National Problems, International Solutions: How Local Business Challenges are Driving Data Innovation in Europe

Rosa Markarian

The European digital advertising industry was once derided — often by Europeans themselves — for being hamstrung by market fragmentation and EU red tape. In the early days of programmatic trading, few had the foresight to predict that these barriers would fuel innovation. Here, Rosa Markarian, Head of Product, EMEA at Xaxis, explains how Europe’s technological and strategic strength is powered by its diversity and yes – even by the difficult regulatory environment.

One of the greatest advantages of a globalised environment is that it allows us to share ideas from different cultures that we can then adapt to suit what we’re trying to achieve locally. The whole world, with all its variations, provides a seemingly infinite source for knowledge and learning. However, when it comes to online marketing, I suspect the global traffic in ideas is a little unbalanced and much of the industry looks — almost instinctively — across the pond to what’s happening in the US. After all, major players like Google, Facebook and AppNexus all hail from the US.

However, as the European market matures, perhaps the time has come for Europeans to look inward for solutions more often than we currently do. Equally, perhaps it’s also time the rest of the world took a keener interest in what is being achieved here.

What is fascinating is that many of the supposed ‘barriers to progress’ in Europe — such as market fragmentation — are in fact fuelling technological and strategic innovation, especially when it comes to the use of data.

Audience Buying, Targeting and How to Find Water in the Desert

One of the main reasons audience buying has flourished in the US is the fact that there is a countless number of third party data providers. Advertisers (or their agencies) can select a segment they want to reach from a selection of thousands in order to target an ad. For example, you can buy five million anonymous cookies to target an audience that is male, a parent, have bought a car in the last three months etc.

The providers get this anonymous data from different partners like ecommerce stores, credit card companies, etc. But in Europe it’s different and — compared to the US — it’s a data desert. This data is just not easily available in Europe due to the US model of third party data providers not being very common here in Europe.

While the outlook for data-driven advertising in Europe was a little bleak in the early days, there is now a new wave of data business models in Europe, especially in Germany, largely because the industry has been forced to innovate.

For example, publishers have started gathering data in a transparent and consensual way through cookies across their websites and have carried out surveys to get additional information like gender or age for a number of their visitors (seed data). In this scenario, if you want to be able to target a larger number of cookies than in the original seed data, for example target based on gender, the behaviour of the seed data has to be analysed thoroughly via sophisticated proprietary algorithms (look-alike modelling). For best performance this process requires not just proprietary algorithms but also data at scale which is best achieved by the larger players in the market.

Agency networks have also applied this across-publisher approach with their own technology, providing several advantages for European ad networks. Indeed, this has created specific advantages that have also been valuable for US campaigns, including:

  • Increased scale and efficiency for cookie-based targeting, since with the enhanced technologies now available, it is not necessary to gather all cookies for a required specific characteristic, as would have been done previously if sourced from 3rd party data providers
  • Increased sales as client-specific segments can be custom modelled e.g. users that are similar to users who have already bought something on the client’s website (look-alike retargeting)
  • Specific custom-targeting for brands, for example, modelling lifestyle segments according to the advertiser’s precise target audience group description. Additionally, as over 60 percent [1] of the European population is now online, there is the need to replicate all traditional offline target groups so they are now available online.

Seed data is needed for look-alike modelling, but the lack of third party data has led to the creation of a wide range of creative approaches in Europe to source seed data of a high quality in a privacy appropriate way i.e. with user transparency and consent. Examples in innovative data sourcing from countries such as Austria, Poland, and the Nordics include: data from local social networks; data from websites with registered users (e.g. dating sites); and data from online panels (market research quality).

The Dutch Template for a Post-Cookie World

There’s a constant concern within the online industry of what would happen if cookies were forbidden. But why fear a leap into the unknown, when there are already real world precedents we can look at? We have already adapted to this very scenario in the Netherlands, and with great success too.

Since January 1st 2013, is has been forbidden for anyone to drop a cookie without explicit prior opt-in user consent in the Netherlands. At first, there were a few months of widespread confusion in the market. Here’s what happened: on many websites, users were asked to accept cookies in order to enjoy all the benefits of the website and to enjoy the content for free. Now more than 80 percent of the users have accepted cookies, and in order to do that they had to click on almost every website they visited (so probably hundreds), to signify that they were comfortable with the use of cookies.

However, during the intervening months when that consent was still pending, companies were forced to innovate, and this activity enabled them to develop alternative ways to reach audiences by using advanced site analysis based on panel data to see the audience composition of a website.  This approach combined with automated inventory buying in real-time made it possible to deliver ads effectively via only those websites that match the desired audience.

A Brighter, More Innovative Future

We are only at the end of the first chapter of the data-driven advertising story, and there’s little doubt that the European online industry will continue to adapt in order to provide consumers with a safe online experience in an ever-changing technological environment over the coming years. As that environment develops, we should take comfort in the fact that European people and companies dealing in data-driven advertising now have a history of adapting to change in order to create new opportunities that best serve the interests of Europe’s advertisers, publishers and consumers.


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