Consolidated Demand: Here's How Europe Can Leapfrog The U.S. In RTB

I wouldn’t be writing this if I wasn’t so confident in the European market’s ability to obtain power and leverage in the online advertising ecosystem. It’s close to mid-2013, and we’ve reached the point in the U.S. where real-time bidding is past critical mass. RTB stormed through its initial test phase in the U.S., and it passed with glowing reviews. Now, the sky’s the limit. But I can’t help but imagine what it would have been like to start all over equipped with the advantages that I know European companies have.

Buyers should demand RTB

It’s really interesting to note how RTB came to be, starting with its initial traction in early 2008. In some ways, RTB should (and could) have never really happened if specific agencies and advertisers hadn’t demanded it happen.

A fundamental truth in display advertising is there’s simply more quality supply than quality demand. It creates a buyers’ market, and, just as we’ve seen recently with housing around the world, when there’s that imbalance, buyers set the rules. Within the ad tech world, this condition led to a group of really forward-thinking advertisers, particularly inside of agencies, that saw what Google was doing early on in its aggressive promotion of RTB. These advertisers realized that they could turn to rivals such as Yahoo and Microsoft and say, “We’re not going to buy your inventory unless you sell it via RTB.”



A conversation with my friend Steve Katelman at Omnicom in 2009 rings true for other publishers today. He told me then, “Microsoft doesn’t understand that they are not a must-have on nearly any media plans.”  He insisted that Omnicom and its agencies must be able to buy via RTB, at least if MSN wanted any additional spend.  

Today, numerous publishers are now “all in” regarding RTB in the U.S. Additionally, we’re seeing adoption rates in mobile, social, and video accelerate faster than display ever did. 

Where does this leave Europe?

I estimate that in the U.S., the online advertising supply demand ratio is something like 5 to 1. In Central Europe? 2 to 1. Publishers have far less reasons and excuses to resist working with European agencies. Take GroupM, with its 40+% market share. There’s leverage here for GroupM executives to turn to a publisher and say, “Look, only 5% to 10% of the market has adopted RTB to date. But we want RTB. We want to accelerate the inevitable.  We’re not going to buy into you unless you sell in the way we want you to.”

Incidentally, this isn’t just a good situation for advertisers, but for publishers, too.  Improved markets benefit everyone.

Germany: Quicker Path to Adoption

A smaller, less fragmented market also creates a much easier path to success and growth. In the U.S., to get 50% of impressions sold, thousands of players in the market need to be involved.  In a country such as Germany, it’s probably less than 20 of the right people that have to insist on similar things to change the market.

This is one of the core reasons why GroupM, with some of the most powerful people in European media, is in a unique position. The company has the opportunity to take a stand and to move an entire market with a bold step. This is a situation where one could observe RTB’s path to mainstream status in the U.S. and make it far more ubiquitous, more quickly.

On the publishing side, the European market won’t have to spend time wondering if RTB is the optimal way to monetize inventory. The important strategic question will be instead, “If you could control a large portion of the ecosystem, how would it transact impressions?”

The number one goal for publishers, at all times, is to increase demand. Historically, demand for publishers was expected (or preferred) to come through premium, direct-sold inventory, as well as conversations, face-to-face meetings and one-off deals.   Those direct deals still have their place, but the future will look more like this:  RTB (also called the spot market) is the place to create highly targeted campaigns for brand and performance campaigns. The direct sales and auction will compete, instead of being siloed as they are today.  This creates more demand for publishers (à la higher CPMs), and better selection for buyers. And a new forward market will be built on top of the spot market to enable better control and measurement of the direct deals being done today.

How fast we get there in Europe is mostly up to a few buy-side players.

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