WW: When it comes to trading online advertising space in real time, so-called real-time advertising (often referred to as real-time bidding), a trading desk is a central concept. What was the motivation for your company to become active with a trading desk?
Prince: The realization that these technologies are already being used in the USA and the UK. And so, about two years ago, we started looking around for technologies that could be used in Switzerland. It was a long process until we found a partner like App Nexus and were able to really get started. The breakthrough came when it became possible to buy cross-border traffic automatically from Switzerland. We've been using this for a year now and it's going extremely quickly.
 
Did you also start at Mediaschneider two years ago?
Semmler: A little later, although the basic considerations were similar. Another point was all the foreign networks that were pushing into Switzerland, buying the same traffic from each other and then selling it to the advertiser at ten times the initial price. We wanted to at least partially eliminate this with a more intelligent purchasing system and better targeting.

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WW: When it comes to trading online advertising space in real time, so-called real-time advertising (often referred to as real-time bidding), a trading desk is a central concept. What was the motivation for your company to become active with a trading desk?
PrinceThe realization that these technologies are already being used in the USA and the UK. And so, about two years ago, we started looking around for technologies that could be used in Switzerland. It was a long process until we found a partner like App Nexus and were able to really get started. The breakthrough came when it became possible to buy cross-border traffic automatically from Switzerland. We've been using this for a year now and it's going extremely quickly.
 
Did you also start at Mediaschneider two years ago?
Semmler: A little later, although the basic considerations were similar. Another point was all the foreign networks that were pushing into Switzerland, buying the same traffic from each other and then selling it to the advertiser at ten times the initial price. We wanted to at least partially eliminate this with a more intelligent purchasing system and better targeting.
 
What have you invested in the trading desks so far?
 PrinceIf you consider that the introduction of a fully functional trading desk involved several employees at management level for almost two years to build up expertise, evaluate and optimize processes, then you quickly reach a high six-figure sum. This requires at least five additional highly qualified employees for ongoing operations. In this respect, we have invested a good CHF 1 million to date.
 
What job profiles are we talking about?
Prince: One is the Ad Trader, which monitors automated purchasing ...
... what prior knowledge and experience is required?
... a lot of experience with ad server systems. A so-called trafficer can train to become an ad trader. They need an analytical understanding and a feel for numbers. And then, of course, a flair for trading in order to buy from different sources so that this is as advantageous as possible for the advertising client. Then there is the Manager Automatic Buying, a modern campaign manager. He books the campaigns into the system and procures the advertising material.
 
What is the ideal background?
... who has at best already worked as a campaign manager and is familiar with an ad server system or Google. They have to enter the campaigns very precisely into the agency's own ad serving system and also generate reports. And the third profile is the campaign engineer, who has a professional background as a computer scientist. They have to bring all purchasing sources into a central database and connect them to the ad server system.
 
Do you see it the same way with Mediaschneider?
Semmler: As a purely digital agency, Serranetga naturally has a slightly different focus than we do, as we have to keep an eye on the entire campaign architecture. That's why we still need traditional planners and have to train them to become analysts. They have to be able to draw the right conclusions from this very complex matter. This is a process that doesn't happen overnight.
Prince: It is precisely here, in terms of personnel, that the main investments are made. We are currently working on these issues and optimizing internal processes. For example, storing data in such a way that intelligent monitoring tools can be applied to it.
 
What proportion of the digital advertising business can you handle via the trading desks today?
Prince: About 60 percent. As an agency, we have now optimized our purchasing to such an extent that we have eliminated the middleman trade with networks that skim off a margin of up to 70 percent. This makes purchasing several times cheaper.
Semmler: For us, it's less, about 20 percent.

And how many trading partners do you have connected to the trading desk?
Prince: We have a main DSP [demand-side platform] with App Nexus, the global market leader in real-time advertising technology, and we have licenses with two others. And we still book some of our inventory manually and Google also has to be added separately, which accounts for around 30 percent of our inventory.
 
Do you also mainly use the Nexus app at Mediaschneider? Semmler:
Because there aren't that many who play in this league, you have to assume that. And the interface to Google also makes up a large part of our business.
 
What are the main advantages of a trading desk?
Prince: The main aim is to minimize transaction costs and optimize processes. Previously, we had to negotiate by telephone with every website and every network. We can also eliminate the costly but ineffective middlemen with their networks. Often, entire packages had to be purchased in the hope that some of the users would correspond to the required target groups. Today, we try to generate certain user profiles using cookies and can use real-time bidding to pick up these users at exactly the right moment with the right advertising material while they are surfing. This has important advantages for the advertising customer, as it eliminates all the wastage and duplicate purchases.
 
However, there is also criticism that there is arbitrage business and kickbacks and that the processes are not transparent. How do you deal with this vis-à-vis customers? Prince:
This is not an issue. If customers previously booked via networks, they are now around ten times more efficient a year later. Every advertising franc is thus optimized.
Semmler: Absolutely. New technologies always involve questions of understanding. We try to make this as transparent as possible for our customers.
 
Are customers demanding more transparency?
Prince: Unfortunately, advertisers still ask far too few questions. Otherwise they wouldn't want to book more clicks. They are often satisfied with the wrong metrics, because a click alone is useless. Performance-oriented metrics, such as the number of leads generated, are better. That's why we always strive to actively inform our own customers about the savings that RTB offers them.
Semmler: If goals have been defined, this can also be measured. However, there is always the question of which sites in a network the customer appears on. And here you have to explain once again that this system is associated with an absolute user focus.

