ADFOX Russian RTB Market in 2013 Overview en

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ADFOX presents the third regular «Russian RTB market Overview», which sums up the development of the programmatic segment of online advertising in Russia in 2013. In the first half of 2013, the Russian RTB-market was estimated at 0.4 billion rubles ($12-13 million) and in the second half of the year RTB sales twice exceeded the indicators of the first six months. By the end of 2013, the Russian RTB market has reached 1.2 billion rubles. It is 6% share of the display advertising market, 20.1 billion rubles ($37.7 million) in 2013, according to the Russian Association of Communication Agencies.

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ADFOX Russian RTB Market in 2013 Overview en

  1. 1. Russian RTB market in 2013 March 2014
  2. 2. Russian RTB market in 2013, ©ADFOX, 2014 2 Table of Contents Table of Contents..........................................................................................................................................2 Introduction ..................................................................................................................................................3 Global market................................................................................................................................................4 Events........................................................................................................................................................4 Consolidations...........................................................................................................................................5 Mobile RTB................................................................................................................................................6 Video RTB at a low start............................................................................................................................6 Programmatic direct .................................................................................................................................7 Russia: Numbers, Facts, Forecasts ..............................................................................................................10 What was happening (and did not happen)............................................................................................11 Sellers......................................................................................................................................................12 Buyers......................................................................................................................................................14 Agencies ..................................................................................................................................................15 Data.........................................................................................................................................................16 Forecasts .................................................................................................................................................17 Major events on the Russian RTB market in 2013......................................................................................19 Schedule. Russian RTB market ecosystem..................................................................................................21 Schedule. Market participants ....................................................................................................................22
  3. 3. Introduction The third regular “Russian RTB market Overview” sums up the development of the programmatic segment of online advertising in Russia in 2013. Last year, experts predicted that by the end of 2013 the Russian RTB market would account for about 2-5% of the entire display advertising segment. According to the Russian Association of Communication Agencies (RACA), display advertising market has added 12% compared to the figures of 2012 and reached 20.1 billion rubles. The total volume of the Internet advertising market in 2013 is 71.7 billion rubles. This segment has traditionally shown the fastest growth in comparison with others – 27%1 . In the first half of 2013, the Russian RTB market was estimated at 0.4 billion rubles ($12-13 million). In the second half of the year RTB sales twice exceeded the indicators of the first six months. By the end of 2013, the Russian RTB market has reached 1.2 billion rubles ($37.7 million2 ), or 6% of the display advertising market. According to forecasts, in 2014 the share of RTB in the total volume of the display advertising can reach 10%. This fast growth is based also regarding the agreement between market giants Yandex and Google, Western players appearing on the Russian market, and technological developments. Experts expect introduction of the programmatic premium concept for exclusive data-using advertising sales, the involvement of large platforms in auctions, and integration of Russian site’s inventory with Western DSPs. In preparing this review, we drew upon our own experience of using the ADFOX SSP product, foreign studies and reviews, materials from the media, and the comments and opinions of players in the Russian market. We would like to thank Internet advertising experts including Dmitry Belozub (Tinkoff Digital), Oleg Nazarov-Bruni (Hubrus DSP), Mikhail Getmanov (Between Digital), Ilya Lagutin (Aidata.me), Alexander Levshin, Evgueny Lyogky (Rutarget), Roman Nester (Segmento), Alexey Rayevsky (Lamoda) and Artyom Rodichev (IPONWEB) who contributed greatly to this review. 1 http://www.akarussia.ru/knowledge/market_size/id4044 2 http://www.cbr.ru/statistics/print.aspx?file=credit_statistics/ex_rate_ind_13.htm
  4. 4. Russian RTB market in 2013, ©ADFOX, 2014 4 Global market Internet advertising continues to be the fastest-growing segment of the global advertising market. According to Nielsen, global advertising across the web, including mobile Internet and apps, grew by 32.4% in 2013. The global potential of Internet advertising remains huge – this segment still accounts for only a 4.5% share of overall spending on ads.3 IAB research on ad segments in different countries in the first half of 2013 shows that display advertising is increasing much faster than search ads. In the UK, compared to the first half of 2012, the display advertising market expanded by 23% to reach £1.81 billion.4 In the U.S. search advertising grew by 7% while display advertising was up by 9%.5 Programmatic buying and ad sales through RTB auctions were among the primary drivers of this process. RTB is now perceived as the main driver of development in the global digital advertising market. This is not surprising as, according to IDC, RTB-generated revenues will grow by 51% annually to reach $20.8 billion by 2017.6 In 2013 alone, it rose 60% compared to 2012 and reached $4.5 billion. The U.S. takes a large share of the global RTB market, but in the long term it is expected to decline from 74% in 2012 to 69% in 2017. eMarketer estimates that RTB spending reached $3.37 billion in 2013, which is only 19% of the total display advertising market in U.S. By 2017, this figure will rise to 29%.7 RTB markets in Western European countries are not yet so impressive, but they continue to demonstrate high growth rates. Country RTB market, $ million 2012 2013 2014 USA 1,920 3,370 4,660 United Kingdom 157.9 283.6 409.1 Germany 86.5 157.2 220.2 France 57 113.5 150.5 © eMarketer According to IDC, the RTB market in Japan stood at $382 million (10% of the display advertising market) in 2013, China – $60 million, Australia – $74 million. 