peaks that it seemed to conquer playfully.

    RTB in Europe is still growing and, in general, not at such a slow pace, but expectations were much higher. The reasons for not such outstanding RTB results are the subject of AdMonsters report . Today we will take a closer look at this interesting document.

    RTB in Europe


    Having appeared just a few years ago, Real-Time Bidding technology has managed to change the way digital advertising is bought and sold in the United States. RTB systems give advertising agencies and advertisers more control over how the advertising budget is spent. The increased control over the buyer has led to the emergence of a number of new players in the online advertising market: third-party data providers, automated purchasing systems (Demand Side Platforms - DSP), data management platforms or suppliers (Data Management Platforms - DMP), etc. d.

    In Europe, this process is only gaining momentum. Experts (in particular, IDC's Kartsen Weide) forecast an increase in sales of RTB advertising in Western Europe from $ 227 million in 2011 to $ 2.5 billion in 2016. The share of RTB on all expenses for display advertising will grow from 3% to 19%.

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    However, there is one obstacle to growth. His name is advertising platforms (or “publishers,” as they are called). Advertisers quickly tested the benefits of the new technology, which cannot be said about the administration of the Internet sites where the banners are placed.

    A joint study by Digiday and PubMatic in 2011 showed that only 20% of sites offered to advertise using RTB systems. Moreover, already at that time, the number of advertisers who somehow worked with this technology was as much as 62%.

    At the moment, the situation has not changed much, and European Internet sites are still cautiously looking at RTB. And this is despite a whole series of seemingly quite significant advantages:

    • More customers - obviously, if advertisers are interested in this technology, then the possibility of placing banners with its help will contribute to the growth of site revenue. Less inventory (such as impressions) will remain unsold, while CPM and impression revenue will increase.
    • Convenience of advertising inventory management. In addition to increased CPM, RTB technology allows you to increase the efficiency of inventory management, which is difficult to sell directly (“premium placements”). According to Google, the overhead of managing display advertising campaigns can range from 8% to 28% percent of the total campaign budget (for comparison, in the case of TV advertising, this figure does not exceed 2%). Without RTB, publishers are forced to work with multiple ad networks in pursuit of better CPM. Combining several networks on one site is a difficult process, and the result is often quite unstable. In addition, in such a situation, it is not possible to automatically optimize the placement price. All this leads to the fact that potentially profitable placements will bring the site much less than net income.
    • RTB is only part of a more general trend towards the transition to programmatic buying and selling, which can significantly improve the efficiency of processes (including sales) of platforms. Programmatic buying allows buyers and sellers of advertising to complete transactions completely automatically without manual manipulations, price discussions, signing contracts, etc.

    These are far from the only advantages that RTB technology can bring to Internet sites and publishers. However, their wider use of this tool is hindered by certain doubts about the riskiness of working with this channel: from data leaks to possible conflicts with other advertising channels.

    According to the AdMonster poll, European sites and publishers can be divided into three groups according to their relation to RTB.

    Not in the game


    This group includes those publishers and online sites that currently do not use RTB. Interestingly, most of them are aware of the potential of this technology, especially in terms of monetizing their advertising inventory, which they cannot sell through traditional channels and the “direct” method. However, their perceptions (often not particularly well-founded) about the possible risks of using RTB outweigh these advantages.

    Here are the most expressive answers to the question “Why aren't you using RTB”:

    • We are not ready for this yet.
    • RTB is just “another” way to buy brand ads. The benefits of this method are not obvious.
    • We are not so often asked for advertising via RTB. The popularity of this channel is low.
    • Our inventory is not so large as to connect such a fully automated system.

    A major factor hindering the penetration of RTB on the European continent is that publishers do not see enough advertisers who want to buy advertising through RTB, competing with each other and offering a higher placement price. This situation may be due to the general fragmentation of the European advertising market, which is divided into many different areas where specific players buy and sell ads.

    Testing RTB


    RTB still seems to many (if not all) European sites and publishers solely as a way to sell unsold "non-premium" placements. Almost everyone who “tests” RTB relates to technology that way. Representatives of this segment of the respondents in the study limit their use of RTB because of fear of the negative impact of advertising placed in this way on premium inventory, or because of a lack of understanding of the potential of this method in terms of increasing work efficiency.

    The main fears also include:

    • The possibility of data leaks (third-party players gain access to customer data).
    • Low-quality banners that can negatively affect the site’s brand. To avoid this, site administrators need to implement the process of testing the quality of banners offered for placement, which not everyone can do.
    • Sales Channel Conflict - RTB competes with direct sales.

    Use to the fullest


    Members of the third group of publishers have already understood all the advantages of RTB and are successfully selling ads through this channel. These European players work with closed RTB networks, expand their reach, develop their own team of data analysts and are looking for new ways to collaborate with buyers of media advertising.

    The main difference between the representatives of this group and those who are only testing RTB is the proactive strategic approach of the former. Instead of using RTB only as a narrow means for selling inventory residues, these players focus on creating new relationships with advertising buyers, and also analyze the best ways to sell their own advertising inventory.

    The reasons for the lack of "victory" RTB


    Among the reasons for the lag in the development of “European RTB” from the US market, respondents interviewed during the study identified several factors:

    • Fewer advertising inventory due to the fragmentation of the European online advertising market, which is divided into various segments, including geography and language.
    • Concerns about the security of customer data and the publishers themselves.
    • In Europe, it is customary to conclude long-term technological contracts, which impedes the ability to change RTB service providers in case of their unsatisfactory work.
    • Less resources available to quickly and efficiently integrate technology such as RTB.

    Nevertheless, without any doubt, RTB in Europe is developing, on the whole, along the same path as it happened in the USA. Accordingly, as previously happened in America, in the Old World, sooner or later, publishers will realize the promise of this technology for solving a wide range of problems and increasing profits.

    Co-founder and CEO of PubMatic (one of the leaders among SSP platforms and exchanges for webmasters) Rajiv Goel says this:

    Costs for RTB will grow not only for inventory that is not sold directly - through this channel, premiums for placement will also begin to be sold and the scale of this will be very large. The benefits of automation are clear to all display market players.

    On the other hand, the popular opinion is that advertisers from the premium segment simply redistribute their budgets on different technologies, hoping to get the best result. In this regard, it is not necessary to expect a complete capture of this market segment with new technologies like RTB.

    In Russia, the situation as a whole repeats the European one - RTB technologies predicted a great future, some experts even predicted its victory over contextual advertising. 2-3 years after the wider dissemination of the new method of advertising sales, the RTB market is no more than another tool that the most advanced players try. Nevertheless, as in Europe, this segment is growing, and more and more advertisers are trying it for promotion.

    And how everything will be next - time will tell.

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