Data from the Microsoft Ad Exchange shows two things stand out about Canadian programmatic buyers: they really like private marketplace deals and they rely heavily on agencies, more so than any other market Microsoft looked at.
Microsoft Advertising sales director R. J. Pauloski presented the data at Thursday’s IAB X-Series conference.
The first graph shows the number of trades conducted on the Microsoft Ad Exchange (MAX) using Deal ID, an open-source framework for making private trades with known publishers, using the same infrastructure that supports an RTB exchange. Basically, Deal ID works like a key to a private back-room that publishers can pass to certain buyers, so they can buy the best inventory at fixed prices (rather than bidding on them like all those plebs on the open exchange).
While it’s not exactly news that Canadians prefer private programmatic deals to open RTB exchanges (eMarketer estimated last spring that there are three impressions bought via programmatic direct for every one transaction on the open market), but it’s pretty surprising that Canadians are doing 68% more Deal ID transactions than their U.S. counterparts, and 7 times more than in the U.K.
It’s possible we’re seeing the influence of CPAX and Index Exchange here, which have done a lot of work promoting Deal ID to agencies as a relatively simple and effective solution for programmatic direct (the trades charted here don’t include trades on CPAX, but if agencies are using the tech on CPAX, they might be extending the practice to other environments).
Likewise, the agency numbers aren’t that surprising taken on their own, but they are when taken in context with what other markets are doing. Brands all over the world are leaning heavily on outside experts when it comes to technology innovation, especially in the zany world of new media. But in other markets, it’s apparently much more common for brands to be working with non-agency third parties to do programmatic trading, or simply hiring their own programmatic experts and doing it themselves.
But in Canada, almost half of all programmatic transactions are going through agencies.
An alternative interpretation is that in other markets, the agencies tend to prefer trading through third-party subcontractors, whereas in Canada they like to do it themselves using self-serve technology. (One way not to read this chart is that U.S. advertisers are doing 81% of all trades in-house; in-house trading still isn’t that popular, in the U.S. or elsewhere. Many of those transactions are going through third-party managed services, like Turn or MediaMath.)
Pauloski also showed a slide suggesting programmatic demand in Canada has largely caught up to the U.S. and U.K. In fact, it did so back in fall 2013:
(The quantity charted above, strip rate, refers to the percentage of available inventory that is purchased on the exchange.)
Again, this is just data for the MAX, so it may represent the popularity of MAX more so than general demand across the industry. Still, it shows that when Canadians do eventually get on board a new technology, they like to do it all at once.
“This market tends to be a little bit slow to adopt, but when we catch on, we catch quickly,” Pauloski said. “We think this is the case because Canada is a less fragmented market than some of the other areas that we’re active in, especially the U.S. and U.K.”
That’s especially true on the publisher side, he said, where the top three publishers together can address more than 90% of the market. That meant it only took a few sellers to commit to programmatic to generate enough scale for the channel to start looking attractive to buyers, whereas in the U.S. that process was much more drawn out.