3 http://techcrunch.com/2014/01/27/nielsen-internet-advertising-grew-32-in-2013-but-its-still-only-4-5-of-spend- vs-tv-at-57-6/ 4 http://www.iabuk.net/about/press/archive/uk-digital-adspend-hits-record-6-month-high-of-3bn 5 http://www.iab.net/about_the_iab/recent_press_releases/press_release_archive/press_release/pr-100913 6 http://www.pubmatic.com/reports-and-whitepapers.php 7 http://www.emarketer.com/Article/Advertisers-Continue-Rapid-Adoption-of-Programmatic-Buying/1010414
  5. 5. Russian RTB market in 2013, ©ADFOX, 2014 5 Events In December 2012, Amazon launched an RTB ad exchange to sell advertising space on its own web-sites. In May 2013, eBay followed with a similar product. In 2013 Avito, the largest Russian advertising platform, offered advertisers a proprietary RTB product that makes it possible to place ads on the portal using user data. In March 2013, Facebook included Facebook Exchange ads in the inventory of its RTB-service. These ads are displayed in user time lines. It was tested for a couple of months by major market players including AdRoll, AppNexus, Brandscreen, Criteo, DataXu, MediaMath, Nanigans, Kenshoo, Optimal, RocketFuel, Tellapart, TheTradeDesk, Triggit, TURN, Xaxis, and X+1. They all are unanimous in saying that the effectiveness of Facebook Exchange is considerably higher than that of standard advertising campaigns, including retargeting through Google AdExchange. Today, in collaboration with AdRoll, Facebook is on its way to mobile RTB8 . Last April, Foursquare partnered with TURN and now company allows the use of location data for retargeting to other websites. Location data obtained from mobile devices is considered the most accurate for targeting advertising. According to the head of one company working with user data, the price usually ranges between $0.5 and $1.5 per thousand impressions, and when using data from Foursquare the price reaches a peak. In late 2013, a number of RTB companies announced that they would conduct IPOs. In September 2013, Rocket Fuel has announced that company intends to place its shares on the stock exchange. On the first day of NASDAQ trading, the stock rose 101%. Then Criteo, a company specializing in retargeting advertising technologies, announced an IPO. Since posting in October, the share price has increased more than twice. In early 2014, the SSP Rubicon Project filed an IPO application with the U.S. Securities and Exchange Commission. Consolidations The U.S. and European inventory owners tend to control their own purchases without compromising data security. Therefore, publishers prefer to create in-house solutions and organize networks. For example, AOL has its own network, Ad.com, which, among other things, sells traffic of The Huffington Post and TechCrunch. In 2013, Ad.com partnered with Facebook Exchange (FBX). On June 19, 2013, the five largest media companies in Denmark joined forces as the Danish Publisher Network to jointly sell advertising via the RTB-model in partnership with the Rubicon Project. Exposure has reached 60% of the country’s population. The alliance offers data about its users and an advertising inventory. 8 http://www.insidefacebook.com/2014/02/24/fbx-adroll-intros-a-new-way-to-retarget-across-devices/
  6. 6. Russian RTB market in 2013, ©ADFOX, 2014 6 In Australia, the online media Mi9, Yahoo!, Fairfax Media and News Limited have plans to create their own advertising networks as a counter to Google. The media sites are looking to sell targeted advertising themselves via the RTB-model in order to boost revenues. We are talking about $876 million in the online advertising media segment. Plans to launch a global ad exchange in 2013 were announced by international media group News Corp.9 Through a single broker, advertisers can buy traffic from more than 50 Internet and mobile platforms owned by the holding company. These include the online versions of the Wall Street Journal, the Times and the New York Post. The same Rubicon Project market solution was used instead of the company’s own developments. Mobile RTB The growth trend in mobile RTB that became evident in 2013 will become the most powerful driver of the entire market in 2014. Inspired by the RTB success in the «big» Internet marketers increase the demand for programmatic buying of mobile audience. On the U.S. market, mobile RTB still takes only 4% of all revenues from the mobile display advertising. But, according to IDC, mobile RTB incomes will increase by a multiple of four in 201410 . As every fast-growing market, mobile RTB is noteworthy for landmark mergers and acquisitions that make it possible for traditional players to acquire the competence and technologies they need to expand their inventory. Among such events in 2013, we note the MoPub acquisition by Twitter, the launch of its own MMX RTB platform by Millennial Media in partnership with Appnexus, and the Gradient X merger with Amobee. Lack of access to personal data that may be used for deep targeting remains a constraint on mobile RTB development. The problem is aggravated by the fact that, as opposed to personal computers, in mobile devices it’s complicated to identify users by familiar to advertising technologies ways. Google's mobile RTB, however, has an indisputable advantage – as the owner of Android, it has direct access to any functionality including the identification and collection of personal data. Google may well use this exclusive competitive advantage in future to strengthen its own position. Video RTB at a low start According to IAB research, online video advertising accounts for nearly 7% of ad spending across the web.11 This segment of the advertising market increases by 20% annually. While in 2013 online video ad spend was $3.6 billion, in 2014 it is expected to reach $4.6 billion, which is not surprising as video consumption across the web grows proportionally — at 24% a year. 9 http://www.adweek.com/news/technology/news-corp-launches-global-private-ad-exchange-151970 10 http://www.pubmatic.com/reports-and-whitepapers.php 11 http://www.iab.net/media/file/IABInternetAdvertisingRevenueReportHY2013FINALdoc.pdf
