Programmatic Buying Market in Russia
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Programmatic Buying Market in Russia April 2021 The growth of the global and Russian digital advertising market leads to the development of new technologies “that can effectively deliver advertising message to customers. Programmatic buying is the most advanced and fast-growing segment in media buying, and nowadays it is becoming a priority for advertisers. We prepared the first comprehensive research on the Russian programmatic market for customers to learn about modern technologies and latest market trends. Oksana Kulakova, Senior This study is different from other types of research as it is Manager based on interviews with representatives of the largest Strategy and Operations companies on the market. Readers will be able to learn consulting about market development prospects and competitive PwC Russia advantages of the solution developers firsthand from the leading industry experts. In the face of high concentration of technological solutions and“ ecosystems, together with PwC Russia we set a goal to objectively assess the quality of existing technologies and get unique insights about market based on the key market experts' opinion. As a result, we were able to carry out a comprehensive comparison of media buying platforms. Based on this study, advertisers can plan and decide on their distribution of marketing investments considering possible scenarios Anna Ketova for the technologies’ development in the future. Google Marketing Platform PwC 3 Approach Objective Analyse the programmatic ad ecosystem and highlight the key potential growth points and partnership opportunities. Two types of players account for most of the activity in the market: • Users (advertisers and advertising agencies); • Providers of ad buying solutions, including large IT companies with demand-side platforms (DSPs) and smaller DSPs that are not part of a larger ecosystem. Research methodology This study consisted of a series of interviews with key market players who were selected according to a set of predetermined parameters. The questions were tailored to the backgrounds of the respondents. Following the interviews, we prepared a summary report of our findings and main conclusions. Selection of respondents Advertisers Eight companies with significant advertising budgets and experience in using programmatic tools. Agencies and agency products Global agencies with in-house solutions for managing and buying programmatic ads. IT companies Large IT companies that provide ad management solutions in the Russian market. DSP platforms Important players that provide DSP solutions but are not affiliated with large IT companies. PwC Contents Pages Online advertising market overview 5 Key research findings 14 • Insights from users 16 • Insights from providers 30 • Choosing a platform: recommendations for 36 users • Vendor comparison matrix 38 Market player analysis 42 • Market player profiles 44 • Provider profiles 46 5 Online advertising 1 market overview PwC 7 Programmatic advertising ecosystem Programmatic advertising market Technology users Technology solutions Major companies Direct buys (10%) (70%) SMEs (30%) Agencies Trading desks Advertisers Network (85%) Local (15%) Agent buys (90%) Verification, fraud, brand safety, usability Buy-side Ads and budgets Key concepts Ad Exchange DSP Automated platform for buying and selling ads on A technological system that helps advertisers to various media sources manage multiple ad networks, ad exchanges and data exchanges in the RTB digital ecosystem. Brand Safety Measures to protect the image and reputation of Fraud brands from negative or damaging information. Fraudulent traffic generated by manipulating ad buying processes or parameters. Data Exchange A specialised data exchange platform that provides SSP user data to advertisers. The data may include A technology platform that enables web publishers information on the user’s sociodemographic profile, to sell ad inventory on their web resources. geolocation, interests, activities, etc. Trading desk Data Management Platform (DMP) A platform for the cross-platform automated media A technology platform that collects, processes and buying according to different advertising models storing user data for further use in advertising (direct placements in the main digital channels or campaigns. auction purchases in the RTB system). On the Russian market, the analogue of ATD are agency teams, which organize media buying from different platforms. Additional Supply and demand Key counterparties services PwC Data Exchange Audience DMP 85% Ad Exchange Platforms Inventory 90% owners 15% SSPs DSPs 10% metrics, etc. Ad slots Sell-side Viewability Inventory owners A metric that allows to track the actual Internet sites that sell ad space to display of an advertisement and the time it interested advertisers. has been in the visibility area. Platforms Agencies and agency Demand-side platforms (DSPs) products form part of the programmatic advertising ecosystem at major IT International communication groups that corporations. are present in the Russian market. Agency products include proprietary technologies Advertisers developed by agencies for programmatic Large companies that invest a ad buying. significant portion of their advertising budget in Audience programmatic buying tools and Audience refers to the end consumer, who that have extensive experience in also play a key role in generating user using such tools. data. Verification Traffic verification (or traffic audit) is a set of solutions to counteract fraudulent traffic and unfair advertising campaigns, including in the following three key areas: fraud, brand safety and viewability. 