The future of Ukrainian advertising, the death of cookies, and the black box of programmatic.

The interview with Anastasiya Baydachenko, CEO of IAB Ukraine.
What was 2019 like for Ukrainian market of Internet advertising? Are you satisfied with the results?

The Internet advertising market is in great shape: even the crisis of 2014 was not particularly painful for it. It is a growing trend, and nothing will stop it. This segment is growing mainly because of search advertising and because of how easy it is to enter the market for a purchasing customer at any level. We don't have any budget commitments or limitations, our creative approach is very simple, and therefore it is easy for us to acquire a long list of smaller customers who are of no interest to the agency segment of the advertising and communications market.

Is advertising in Ukraine improving in quality? Do most customers prefer a cheap banner or something serious and creative?

To answer this question, we need to base on performance evaluation, and I can't say that Ukrainian market is doing well on that. Some companies — usually, international and global, come with a set of KPI and evaluations from the start, and also with the request for obligatory use of additional software that allows for very accurate measurement of ROI and the quality of the creative in this particular case. Such companies are easier to work with, because special instruments help you with performance evaluation. However, the use of such additional systems usually requires additional funds, and this increases the cost of the campaign.
«Когда ты говоришь с клиентом без камер, они жалуются: «Боже, мы до сих пор путаем DMP и DSP»
How do Ukrainian companies measure campaign performance?

Even e-commerce in Ukraine very often acts based on A/B testing principle: they don't know in advance whether a certain creative, platform or format will be effective. They just give it a go. And if it works — they invest more money, and if it doesn't — they don't. Taking into account the uncertainty, high risks, and constant technological changes, this is a sound approach, but an element of preliminary analysis should always be present.

This is the analysis based on all collected data, experience, results from previous periods, or a research that we customize. It is best to base on a certain mix of data: to take into account both the data from the research, and the accumulated big data, and A/B testing. All elements are important.

We are often unable to measure the performance of advertising ourselves, because we don't fully use the existing tracking instruments. For instance, we have three researches on the Internet audience, and each of them has certain nuances and can't provide a full picture. The lack of an industrial study also prevents us from identifying the most effective instruments.

Regarding out-of-home advertising: IAB now has a digital out-of-home advertising committee that is currently working on the development of standards. This will help develop approach to performance evaluation where we will understand what we sell, how we sell it, and for how long a clip remains on a board. This helps form KPI. The issues of reporting and tracking are rather pressing for out-of-home, that's why our task as an industrial establishment is to agree on standards. It is important that these standards are in line with the global ones and allow for forming KPI. Then, we can measure the performance of a campaign based on these KPI. Now we use different approach every time: if we are lucky and we have global guidelines — great, we use them, and if not — we work the old way.
«Украинский рынок рекламы называет programmatic черным ящиком. Наша задача — просветить этот черный ящик рентгеном»
How much did DOOH take root in Ukraine?

I feel that digitalization of other media started since about 2016. However, we can't say that this is a large market yet. The market is only emerging, and this is exactly why it is important to create regulations for it now. Clear regulations and standards always have very positive impact on further growth.

Unfortunately, in Ukraine we use very few instruments that in other places in the world have long been considered standard protocol. However, within IAB framework we started talking to operators to unite as industry and solve this issue. These are namely the instruments that will constitute the area of growth in the nearest 5-10 years: this a global trend and also healthy logic.

How do global advertisers such as AliExpress that want to buy traffic on digital boards come to Ukraine? They don't approach Octagon, Big Media, or Prime Group. They enter the programmatic system. And only those players who connect to the programmatic system will be able to sell their advertising space. And we should be ready that this will be the way that all global players will want to buy in five years.

Some of the players who have digital boards are already connecting to systems or are at least testing them. We can't fully use the possibilities of programmatic for out-of-home, but we can at least test them. Testing and connecting doesn't cost anything, and as soon as there is demand from the Ukrainian buyer, the market is ready to respond. Being technologically ready is very important.

To what extent are the Ukrainian companies technologically ready?

Larger brands are doing okay: they already have internal management systems for such advertising. For some of them it is a global instrument — software that is used in Europe, and it is a matter of several hours, a day at most to connect programmatic to it. For others those are self-designed CRM-systems — they are more complicated to work with, but this is also an issue that can be solved. In any case, management of DOOH advertising requires the out-of-home operator to use software. The task of connection is the task of co-configuration of programmatic software and the operator's software. This sometimes takes an hour, sometimes several days, but it is doable.

Are Ukrainian companies still afraid of programmatic?

This is a painful and a very relevant issue. On March 13, we are preparing a large educational event, Programmatic Mythbusters. Why?

Observing the interaction of programmatic players and customers/auditors from the sidelines, I see that they remain on different levels of understanding. Customers and auditors do not always know what programmatic is talking about. Programmatic takes offence: "Why so, we hold workshops, we talked about it a billion times, why don't they understand?"

And when you talk to the customer off the records, they complain: "God, we still can't tell the difference between DMP and DSP. We wish we had a cheat sheet on A4, this would be very helpful."

Programmatic and customers in Ukraine currently have different understanding of what is simple. Programmatic players think that they explained everything in a way that is very easy to understand, but this is still too complicated for the market.