  7. 7. Russian RTB market in 2013, ©ADFOX, 2014 7 According to Forrester's research "How Software Is Eating Video Ads And, Soon, TV", the programmatic technology is confidently making its way to the online video ad market.12 Comparing the dynamic growth of programmatic advertising and the continuous rise in online video consumption, experts predict that the video ad market is on the brink of a revolution. Marketing experts will have to invent cross-platform advertising campaigns instead of just placing TV video ads. In addition, development of the programmatic direct concept will make it futile to procure huge video advertising space in an effort to catch the user you need in front of the screen. Programmatic direct Marketing experts in the West have already tried and tested advertising space auctions via the RTB model. Now they are testing another option of non-auction sales based on the programmatic services, the programmatic direct. With programmatic direct, agencies and DSPs are able to use the RTB model under a direct contract with publishers. This helps them to attract large-scale advertisers and premium publishers that are not happy with standard RTB. Programmatic direct is an ad sale model through the programmatic infrastructure at a fixed price agreed between the buyer and the seller. This may include such programmatic advantages as the use of different audience data and others. When conducting transactions through programmatic direct, the advertiser, which has a direct agreement with the SSP, is assigned the identifier of the deal – Deal ID. And if advertising tools, which gets into this advertiser’s zone of interests, put up for auction, the system identifies it among other customers, and gives it the victory without bidding. If the tools do not match its interests, an auction is held among all other buyers. Thus, a premium buyer can use all advantages of the programmatic buying, but to buy inventory for a fixed price and without bidding. Today there are many other categories of programmatic buying in the market, with a different type of inventory and participants of the transaction. IAB has prepared a table describing different terms used in the sphere of programmatic sales. 12 http://www.forrester.com/How+Software+Is+Eating+Video+Ads+And+Soon+TV/fulltext/-/E-RES109201
  8. 8. Russian RTB market in 2013, ©ADFOX, 2014 8 © IAB13 Players of the Russian RTB market also call direct programmatic one of the main vectors of development in 2014. Alexander Levshin, independent expert: I think that 2014 will be marked by diffusion of programmatic advertising products, that intuitively similar to traditional direct buying, but more convenient, allowing to automate all processes of advertising campaign. Mikhail Getmanov, Between Digital: 2013 showed a relatively low RTB efficiency in terms of large platforms that are used to higher prices than those dominating in the RTB segment. This trend will be corrected with the development of programmatic premium in Russia in 2014. Boris Omelnitsky, ADFOX, IAB: The programmatic premium concept and direct sales through RTB infrastructure (Deal ID) are supported by major market players and communication groups. They invest in developing their own DSP-integrated Trading Desks and services to raise the efficiency of advertising space sales, on the one hand, and to provide advertisers with closely focused communications, on the other. In Russia, programmatic direct is actively developed by, for example, GroupM with its Xaxis and Quisma TDs, and Aegis with its Amnet platform. I am convinced that programmatic direct will lead the direct procurement concept to a new technological level. 13 http://www.iab.net/media/file/IAB_Digital_Simplified_Programmatic_Sept_2013.pdf Tipe of inventory Pricing Participation Other Terms Used in Market Other Considerations Automated Guaranteed Reserved Fixed One-One Programmatic guaranteed Programmatic premium Programmatic direct Programmatic reserved Unreserved Fixed Rate Unreserved Fixed One-One Prefered deals Private access First right of refusal Invitation-Only Auction Unreserved Auction One-Few Private marketplace Private auction Closed auction Private access Open Auction Unreserved Auction One-All Real-tima bidding (RTB) Open exchange Open marketplace • Prioritization in the ad server • Deal ID • Data usage • Transparency to buyer • Price floors
  9. 9. Russian RTB market in 2013, ©ADFOX, 2014 9 Along the growth of traditional RTB, programmatic premium will stimulate the development of programmatic buying and displace traditional direct buying of advertising. Magna Global is optimistic, expecting that 83% of the display advertising inventory in the U.S. will be sold with programmatic technology by 2017, including 52% of RTB sales and 31% through the Non-RTB programmatic14 . © Magna Global 14 http://news.magnaglobal.com/magna-global/press-releases/magna-ipg-mediabrands-programmatic- advertising-forecast.htm
  10. 10. Russian RTB market in 2013, ©ADFOX, 2014 10 Russia: Numbers, Facts, Forecasts According to Public Opinion Foundation (FOM) research published in autumn 2013, 46% of the entire Russian population, or 53.2 million users, go online on a daily basis. Over the year, this figure rose by 9%.15 According to Internet World Stats, in terms of Internet penetration Russia is in line with Italy, outperforming China and Brazil with their 40% of daily Internet users but is considerably behind the UK, Japan and the U.S.A., which have nearly an 80% level of active Internet users. According to RACA, the entire Internet advertising market stood at 71.7 billion rubles in 2013. Internet advertising has traditionally demonstrated the most impressive growth compared to other segments of the advertising market (up 27% compared to 2012). Display advertising rose 12% (20.1 billion rubles), and contextual advertising grew by 34% (51.6 billion rubles)16 . In 2012, having just entered the market, RTB became the trend of the season. Everyone named Real- time bidding a technology of the future and hurried to jump on train before it left the station. The growing noise around RTB led to excessive expectations on the part of numerous players, both advertisers and technology companies. While the market needed to comprehend the new bidding reality, perform required integrations, develop new standards and collect data, advertisers were eager to have an immediate effect. Despite an apparent disappointment, however, interest in RTB did not subside. Artyom Rodichev, IPONWEB: The Russian market demonstrated an enormous interest in programmatic in 2013. I am convinced that the market shifted from pure discussions and humble attempts to master RTB to explosive development. We launched a number of new projects with Russian clients. We also realized that the Russian market is ready for standardization and universal solutions, and we decided to develop BidSwitch, our product that facilitates collaboration among RTB players, on the Russian market. Experts expected that RTB would win about 2-5% of the Russian display advertising market by the end of 2013. In the first half of the year auction sales brought nearly 0.4 billion rubles ($12-13 million) in revenues.17 In the second half of the year, RTB sales were double the results of the first six months. By the end of 2013, the Russian RTB market was estimated at 1.2 billion rubles ($37.7 million18 ), or 6% of the display advertising market. It's worth noting that this figure includes nothing but the sales of advertising inventory through Real- time bidding. It does not include sales via the programmatic premium model or any sales other than through an open auction for third-party DSPs. Evgueny Lyogky, RuTarget: Indirect data make me believe that the RTB advertising market exceeded 5% in 2013: 7-8% of the display advertising market seems a more credible figure. 15 http://fom.ru/SMI-i-internet/11288 16 http://www.akarussia.ru/knowledge/market_size/id4044 17 http://adfox.ru/ru/news_detail/17/ 18 http://www.cbr.ru/statistics/print.aspx?file=credit_statistics/ex_rate_ind_13.htm
