US, France and UK lead real time bidding online media revolution according to new research

Online advertising is still growing rapdily around the world according to research conducted by Econsultancy on behalf of The Rubicon Project, Inc., which operates the advertising industry’s largest independent real-time trading platform for digital advertising.

64 per cent of advertisers and media agencies surveyed declared they have increased their spend on display advertising online in the last year. In the US, 77 per cent of advertisers and agencies have increased their investment in display, a figure that rises to 88 per cent in France, 63 per cent in the UK and 62 per cent in the APAC region.

This is the third time that Rubicon Project has commissioned this research from Econsultancy, and display investment has grown with each successive survey up from 58 per cent in 2011 and 57 per cent in 2009. In 2009 a quarter of those surveyed revealed a decrease in spend, but this has reduced to 14 per cent for the past twelve months. Almost half of the respondents in Europe have seen an increase in the price of display advertising and two-thirds of advertisers and their agencies in APAC have seen an increase. However, 29 per cent of the advertisers and agencies surveyed in the US believe the cost of display has declined.

Spend on Facebook advertising, paid search marketing (PPC) and the Google Display Network (GDN) is also up, although 12 per cent of respondents have decreased their investment in the Google Display Network.

The rise Of RTB, trading desks and Demand-Side Platforms (DSPs)

The research reveals the continued growth of automated trading with 39 per cent of the advertisers and agencies surveyed buying display advertising through DSPs. This is up from 23 per cent in 2011.

Improved performance is given as the main advantage of real-time bidding by two-thirds of the advertisers and agencies surveyed, which was also the main advantage in 2011 identified by 48 per cent of those surveyed. Reduced media wastage, lower cost-per-acquisition and better targeting capabilities also score highly, which also reflects the responses from two years ago.

An average of 40 per cent of the trading desks’ spend is via RTB, although these numbers are much higher in France (73 per cent) and lower in Germany (24 per cent). This is a big change from 2011 when the survey revealed that an average of only 34 per cent of trading desks’ spend was allocated to RTB – with 41 per cent in US and 34 per cent in Europe.

‘Fewer points of sale’ is highlighted as a key benefit of working with a DSP by 41 per cent of respondents, up from just one fifth of respondents two years ago. The following benefits are each identified as a key benefit by more than half of those questioned:

· Improved targeting
· Real-time understanding of campaign performance
· Ability to buy at impression level
· More efficiency
· Increased reach

37 per cent identify ‘global frequency caps’ as a benefit and this is expected to grow as more global campaigns are managed centrally.

The growth of private marketplaces, especially In Europe

A fifth of the agencies and advertisers surveyed have implemented private marketplaces, with a further 40 per cent planning to do so. This trend is particularly pronounced in the UK, and also in France where three quarters of agencies have implemented a deal. In APAC, 18 per cent of advertisers and agencies have implemented private marketplaces and another half plan to. In contrast, only a tenth of the buy-side in Germany have created private marketplaces, although more than half of those surveyed are planning to. On a global scale, over a third of advertisers expect to increase their spending on private marketplaces by between 26-50 per cent in the coming year.

42 per cent of ad planning and buying is based on first party data in their planning and buying – which is likely to be retargeted advertising – and 31 per cent of planning and buying is based on third party data. Advertisers in the US are most likely to use first party data, although one in four campaigns there are planned with no data at all.

Jay Stevens (left), general manager of International, Rubicon Project, says: “All of us who work in advertising have seen the dramatic rise of programmatic trading around the world over the past few years. This research reveals that more than a third of advertisers are buying online display advertising through Demand-Side Platforms, benefiting from improved targeting, reach and efficiency and fewer points of sale and global frequency caps are also highlighted as advantages suggesting more media will be traded on a global basis over the coming years.

“The research also reveals the growth of private marketplaces, especially in Europe. Twenty of the advertisers we surveyed around the world have implemented a private marketplace, but this figure rises to three quarters in France, a market where there are more sophisticated independent trading desks and media innovations such as La Place Media, a collective of several leading publishers making their inventory readily available for programmatic trading.”

Marco Bertozzi, executive managing director of Publicis Groupe-owned VivaKi EMEA says: “We are still seeing growth rates of over 100 per cent year-over -year for RTB spend. The development in sophistication from publishers, agencies and advertisers around RTB in general, and private marketplaces in particular, means that the real benefits are now being exploited in delivering these growth numbers.

“It is the most exciting space in digital and will soon stop being a channel and become the delivery and targeting mechanism for all digital with Facebook, Twitter and others embracing the technology.”

Linus Gregoriadis, research director at Econsultancy, adds: “The online display advertising industry continues to develop at breakneck speed, with programmatic trading much more established globally than it was two years. The increasing budgets for online display advertising shown in the research are a reflection of the improved efficiencies and of the better opportunities for advertisers to reach the right audience.”

Use of Demand-Side Platforms (DSPs)

Most trading desks use two or three DSPs, with a further 16 per cent using more than four. These numbers have stayed consistent since the last time the research was conducted. Liquidity (lack of available inventory) is described as a challenge of working with DSPs by two thirds of those surveyed around the world, up from 54 per cent in 2011.

Service levels are also an issue for nearly half of the agencies and advertisers surveyed, down from 51 per cent in 2011, and under-delivery of campaigns has reduced from being cited as a challenge by 49 per cent of agencies in 2011 to 45 per cent in 2013 as the amount of inventory on the market available for programmatic trading climbs around the world.

74 per cent of the advertisers and agencies surveyed are still buying advertising from online advertising networks, and 39 per cent from sales houses and rep firms. This demonstrates that buyers are using a wider range of technologies. These numbers are increased from two years ago when 63 per cent said they buy on ad networks. Over the years the research has charted the continued growth of this sector.

Fabien Magalon (left), managing director of La Place Media, says: “The French online display advertising market has seen a fantastic quality leap over the last twelve months. First on the sell side, with the launch of La Place Media, and the Orange Adexchange, followed by the buy side with more and more advertisers investing increasing amounts on brand advertising on our La Place Media inventory.

RTB gives the market the ability to package inventory with first party data through Deal ID, which has allowed La Place Media to drive significant increase in our average CPM’s compared with the open auction.”

Rubicon Project’s automated advertising platform is used by more than 500 of the world’s premium publishers to trade with over 140,000 advertisers globally. The full report can be downloaded here.

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