Opinion: The Future of Advertising Landscape
In this article Marcel from RTL’s technology organization presents his views on the future of Ad industry in the Netherlands.
RTL Nederland is one of the Netherlands leading and most distinguishing media companies. RTL has five free to air television stations (RTL 4, RTL 5, RTL 7, RTL 8 and RTL Z) with advertisements as main source of revenue. RTL also manages advertisements for independent broadcasters and independent news organizations. RTL owns the leading local video-on-demand platform Videoland. In addition, RTL has MCN in entertainment, a growing live events division, three digital channels (RTL Lounge, RTL Crime, RTL Telekids), the digital weather platform Buienradar and a ventures division. RTL’s channels and platforms offer a wide variety of international and predominately Dutch programs, documentaries, films and series. RTL Nederland is a subsidiary company of RTL Group and part of the international Bertelsmann organization.
QPlease introduce yourself and your experience in Advertising Industry
My name is Marcel Korstjens — Alling , I’m 46 and I am the Head of Commercial Technology at RTL Netherlands. I have been working in the online business since 1996 where I started at Cyberlab, (the first interactive agency in the country). After CyberLab I moved to QXL(online auction) and in 2004 I switched towards online advertising when I moved to the publisher Ilse Media(now Sanoma) where I worked on the Online Traffic and Sales development. After Sanoma I switched to a sales network called WebAds and since 2014 I have been working for RTL.
QWhat is the state of Advertising industry in Netherlands?
The Dutch have always been very good in re-inventing the way we currently do our business. That is the reason why the Dutch online advertising industry is well advanced compared to our neighboring countries.
Programmatic and RTB have been widely adopted and header bidding is taking over the tag setup on the pages. Yield and efficiency are always focus points for publisher while advertisers and agencies have really grown to full blown ROI machines to give the advertiser a high return on their advertising spend.
QHow do you see the Linear TV advertising evolving?
The crucial point on Linear TV is that somebody at RTL decides what the user is watching. In the recent years we are seeing a trend that more and more people are taking control in deciding themselves what to watch and when to watch. But I believe that there will always be people who do not want to choose or who prefers someone else to choose for them the content to watch. See decision fatigue.
I always compare it with music. Long time ago I used to buy CD’s and decided myself what to listen. Then I moved to Spotify as their music catalog is huge and I could choose everything myself. But now I am find myself using Spotify radio more and more. Yes, I decide if it is Jazz, Rock, Pop or Heavy Metal but I let some algorithm choose which songs to play.
I think the Linear TV is going to develop into something cool. The user decides the genre like game shows, drama or action and RTL decides and plays either Game of Thrones or The Soprano’s.
The big question for me is if Linear TV will stay advertising-paid or if it will move into a subscription model so no advertising will be shown. In other words, will viewers prefer to pay with cash (subscription without advertising) or with do they prefer to pay with time (viewing commercials).
QDo you think the publishers in Netherlands are fully ready for the Programmatic buying?
First, a publisher doesn’t buy, he sells. Second is that 90% of the publishers are doing so in some form or another and Third is that agencies and advertisers want to buy programmatic as it enables them to be in control and do the decisioning whether to bid/buy a certain impression from a certain user.
I am not sure if the market is ready to do programmatic buying of Linear TV commercials as the benefits for the advertiser and agency are not clear yet. When they are clear and show positive I am sure everybody will adopt it.
QWhat according to you are the biggest threats for the Ad industry in the Netherlands?
There are a couple of big ones. The biggest one is “1 shared truth”, something we do not have. Take viewability for instance. Every advertiser/agency and publisher has its own definition on when an advertisement had a ‘Opportunity to See’ and as everybody has a different standard it is hard for any one of the parties to yield across multiple buyers. Should the creative be in view 10% for 2 seconds or 50% or 100% for 1 second before the attribution is counted? This shared truth also contains GRP or CPM. How do we expect the advertiser to decide where his budget has the best effect if the 2 worlds of linear TV and online advertising cannot be consolidated.
The second one is ‘fair price’. Most businesses in the world work on the ask and demand metric. I have something which costs me €1 to make and I sell for €10. You need one of the things I sell and you in turn will make €100. Now the question is if there should be any relationship between the 2 prices. How do we calculate if my €10 is a fair price to pay. This question turns nasty fast when we include the global players (like google, amazon and Facebook) who have a totally different business model but still sell the same product as what I sell only for €5.
RTL creates new content, pays the people making the content and pays the tech guys to run the platforms and advertising. That’s why RTL needs that €10.
Google on the other hand depends on someone uploading content to Youtube. Sure they have the technology costs but they can sell their advertising space for €5 because they do not have the content creation costs like RTL has. This situation makes it really hard to convince the advertiser to spend their budget at RTL. This ‘unfair advantage’ (at least unfair in the sense a local player is battling a global player) is the biggest threat for all ‘local only’ initiatives.
QHow do you see market responding to the recent AppNexus takeover by AT&T?
It depends, this takeover is yet another one in the long line of big company’s buying their own adtech stack. From that point I am not worried about it. Not owning your own adtech stack will always put you in the situation where you will need to use 3rd party adtech on a revsplit setup model. For online advertising this has always been acceptable but we all know “TV Linear budget” is moving over into online and nobody is going to pay 15% to any outsider for amounts over $100 million.
Besides the cost saving AT&T will have. AT&T says they want to turn Appnexus into one common platform to run Linear TV ads for the entire industry and that could be a big change. If AT&T is capable to setup Appnexus to solve the ‘1 shared truth’ situation (for instance by including GRP ratings in comparison with CPM in demo reach numbers) they could do a huge step and help the market to standardize and grow.
Without this common denominator I think they will have a very hard time and I see the future of Appnexus just as a DSP/SSP ecosystem.
QWhat, in your opinion, should be the approach publishers take to survive in this domain dominated by Google & Facebook?
There can be only 1 approach in my opinion and that is “to stay authentic” and maintain a great relationship with your users. Although Google and Facebook are huge they are neither authentic nor build a relationship with the users. Facebook has no face (maybe Mark if any) and Google has no face.
RTL means something to the Dutch audience. It’s that breathtaking TV show, that funny host of the morning show or that topic which was on TV last night and now everybody is talking about it at the coffee machine.
RTL’s mission is to make the difference with unmissable stories to the Netherlands that touch the heart and mind. If we accomplish this, I am sure the users will reward RTL by viewing and interacting with the content, be willing to pay for the content with money or time while feeling more secured/relaxed in the privacy discussion. RTL is a trusted brand that treats users with respect and communicates what we are dong in a transparent way. That is what will set us apart from the ‘big 6’ where a user is just a way of making more money.
While Google and Facebook do things ‘to’ users, RTL will do things ‘together’ with the user. And that will make the difference in my opinion.