Why Europe’s publishers have embraced programmatic co-ops

Pangaea, the Guardian’s new programmatic alliance, may have turned heads in the U.S., but it’s nothing new for publishers in Europe.

With the deal, The Economist, Financial Times and CNN International and others have all agreed to combine their collective programmatic inventory and data, giving them the kind of scale and data that they wouldn’t get otherwise. The hope is that will attract advertisers, boost CPMs, and make them more competitive with the likes of Facebook and Google.

It’s an increasingly common model in Europe. Pangaea’s creation follows that of similar publishers alliances in Czech Republic, Denmark, Greece and France, where large publishers bundled their programmatic inventory in a similar capacity.

“When you have such a fragmented supply offer, it makes sense for many publishers to gather and create differentiated offerings like these,” said Fabien Magalon, managing director of La Place Media, a three year-old programmatic collective that includes 250 publishers, including France’s Amaury Médias, FigaroMedias, Lagardère Publicité and TF1 Publicité. He said that La Place Media, which reaches 70 percent of France’s Internet population, managed to increase CPMs for above-the-fold impressions by 70 percent in its second year.

Market dynamics make Europe ripe for such initiatives, and explain why publishers on the continent have adopted programmatic selling faster than their counterparts in the U.S., or even the U.K. The biggest factor is size. France, for example, had total population of just 66 million people in 2013, 82 percent of whom had Internet access, according to The World Bank. The populations of Greece and Denmark are even smaller at 11 million and 5.6 million, respectively. Compare that to the population of U.S, which topped 318 million at the end of 2014.

“Because of the population differences, there’s a compression that occurs,” said Jay Stevens, general manager of international at Rubicon Project, which has powered five programmatic cooperatives so far. “It’s more expensive to run a sales organization, an operations team, and account management because they’re eating more into the margins of each individual order.”

This is a problem that Google and Facebook don’t have. Not only are the companies uncontested in their scale, but they’re also flush with data that users have, for the most part, volunteered willingly. All of this makes them attractive options for buyers, which gravitate towards efficiency.

Publishers, on the other hand, don’t have that kind of reach and have only recently gotten serious about investing in data management platforms to help them make sense of what they’ve collected on their readers. Programmatic collectives, however, turn that dynamic on its head by giving publishers greater reach and letting them pool their data.

“It’s difficult for these traditional media owners to be able to compete one-to-one against Google or Facebook,” Sears said. “They might have decent size reach in their markets individually, but they lack the data component at scale. Publishers might have the data, but it’s siloed.”

While European publishers’ programatic co-ops have been successful on a country-by-country level, the question now is whether they will start pushing for larger n continent-wide co-operatives.

“At this stage we haven’t started any in-depth discussions with similar organizations elsewhere,” Magalon said, “But it might make sense to make something like that happen.”

Photo: Shutterstock

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