9 Mobile is driving growth in the online advertising 1 market globally Global online ad segments, 2018-2024, USD billions2 Growth rates +6.6 2019-24 % 390 -2.6 371 % 349 2.3% 323 311 303 269 0.4% Desktop 40%, -0.5% 2020 Mobile 7.7% 60%, 2020 7.0% 2018 2019 2020 2021 2022 2023 2024 Classified (desktop) Contextual ads (desktop) Display ads (mobile) Display ads (desktop) Contextual ads (mobile) Global spending on display ads vs Global spending on programmatic ads, other online formats, %2 USD billions3 +26 Growth rates % 2019-24 5.1% 4.2% 2017 2018 2019 2020F 2021F Display ads 1 Other formats 1Hereinafter display advertising includes all banner, video and mobile formats, excl. contextual advertising, classified advertising. 2PwC analysis, PwC Global Entertainment & Media Outlook 2020-2024 3PwC analysis, Zenith Programmatic Marketing Forecast PwC Key trends in the global online advertising market In 2020, the global online ad Smartphones continue to market declined by 2.6% due to displace computers as the the impact of the COVID-19 primary way that people access pandemic, except for the mobile content. video ad segment, which grew by Thanks to the penetration of 0.85%. smartphones in developed and The General Data Protection emerging markets, mobile ads Regulation (GDPR), which has accounted for 60% of the imposed new restrictions on how market in 2019, and may personal data can be used, is constitute 67% by 2024. expected to negatively effect Mobile is also driving growth in players that rely on third-party data programmatic ads: over 80% of and to strengthen large IT all mobile ads are bought via platforms. programmatic. Currently, video is leading format The latest trend on the market is for ad content. The development the use of hybrid programmatic of social networks and video models (partially in-house) and platforms (YouTube, etc.) has led proprietary data collection to a shift in consumption patterns processes to enhance the towards video content. This trend effectiveness of targeting. is also being driven by the growing accessibility of smart TVs and other over-the-top devices. 11 The advertising market in Russia is growing faster than the global average Online advertising segments in Russia, USD billions2 Growth rates +8.0 2019-24 % 5.4 5.1 +5.0 4.8 4.6% % 4.4 3.9 3.8 4.3% Desktop 3.3 69%, 6% 2020 Mobile 9.6% 31%, 2020 11% 2018 2019 2020 2021 2022 2023 2024 Classified (desktop) Display ads (desktop) Contextual ads (desktop) Contextual ads (mobile) Display ads (mobile) Expenditures on display vs. other Spending on programmatic ads in online ads, %2 Russia, USD millions3 91.09 +15 5 15.93 % 4 Growth rates 2019-24 9% 6.3% 2018 2019 2020F 2021F 2021F 2021F USA China Display ads Russian market 1 Other formats Market leaders 1Contextual advertising on desktops and mobile devices, classified advertising 2PwC analysis, PwC Global Entertainment & Media Outlook 2020-2024 3PwC analysis, Zenith Programmatic Marketing Forecast. Spending in Russia does not include social media due to lack of data. PwC Key trends on the local online advertising market Despite the negative impact of Display ads account for 39% of COVID-19, Russia’s online the online advertising market. In advertising market grew 5% in 2019-2024, display advertising is 2020 and will reach USD 5.4bn expected to grow at an average over the next five years. annual rate of 9%. Unlike the global market, The variety of large and small desktop advertising remains players on the Russian market the largest segment in Russia, has encouraged competition and accounting for 69.1% of the total helped to facilitate the growth of the market in 2020. programmatic ad buying market as a whole. The mobile online ad market has grow rapidly in recent Developers are working on new years, including by 20.2% (USD ad formats, including 1.1bn) in 2019. Currently, mobile programmatic ad placements on ads account for 31% of Russian smart TVs and in digital online ad market but could reach out-of-home spaces. 36.5% by 2024. 13 2 Key research findings PwC 15 Users Advertisers are widely engaged in using programmatic ads Advertisers in the Russian market are deeply engaged in developing programmatic buying solutions. We interviewed senior managers at global agencies and brands to learn about their thoughts on the latest trends and expectations about how the market might develop. Conclusion: Programmatic has become the preferred 1 method for buying ad inventory • In recent years, a substantial number of advertisers have redistributed their advertising budgets to focus more on Advertising budgets have largely programmatic.