  11. 11. Russian RTB market in 2013, ©ADFOX, 2014 11 Nikita Pasynkov, ADFOX: In 2013 RTB the market in Russia has developed rapidly. New players started their business and companies that started earlier have decided on their specializations. More tools and opportunities for RTB-buying became available for advertisers. As a result, the market has grown significantly, and in 2014 this growth will continue. What was happening (and did not happen) The noise around RTB subsided in 2013 as compared to 2012 while meaningful action gained momentum. The market has of course lost some of the players that loudly announced themselves. They were replaced with new technological companies and Western players. Roman Nester, Segmento: Tinkoff Digital left the market just a year after the new business was started. This was the most significant event of 2013. In this very short time TD, however, managed to set the level of expectations that now every player has to deal with. I think we'll have to spend all of 2014 explaining to advertisers that RTB is not a magic wand, but an advertising tool that needs to be properly used. Artyom Rodichev, IPONWEB: International players started showing interest in our market, and it's very good. So far, they are mid-size companies. I expect that such giants as TURN and MediaMath will come here too, which will be a strong impetus for development. In 2012, Yandex announced the creation of its own RTB system. In 2013, partner companies (Yandex ad network) were gradually joining the auctions. In late 2013, after Yandex acquired Kinopoisk, this popular platform's traffic was also put on sale through the Yandex RTB system. In addition, Yandex used its own Kritpa technology to automate audience research and classification.19 In early 2014, Yandex announced the start of collaboration with Google in the field of advertising. The Yandex display advertising service AWAPS will be connected to Google's RTB system (DoubleClick AdExchange), and Google's service DoubleClick Bid Manager will be connected to Yandex's RTB system.20 Roman Nester, Segmento: In 2013, Yandex joined the RTB system, and in February 2014 Yandex and Google announced collaboration between the companies. This alliance opens up a new stage in the development of the market, which actually will be free from any closed inventory. In the first place, advertisers will win as they will be able to save considerably on purchasing advertising space. At the same time, contrary to expectations, other Russian Internet behemoths are not hurrying to enter the programmatic buying market. Experts believe that Russian social networks will adopt the successful experience of Facebook Exchange and take an active part in developing the market. 19 http://company.yandex.ru/technologies/crypta/ 20 http://company.yandex.ru/press_releases/2014/0226/index.xml
  12. 12. Russian RTB market in 2013, ©ADFOX, 2014 12 Alexey Rayevsky, Lamoda: We're eagerly waiting for Mail.ru and Vk.com to join the auction, but they have not done so yet. Sellers More and more major Russian Internet projects enter the RTB market, offering their inventory through various advertising exchanges or experiment with creating their own technologies. The online dating service Wamba, RBC holding, the largest Russian ads portal Avito and many others began to exhibit their traffic on the auction last year. Avito, for example, offers all Russian advertisers to buy ad impressions on the portal using Google DoubleClick AdExchange and Yandex RTB. Advertisers may sign a direct agreement on the purchase of a certain volume of traffic using data through programmatic direct or participate in the open auction. Among major clients of Avito currently dominated retargeting companies, but there are also some of the major brands, including BMW Group, Svyaznoy, P&G. Experts believe that in future their RTB traffic will be concentrated in the hands of several large SSP systems. Portal owners will test the functionality of every such system and choose the one that generates maximum revenues from the sale of residual traffic. Oleg Nazarov-Bruni, Hubrus DSP: Over the past six months only our company connected some new SSP: Wamba, PayHit, Adflow, RBC, Epam, Smaclick, C8, Republer, they had started to popularize RTB purchases from publishers. Publishers already massively try to send their traffic and experiment with it varying rates. The average of purchasing can reach 15% of the total volume. The share of Yandex and Google really started to decline due to the emergence of new local players. Also in a new year a major Western SSP (PubMatic, Rubicon, Сasale, AOL, spotX) began to claim the Russian demand. They have a lot of unclaimed Russian inventory. I think that by the end of 2014 it will be the consolidation of traffic: sites will leave small SSP and move to the big ones – those that will bring more money. On the Russian market SSP services now provide: o ADFOX o AdRiver o Begun o Between Digital o DoubleClick o OpenX o PayHit o RBC o Republer o Yandex
  13. 13. Russian RTB market in 2013, ©ADFOX, 2014 13 The traffic purchased via the RTB model demonstrated steady growth over the year. Moreover, the growth has been developed not only by the increase in number of provided inventory, but also by increasing the percentage of sell-out. % of purchases in relation to the traffic put on sale (according to ADFOX SSP) Boris Omelnitsky, ADFOX: Over 2013 we saw continuous growth in the percentage of traffic purchased via the RTB model while the number of ad impressions put on sale grew slower. This means that market growth is based, first of all, on the work of the auction mechanism and the willingness by advertisers to buy a more expensive targeted audience. 240x400 remains the most demanded ad type, its share in the total volume of RTB-sales has risen up to 80%. The next most popular is the ad type is 728x90, other formats are almost ousted. The most popular format 240x400 demonstrates the highest CPM.
