Germany Catches On: Ad Exchange Sees Uptick In RTB Ad Buys

AdScaleA new report from Germany-based ad exchange AdScale shows that US advertisers, agencies and vendors are not the only ones seeing rapid growth in real-time bidding (RTB).

The average cost per thousand (CPM) for standard ad space purchased via RTB now averages close to 35% more than the average CPM of campaigns booked without RTB in Germany, according to AdScale. For the overall market, AdScale calculated that approximately 12.5% of all display advertising revenues had been generated via real-time advertising by mid-2013. The figure is expected to increase to 17.5% by the end of the year.

“The automation of media buying and selling offers a lot of advantages [and] German players now realize these advantages, and more and more agencies are establishing their own trading desks,” said AdScale CEO Matthias Pantke. “Almost 50% of the display advertising market in Germany is expected to be traded via ad-exchange platforms by the end of the year. Last year up to 5% of our inventory was sold via RTB. In June this year, 34% of revenues on AdScale were generated by RTB.”

Despite its progress, the German RTB market still has a long way to go in catching up with traditional ad networks, according to Pantke, who noted that advertisers also are in the early stages of adopting RTB for mobile advertising.

One of the problems, Pantke said, is that “the German publishers market is dominated by leading media companies. Currently they [publishers] are still a little hesitant to handle their inventory via RTB and are therefore testing different strategies for their yield management."

Another challenge German companies face is similar to one faced worldwide: the need for analysts to interpret the data and provide insights into the ad inventory. “Agencies and clients need experts and analysts for this kind of media trading,” Pantke noted. “And if we sell anonymized user profiles via RTB, we need to enrich these profiles with third-party data. But in Germany the privacy protection rules are very different and much more strict than in the US.”

Last year, 40 German advertising associations launched the “German Data Protection Council for Online Advertising,” a self-regulated initiative to oversee the German online behavioral advertising sector and introduce transparency into its practices.

The initiative includes codes of conduct for participating advertisers and an OBA icon similar to the United States' blue “AdChoices” icon that enables users to obtain more information about the data being collected about them and must appear in the online ads of participating advertisers. It is unclear how successful the German initiative has been.

Germany and the United Kingdom, Western Europe’s largest ad markets, are forecast to reach $28.7 billion and $26.5 billion, respectively, in total media ad spending for 2014, according to eMarketer. The US is expected to hit $177.8 billion in media ad spending by next year.

 

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