How do you perceive publishers in Switzerland when it comes to this topic?
Prince: There are of course certain fears among national publishers because real-time bidding is associated with the performance track. But for us as an agency, it's not just about that. First and foremost, we want to reduce transaction costs ...
Semmler: ... yes, one hundred percent agree ...
Prince: ... for all parties. Firstly, for us, because we don't have to employ three people who are constantly booking flights. Then we don't want to have networks in between that also skim off margins. And we also don't want publishers to have to employ ten people to answer the phones and manually book, say, moving image advertising into the ad serving system.
 
But why do publishers refuse to use RTB processes? Some say that this is far from being an option for them.
Semmler: Of course my blood freezes in my veins when I hear that. I think it's simply a fear of the supposedly lower CPM. Of course, there are also certain forces that influence this.
 
Which ones?
Semmler: These are the forces that are running an arbitrage business today. And logically, they have no interest in it. We are primarily interested in the automated model. We certainly don't expect prices in the premium segment to collapse just because of automated purchasing.

What would be the answer to publishers as to why RTB is not necessarily bad?
Prince: We can now set up the technology so that we can start on January 1 or 2. A portion of the budgets that would otherwise migrate abroad will then be booked as premium. Three to five premium advertising formats will be defined so that they can be booked automatically. Of course, this is a little cheaper because the publisher does not have to do any work, but at high CPMs.
 
Why do publishers fear that prices could fall because of RTB?
Prince: Some of it is a lack of understanding of the technology. Because "bidding" unfortunately implies that it's about the price and not the process. I've also heard publishers ask 'how am I supposed to make a good offer to my good customers if I can no longer control what it costs?
 
What is the answer to this fear?
Prince: That you still have the masses. Special deals are still possible. Instead of real-time bidding, we will be talking about real-time advertising. And that's because it's about catching the right user at the right moment. This does not require a highly complex SSP machine [sell-side platform], modern ad servers are also sufficient. Then we can book in automatically with the publisher and the agreed CPM of, say, 17 francs applies ...
 
 ... without any actual bidding taking place, but it is automated
... Semmler: ... exactly. Then people can concentrate on their actual work again. Because a really good planner in the digital sector is too expensive to make bookings for online advertising by fax. If I look at the traditional TV market, for example, even there are better automated processes than we currently have online.
 
What do you do if publishers don't participate?
Prince: We then book the initial contact with the Swiss premium publishers and the subsequent contacts via RTB - at significantly lower prices.
 
That does create a certain amount of pressure to move. Can you only run campaigns with foreign sites today? Prince: In the performance area, easily. Because we have two billion ad impressions available per month ...
 
... so there's no need for Swiss publishers at all ...?
Prince: ... not in the performance sector. But it would be welcome if we could book Swiss inventory, even at higher prices.
Semmler: At the moment, Swiss publishers are not earning any money from the budgets that run via RTB systems, and that is certainly not insignificant. And I think an incentive should be created so that they can participate in this growing pie.
 
The pressure on publishers is getting ever greater ...?
Semmler: You can certainly say that.
 
Can Swiss sites also be dispensed with for branding campaigns? Semmler:
No. We need the users on these platforms. But we can already get them today if the model I mentioned earlier is applied. I certainly need Swiss publishers for branding campaigns. No discussion.
 
What specific discussions do you have with Swiss publishers?
Semmler: I have regular contacts like this and try to take one step at a time. For example, to make the process-oriented advantages clear. Or to show that Swiss publishers could, let's say, earn money from a Dutch airline, which has hardly been possible up to now because the effort involved was far too great. I can already see that understanding is growing. But certain publishers are moving in a slightly different direction with their own network ...
Prince: ... Yes, the PPN, the purpose of which is going in the right direction. Namely the simplified booking of Swiss premium inventory, which is also enriched with relevant profile information. The shortcoming at the moment is that the PPN is self-contained and therefore cannot be combined with the RTB inventory. This eliminates the most important advantage of real-time advertising.
Semmler: And there are other large publishers, such as MSN, that make their traffic available via an SSP. Therefore, the understanding must grow and is growing.
 
To what extent are other existing networks and marketers also under threat and under pressure to adapt?
Semmler: Swiss networks are too expensive in terms of performance compared to all cross-border traffic. But from a branding point of view, it can make sense to buy Swissness in such networks.
 
Couldn't such networks also open up for RTB?
Prince: Of course they could. But their business model as middlemen would become obsolete. Because with automated purchasing via RTB, you could just as well book directly with the publishers.
 
You are both pioneers in this field. How else do you perceive the industry when it comes to this topic? Is everyone pulling in the same direction or are you also happy that publishers are not going full throttle with RTB?
Semmler: Whenever a high margin between traffic purchase and traffic sale plays a role, there is no great interest in changing the system.
Prince: All the training courses are classically geared towards environmental planning. Anyone who has a job today has no interest in doing something new. Even if you have a well-running business, you don't want to change anything. That is logical.
 
Could it still be that RTB in Switzerland will turn out to be a disaster?
Prince: No way - really no way. It cannot be the future that each publisher is booked in individually by telephone.
Semmler: No, I'll put my money where my mouth is. The modulation has a completely different quality, the contact class optimization has a completely different quality - no way.
 
Interview: Christoph J. Walther