  14. 14. Russian RTB market in 2013, ©ADFOX, 2014 14 The share of different formats of banners in the total volume of redemption through RTB (according to ADFOX SSP) Buyers Russian DSPs that appeared in 2012-2013 continue active operations on the market, such as Hubrus, Soloway, Begun, Rutarget, Aitarget, Targetix. Some players are expanding their activity and developing new businesses. Kavanga, which used to buy traffic from third-party SSPs, launched its own Sell-Side Platform, Republer, in 2013. Between Digital, a leading SSP on the Russian market, announced the creation of its own DSP Intency. Artyom Rodichev, IPONWEB: I think that an important feature of Russian players is their strong technological commitment. Everyone is striving to set up its own bidder, SSP or data platform. In absolute figures, our market is small but it has dozens of players already. It's still too early to say in what way they will develop further. I would bet on consolidation in the next 1 to 2 years. According to experts, in the future, companies will move from a tendency to expand its range of services on the RTB market to specialization in its segment and cooperation with other players. Ilya Lagutin, Aidata.me: I think that in 2014 we'll see fewer companies declaring that they deal with the entire stack of technologies while there will be more partnerships and product integrations. As early as the beginning of the year, we saw that market behemoths such as Google and Yandex started integrating their RTB systems. The DSP market in Russia is represented by several major local players, western platforms and a large number of small buyers. Western players come to the market primarily through major media agencies.
  15. 15. Russian RTB market in 2013, ©ADFOX, 2014 15 DSP operating on the Russian market: o AdSniper o Aitarget o Appnexus o Begun o Crimtan o Criteo o Doubleclick o Getintent o Hubrus o Intency o Kavanga o Mail.ru o MediaMath o Mythings o Rutarget o Segmento o Sociomantic o Soloway o Targetix o TURN o VI o Yandex Large advertisers are on the path towards creating their own technologies for purchasing traffic through auction. The platform Data Mind was created from such in-house technology, which was originally unveiled as an independent DSP, but a year later became a division of TCS Bank. Major online retailers such as Lamoda are independently procuring goods. You may say that a new In-house DSP has emerged, which continues to work and develop. Alexey Rayevsky, Lamoda: We were expanding the share of the advertising space bought through our own RTB system over the year. Now we continue testing new suppliers of RTB inventory. Online retailers, including Lamoda, also develop their own technologies and accumulate algorithmic knowledge of advertising campaigns. Indeed, good knowledge of their audiences makes online stores sound players on the RTB market, which suffers from the lack of data suppliers. Agencies Tenders for Internet advertising held by major advertisers in 2013 incorporated RTB-related conditions. Retargeting as a programmatic buying product has become a common condition of tender documents
  16. 16. Russian RTB market in 2013, ©ADFOX, 2014 16 while requirements like "Tender Participant shall have an experience in placing Internet advertising based on Real-Time Bidding (RTB) technology" are included in the requirements of such advertisers as VTB and Rostelecom. While advertisers are prepared to invest a considerable part of their ad budgets in programmatic buying, agencies have to invent new methods of business. Evgueny Lyogky, RuTarget: We estimate that in the next couple of years, the majority of leading agencies will set up their own Trading Desks to be able to manage advertising space for numerous channels. The "request - media plan - reservation - confirmation - placement" scheme will become too cumbersome. Users are mobile, they deal with growing information flows every day. To attract their attention, agencies will have to make fast and very specific offers. Trading Desk is a centralized platform to buy advertising space via various advertising models. Trading Desk allows advertisers to automate advertising space purchasing as well as the management of advertising campaigns. The platform integrates with several others and makes it possible to use the one that is most suitable to ensure the effectiveness of a specific advertising campaign. Media agencies often set up their own TDs focused on the requirements of their clients. Today in Russia there are only a few Trading Desks, but several Western players entered the market with their TD: Xaxis and Quisma from GroupM, Amnet from Aegis. Agency Trading Desks in Russian market: o Accuen o Amnet o Auditorius o Quisma o Vivaki AOD o Xaxis Data In Russia, as throughout the world, data is collated by major Internet services and social networks, such as Yandex, Google, Rambler, Mail.ru, VK and Facebook. Other players have extremely limited access to this data, as user profile data is used by the companies themselves, which last year entered the RTB market. Online retailers also have their own data and can use it to target and segment their audiences. Nearly all major e-commerce players have already entered the RTB market in this way or another. Alexey Rayevsky, Lamoda: Russia still lacks a clear mechanism for obtaining third-party data, which constrains the growth of RTB share in image (non-selling) ads. Most RTB sales come from online retailers targeting on the basis of their own first-party data.
