Paul Turner is Director of International Business Development at Invite Media, a demand-side platform.
They say a week is a long time in politics – well it appears that the same could also be said of the DSP space! It's been fascinating to see the volume of articles on DSPs these last few weeks and the number of people commenting on them. One thing is for sure – this is definitely a dynamic, exciting and passionate space to operate in.
Looking at the various articles and comments, and spending time in both the US and Europe recently, what's been of particular interest to me is how quickly the European display space appears to be catching-up to the US. As with the US, there's now a vibrant community of 'next-generation' buyers and sellers with their own take on how the market will evolve. Rewind nearly three years ago to when I joined Right Media and it felt like we were selling something completely alien to most in the European market – at times it felt as though we were talking a different language. Save for a small number of very sophisticated Networks, Europe on the whole was very slow to adopt Exchanges. That's definitely changed over the last year and a half – there are now a large number of quality Publishers, Agencies and Networks operating on Advertising Exchanges.
I think the reasons for the slight lag in European adoption of Exchange technology can be broken down into a number of areas:
- Mini-markets – Europe isn't, or at least shouldn't be tackled as, one large, homogenous market. Every individual country has its own rules, regulations (although the EU does standardize much of this) and each country also has its own language, culture and often currency. This makes it incredibly difficult to offer a standard, non-customised technology which in turn means absorbing 'customisation' costs. Some markets demand local office presence, some demand local language support. All of this represents a significant barrier to entry to any US-focused technology offering.
- Market sophistication – Europe differs greatly in terms of the speed with which broadband and new technology has been adopted. Scandinavia, for example, represents an incredibly advanced market technology-wise but for many US companies it's too small to justify significant investment on its own. As a result of difference in internet usage rates CPM's tend to vary enormously around Europe – countries like Germany and the UK, with lots of supply and quality demand, tend to command higher average CPMs than the likes of Poland, for example. Putting in place consistent, accurate and market led commercial forecasts is therefore very difficult.
- Network resistance – Because Europe tends to operate as a number of smaller, self-contained markets, the scope for Networks, and sometimes large Publishers, to 'control' these markets is much greater. Many Networks, at least at first, felt that Exchanges were a threat to their business rather than a valuable addition. Couple that with the presence of local organizations like IASH, which seeks to provide safeguards for buyers of online inventory, and the situation becomes even more complicated for any company unfamiliar with each individual market.
As mentioned, however, for a number of reasons the 'adoption gap' is definitely closing. I see a region which is not only ready but also hungry for new technology (emphasis on the word technology!). So what's changed? Local barriers to entry still exist but there's definite evidence that the pace of, and hunger for, innovation (at least on the services side) in places like the UK and Germany has at least kept up with the US – on the buyside companies like Exchange Labs, GDM, MexAd and Infectious offer similar solutions to the more service/resource heavy 'DSP' providers in the US, whilst on the sell-side Pubmatic, AdMeld and Rubicon are all gaining market share very quickly. Many of these European-centric Demand Side Service Providers are now starting to layer cool technology and/or localized data around their offering. In addition many Agency Groups have mirrored their US Exchange practice operations in Europe which has further accelerated the demand for new buyside technologies.
There's no doubt that the European market is definitely a more vibrant, technology obsessed place than three years ago. There will always be 'local market' differences which complicate matters but, as we're already witnessing, innovation on both the supply and demand side has accelerated the pace of change and still offers significant reward for any company willing to take the time and money to invest in product and resource development.