  17. 17. Russian RTB market in 2013, ©ADFOX, 2014 17 Other players use the services of existing suppliers to get third-party data. These suppliers can be divided into two groups: companies that possess data and provide it for targeting advertising (Data Suppliers) and companies that aggregate the data of suppliers to generate aggregate profiles based on several sources (DMP). Among the companies that provide data to the solution for advertising targeting: Data Suppliers: o AddThis o Adex o Liveinternet o Pluso o Proximic o uLogix o Visual DNA DMP: o Aidata.me o Auditorius o Lotame o VI Forecasts In 2014, the Russian RTB market will develop along several lines: o The programmatic direct technology will develop to provide for premium sales of advertising inventory via the programmatic infrastructure. o Brand safety technologies will develop to protect advertisers from the appearance of their banners in unwanted websites. o More and more large platforms will use auctions to sell their advertising inventory. o The data market will develop, and new suppliers will emerge. o Russian traffic will integrate with Western DSPs. o The market will see more and more professionals able to deal with data and new technologies. According to forecasts, in 2014 the RTB share may reach 10% of the entire Russian display advertising market. Oleg Nazarov-Bruni, Hubrus DSP: I hope that by the end of 2014 the market will grow at least twofold. Major clients that started increasing the levels of expertise and analytics on their side will change the situation. They start experimenting with DSPs directly, and will demand results from agencies over time. The development will accelerate when Western platforms come to the market in 2014 – they will bring their own clients that have a successful buying experience with them.
  18. 18. Russian RTB market in 2013, ©ADFOX, 2014 18 Alexey Rayevsky, Lamoda: RTB share will exceed 10% of the display advertising market. Further growth will be based on the data market development and new large platforms joining the bidding.
  19. 19. Russian RTB market in 2013, ©ADFOX, 2014 19 Major events on the Russian RTB market in 2013 January The operator of selective advertising Soloway gave its 2012 results. The company's turnover reached 500 million rubles. One of the most important events of the past year in Soloway was the rapid development of RTB technology in Russia. By connecting the RTB protocol to Google Double Click Ad Exchange and ADFOX SSP, Soloway allows its advertisers to place banner ads in the Google advertising network, on the sites of the holding SUP Media and the media agency +Sol. At the same time, the Soloway behavioral targeting can be applied to all of the connected platforms21 . March The Internet company Tinkoff Digital launched its mobile platform MadNet, built on RTB technology. According to company heads, it has entered into agreements with Google DoubleClick Ad Exchange, Smaato, Mopub, Mobclix and Hunt Mobile Ads22 . The fund Russian Ventures and AIData have launched DMP Loger. According to the creators, the Loger platform is independent, and does not belong to one of the Top 10 media holdings, which does not impose limits on the system in terms of the selection of the data provider23 . April The fund iTech Capital invested $3.5 million in the Garpun advertising platform. According to the press service, the funds will be used to speed up the development process, and also to automate additional online marketing channels, including RTB24 . The advertising network Kavanga launched a new company Republer. The Sell Side Platform (SSP) will allow site owners to sell traffic at auctions in real time. Dmitry Glavatsky was appointed CEO of Republer. The platform is currently being tested25 . The independent advertising DSP-platform by Hubrus has been launched commercially. Iponweb is the support partner and supplier of technology.26 21 http://internet.cnews.ru/news/line/index.shtml?2013/01/15/515462 22 http://internet.cnews.ru/news/line/index.shtml?2013/03/11/521982 23 http://www.towave.ru/news/fond-russian-ventures-i-aidata-zapustili-proekt-loger.html 24 http://www.digit.ru/internet/20130410/400530137.html 25 http://www.sostav.ru/publication/kavanga-sozdala-rtb-kompaniyu-republer-2301.html 26 http://adindex.ru/news/digital/2013/04/3/98042.phtml
  20. 20. Russian RTB market in 2013, ©ADFOX, 2014 20 May The venture fund Prostor Capital invested in the company CPAExchange - an automated service for placing online adverts based on the CPA (cost per action) model. The fund now owns 25% of the company. The size of the investment was not revealed. The funds will be used to complete the development of the RTB-systems in order to increase conversions and also to buy traffic27 . June The international advertising group Aegis Media launched an advert purchasing system in Russia, which is displayed to users in real time. Amnet (belonging to Aegis) has developed an RTB-platform, it is used by advertisers in the U.S., the UK, Germany, France and other countries28 . August Segmento, which uses RuTarget RTB technology, entered the Russian media marketing and advertising market. Segmento provide high-tech advertising services to agencies and end clients29 . December Segmento launched the Brand Safety Shield service based on RuTarget's web-crawler technology to be able to guarantee that its clients' ads won't appear on unwarranted sites30 . Between Digital launched DSP Intency. P.S. February 2014 Yandex and Google agreed to cooperate in the field of advertising. The Yandex display advertising service AWAPS will be connected to Google's RTB system (DoubleClick AdExchange), and Google's DoubleClick Bid Manager will be connected to Yandex's RTB system31 . 27 http://www.adindex.ru/news/digital/2013/05/30/99393.phtml 28 http://www.vedomosti.ru/tech/news/12635631/potorguyutsya_za_polzovatelya 29 http://www.searchengines.ru/press-releases/archives/segmento.html 30 http://www.searchengines.ru/seoblog/segmento_zapustila.html 31 http://company.yandex.ru/press_releases/2014/0226/index.xml
  21. 21. Russian RTB market in 2013, ©ADFOX, 2014 21 Schedule. Russian RTB market ecosystem
  22. 22. Russian RTB market in 2013, ©ADFOX, 2014 22 Schedule. Market participants Profile: Data Suppliers AddThis is the largest sharing and social data platform. The company personalizes the web with powerful, easy-to- use social engagement tools, APIs and services. AddThis social plugins and analytics are used by over 14 million sites worldwide. http://www.addthis.com/ Profile: Data Suppliers ADEx – a platform for providing target data. Since 2009 engages in the collection and provision of non-personal data about users activity for promotional use. http://adex.pro/ Profile: SSP, AdServer ADFOX has operated in the market since 2005 and provides independent technologies for management of advertising in Internet, mobile, application, and online video. In November 2012, ADFOX entered the RTB market and launched ADFOX SSP - its own platform for commercial use to optimize advertising revenue on the websites. The ADFOX SSP has undergone technical integration with all of the leading DSPs on the market. http://adfox.ru/ Profile: AdServer The Internet advertising management system AdRiver began working in March 2001 and is now one of the leaders in the Russia technological solutions market in the field of online advertising. AdRiver software currently provides more than 2 billion ad impressions per day. AdRiver belongs to the Internest group of companies. http://www.adriver.ru/
  23. 23. Russian RTB market in 2013, ©ADFOX, 2014 23 Profile: DSP AdSniper is a system to automatically purchase advertising with price correction in real time in accordance with the campaign results. http://adsniper.ru/ Profile: DMP Aidata.me is a data management platform. It operates in the markets of Russia, CIS, Brazil and Southeast Asia. The company is engaged in segmenting and transfer of socio-demographic and behavioral data. Various advertising platforms using data Aidata.me provide 100 million targeted impressions per day. http://aidata.me/ Профиль: DSP AppNexus is a New York City-based company that provides a platform specializing in real-time online advertising. As of 2013, AppNexus servers process 16 billion ad buys per day; it handled an estimated $700 million in ad spending in 2012, giving it the biggest reach on the open web after Google. http://www.appnexus.com/ Profile: Trading Desks, DMP The project was launched in November 2012. Auditorius works like TradingDesk in the Russian RTB ecosystem. http://www.auditorius.ru/
  24. 24. Russian RTB market in 2013, ©ADFOX, 2014 24 Profile: DSP Begjun is the first Russian performance based contextual advertising service with auction pricing. It enables a “one stop shop” advertising campaign to be held on partner sites in all the major search engines on the Russian Internet, as well as in external advertising services. The company has been operating on the market since 2002, and in 2012 it launched its own RTB-service for its customers. http://www.begun.ru/ Profile: SSP Between Digital is an integrated platform for managing website advertising that works with RTB technology. The commercial launch was announced in December 2012. Today Between Digital is integrated with AdRiver, Begun, CPA Exchange, Google, and Retargeter. In December 2013, the company launched its own DSP Intency. http://betweendigital.ru/ Profile: DSP Crimtan is a behavioral advertising network, built on the basis of its Real-time Audience & Media Platform. The company provides advertisers with advanced internet marketing features, including profiling, segmentation and targeting of the Internet audience, optimization, delivery and campaign reports through a vast network of sites, networks and traffic aggregators. http://crimtan.com/ru/ Profile: DSP Criteo is a global leader in personalized retargeting. The company was founded in 2005 in Paris and now works with more than 4000 customers and 600 publishers worldwide. Criteo has business partners in 30 countries in Europe, Asia, the U.S. and has opened representative offices in 15 of them. The company’s largest clients include the Internet store Ozon, Sapato.ru, and Quelle. http://www.criteo.com/
  25. 25. Russian RTB market in 2013, ©ADFOX, 2014 25 Profile: RTB Stack The company was founded in 1998, and now is a leading web corporation in the major global markets. The company has been developing RTB since 2009, and has so far invested more than a billion dollars in the development and promotion of this technology. Google has operated in Russia since 2005, and first offered its RTB-products to its customers in 2012. www.google.ru Profile: DSP Russian technology for optimization of advertising budgets. In addition to providing tools to purchase advertising directly, targeted according to the actions and behavior of the audience in real time, customers are given access to the Russian traffic exchange. The first independent service using the company's technology is Retargeter. http://hubrus.com/ Profile: DSP Kavanga is one of the largest Russian Internet advertising networks that operates on its own process platform. The company was founded in 2008. Today it integrates more than 1000 high-quality thematic sites into a single advertising space. In Russia it gets 27 million visitors per month aged 12-54 years. http://kavanga.ru/ Profile: Data Suppliers LiveInternet is a portal that has since 2003 provided website statistics services and online diaries, and also a variety of other services that serve a wide range of user needs. The leading statistical service LiveInternet provides tools to collate, process and then analyze website visitor data. http://www.liveinternet.ru/
  26. 26. Russian RTB market in 2013, ©ADFOX, 2014 26 Profile: DMP Lotame empowers publishers, agencies, and brands to unlock the full value of their audience data with data management platform Crowd Control. Clients leverage Crowd Control to collect unstructured audience data, irrespective of the source, and convert that audience data into insights and analytics, which allows them to make informed decisions and increase ROI of their data assets. http://lotame.com/ Profile: DSP Headquartered in New York, MediaMath was founded in 2007 and is a leader in the demand side platform category (Forrester Wave, Q4 2011). The company buys billions of highly targeted ads per month on behalf of dozens of agencies, including all the major agency holding companies. Major brands include American Express, Kellogg’s, Prudential and Kayak. MediaMath is a global company with additional offices in London, Boston, Chicago, Los Angeles and San Francisco. http://www.mediamath.com Profile: Retargeting Founded in 2005, myThings is a global leader in customized programmatic ad solutions. Turning big data into incremental demand, the company personalizes over 5 billion impressions a month for top advertisers in 30 markets including Adidas, Walmart, ToysRUs, Littlewoods, Very.co.uk, Zalando, Orange, Best Buy, and Microsoft. http://www.mythings.com/ Profile: SSP OpenX is a global leader in digital and mobile advertising technology. OpenX’s vision is to unleash the full economic potential of digital media companies. OpenX solutions provide a unique Software as a Service platform by combining ad serving, an ad exchange, which includes Supply Side Platform technology, and content valuation. http://openx.com/
  27. 27. Russian RTB market in 2013, ©ADFOX, 2014 27 Profile: Data Suppliers Pluso is a sharing service in social networks and blogs. 55 thousand sites have installed the Pluso plugin. Pluso used the widely known link exchange service AddThis as its protocol. The company provides data to Russian DMPs. Profile: SSP Affiliate program which offers the sale of advertising tools for web sites, including the RTB auction. Connected to several Russian DSPs. http://pay-hit.com/ Profile: Data Supplier Proximic provides advertising networks, agencies, DSPs, and publisher networks with the information needed to drive premium ad placements by combining non-linguistic contextual profiling technologies, resulting in better targeted ads and filtering content across highly granular topical categories. http://www.proximic.com/ Profile: Retargeting, Trading Desks Quisma offers full-service, innovative technology and profound expertise covering the entire spectrum of digital marketing. The agency was founded in 2001 and became a member of GroupM (Mindshare, Mediacom, MEC, Maxus) in 2007. Headquartered in Munich the agency has other 12 offices in 10 countries. Quisma works in Russia since 2012. http://www.quisma.com/
  28. 28. Russian RTB market in 2013, ©ADFOX, 2014 28 Profile: SSP Republer is a part of Kavanga Group as well it is a stand-alone project that is span off from ex advertising network Kavanga. Republer SSP — one of the first full-service Sell-Side Platform in Russia. Republer SSP technology platform was developed inhouse. Our tech-savvy team boasts a great experience of working with publishers’ business inherited from Kavanga. http://republer.ru/ Profile: DSP RuTarget is a Russian developer of RTB technologies, creating professional solutions to order. Segmento uses RuTarget RTB technology. Segmento provides complex high-tech advertising services for agencies and advertisers. http://www.rutarget.ru/ Profile: DSP Founded in Berlin in 2009, the company works with Internet marketing, network analysis and scalable computing. As a leading supplier of bidding solutions for advertising companies worldwide, the company helps its customers gradually increase sales, using what are for the brand effective and secure marketing channels to obtain the desired result, which are very clear to the client. www.sociomantic.com Profile: DSP, Retargeting The selective advertisement operator Soloway has operated on the market since 2004 and uses all of the most advanced developments in the field of Internet advertising. Soloway collates and analyzes information about Internet users: about where and how they access the Internet, search engine terms, and also website and page visitor history. Adverts are shown in the extensive media space, which includes hundreds of thematic sites. http://www.soloway.ru/
  29. 29. Russian RTB market in 2013, ©ADFOX, 2014 29 Profile: DSP Targetix specializes in the development of Internet advertising solutions. In 2009 the company launched its own media network Targetix Display Network, which now integrates more than 5000 Russian language portals. http://targetix.net/ Profile: DSP The largest independent company in the advertising technology sector and the recognized leader in platform- based mobile, video, display, and Facebook advertising. An early pioneer of data-driven advertising, having delivered one of the industry’s first programmatic ad impressions in June 2009. A technology-first company, committed to making big data infrastructure available to customers on five continents on a self-service, subscription basis. http://www.turn.com/ Profile: Data Suppliers uLogix operates the data on more than 70 million usersrs monthly, processing an average of 15 interests of each user. The company declares about the coverage of Runet at the level of 80%. Also uLogix offers the technology of mining of retargeting. http://ulogix.ru/ Profile: DSP, DMP Vi is the largest media advertising market operator in Russia and Eastern Europe providing professional media advertising outsourcing services, including media-selling, analytics, law and IT-support. Company consists of media-selling companies ranked as leaders in basic segments of the Russian media advertising market Vi is conducting business in Russia, Belarus and Kazakhstan. http://www.vi.ru/
  30. 30. Russian RTB market in 2013, ©ADFOX, 2014 30 Profile: Data Suppliers VisualDNA is a fast growing startup with offices in Moscow and London. It uses its own patented technology to collate data about Internet users. To create the user portrait it uses visual tests. http://data.visualdna.ru/ Profile: Trading Desks VivaKi was established in 2008 by Publicis Groupe, the world’s third largest marketing communications organization, to accelerate the digital transformation and expertise of the Groupe and its agencies. Today VivaKi is a global leader in digital advertising solutions, working with the world’s leading organizations to help them navigate the evolving and chaotic consumer landscape. http://www.vivaki.ru/ Profile: Trading Desks Xaxis is the world’s largest audience buying company. Through its proprietary platform, Xaxis offers advertisers a single, comprehensive resource from which to reach and engage with global audiences across the universe of digital media. Xaxis does this for its GroupM agency partners, Maxus, MEC, MediaCom, and Mindshare. In October 2012 Xaxis opened its office in Moscow as part of GroupM Russia. http://www.xaxis.com/ Profile: RTB Stack Yandex is the largest Russia Internet company, with its core business being search engine development. The company has a search engine of the same name and the Internet portal yandex.ru. Founded in 1997, Yandex announced the launch of its RTB-platform in March 2012. Several DSP systems have now been connected to the Yandex RTB-system, including Direct, which belongs to Yandex and a media advertising system. http://www.yandex.ru/
  31. 31. Russian RTB market in 2013, ©ADFOX, 2014 31 Russian RTB market in 2013 Office 508, 6 B Artioukhinoi Street, Moscow, Russia Tel +7 (495) 661 76 77 Email: info@adfox.ru www.adfox.ru Authors: Boris Omelnitsky bo@adfox.ru Nikita Pasynkov nikita@adfox.ru Vera Khiteeva vera@adfox.ru

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