That's why we outlined about 12 myths and misconceptions in advance, and programmatic players will have about 5 minutes to debunk each of them. The second part of the event is the panel discussion where auditors (Kwendi and Media Audit Institute have already confirmed their participation, which is very important) will talk about practical applications. One of the main issues is that auditors don't believe in programmatic for a brand. They want to see cases how programmatic builds brand awareness, how it impacts the indicators, how it works, for instance, for Coca-Cola. If programmatic shows these cases to the auditors and customers, this will most likely help increase the sellability of the instrument.

If we look at programmatic, for instance, in DOOH, the main issues now are the limited tools and the lack of equilibrium price. The more settings there are, the easier it will be to configure this instrument. Currently this is rather testing that doesn't bring any money, and brings little when it does. It is all temporary though. The most important thing is being technologically ready to sell when the demand emerges.
Развивается интернет-реклама — развивается фрод, это как плывущие рядом акула и рыба-прилипала
Could you list the main myths of programmatic?

The myth that is rather problematic for the market — lack of understanding of programmatic and comparing it to the black box. A black box is something hard to understand, where manipulation and fraud are possible. This immediately destroys the trust in the instrument. Our task is to put this black box under X-rays.

IAB has its own glossary. How often do the players on the market consult it?

We are trying to promote it. We have Glossary Tuesdays on our Facebook page when we talk about the glossary and explain the vocabulary. Of course, we need additional resources for promoting it, but we are working on it. People need to understand that there is a Wikipedia of sorts, and if you don't know the term, you should look it up there first. However, we won't be able to make people memorize those terms like they do with foreign languages at school.

Upstream has recently published a report on fraud in mobile, and the numbers there are absolutely crazy: 93% of the transactions were fraudulent. How much is the problem of fraud relevant in Ukraine?

The problem of fraud is always relevant when we are dealing with technical things. If there are non-humans, the risk of fraud arises automatically. For instance, there is Google that improves its algorithms and there are SEO professionals who outplay it. Fraud develops alongside Internet advertising — they are like a shark and a sharksucker who swim side by side. This will always be the case, and our task as an industrial organization is to bring the problem of fraud to the public attention. On January 29, Oleksiy Liakh and Bohdan Rudyi gave a talk on this. Protection from fraud is a very important hygiene factor in the education of a media planner or media manager on the side of the client.

If you are working with a global client, then very often your contract with them features a separate section on fraud and a list of software to be used. Many years ago I provided services for Nokia who were the first in Ukraine to use Double Click, and I was surprised: the bills came, we paid them, and then after a month or two an amended bill would come: Google identified which clicks were fraud and decreased the amount to be paid. It was 2009, and nobody in our market has even thought about it yet.

Anti-fraud and the quality of traffic are some of the key priorities of IAB for the coming year.

What would you advise a media manager for basic fraud protection?

Obligatory use of software. You also need analysis: how many conversions, where they clicked, did it turn out that a lot of money was invested into the website, but it didn't generate views. The common Google Analytics already lets you know that something went wrong. Whether to use blacklists or only whitelists. This is the hygiene level. Because believing that nothing is going to happen to you is like having sex with a stranger without a condom and hoping that you won't catch anything.
Blacklists or white lists — what do you prefer?

As an individual, I have my whitelist or preferred list — websites that I often visit and that I trust. However, if I were launching a campaign as a media planner, what I don't want would be important for me. Clear Sky sends us lists of websites that use unlicensed videos, images and so on once a month, and this is also a basic hygiene factor. For some of the companies it is a huge problem if their brand turns up on a grey, pirate website. Blacklists by Clear Sky are the basics. Then, a brand's personal blacklist is formed: you had negative experience, the return on investment made into the website didn't live up to expectations, and so on. IAB raised an issue of the industrial blacklist on several occasions, but there are people who support and who oppose this idea: some want to share their experience and some don't.

What cases of placement on grey websites or wrong placement do you remember from your experience?

Just last week two brands that I will not be naming for the obvious reasons told me that they matched on YouTube with the video that calls for terrorism. This was a huge problem. For instance, in the US there is legislation that strictly regulates sponsorship of terrorism, and appearing in such a video means huge multi-billion legal costs. And two brands in Ukraine faced this. As a result, one of them entirely stopped placing advertisements on YouTube, and the other started applying the strictest white filters and also decreased the amount of advertising on YouTube. This is a systematic problem, and the solution should come from the platform itself.
Я верю, что если Google объявил, что куки не будут работать с 2022 года, то у Google есть решение
Google named the profit from advertising on Youtube for the first time, $15 bln in 2019. Were you surprised by these results and will this video platform continue growing?

It's not about the absolute figure, but about how much Google earns on a search engine and how much on applications. The search still contributes over a half into the pie of the Internet market. And if here in Ukraine about 80% of video advertising is on YouTube, it is important to understand that in other countries local players such as for example Amazon may have a rather strong position. We still lack strong players in the segment of quality video advertising.

How actively do Ukrainian brands go into applications?

Not very actively, and here it also is all about analytics. Who is able to tell what is happening in the applications? Kantar and Gemius may help somewhat, but we don't have an ideal solution: there is no unified analytical test tube.

In November, we analyzed the market, and the lack of a unified meter was named a number one problem. After that, I wrote to the heads of all largest advertising agencies in Ukraine and have already received confirmation from Razom, OMD, and Havas Media. I am waiting to hear back from Publiсis, Dentsu Aegis, and GroupM (by the time this interview was published, all of the advertising and communications groups confirmed that they were ready to participate). As soon as they are on board, it would make sense to talk to the researchers and discuss vision. If everyone has the same understanding of the price and goals, we could start writing the TOR for the tender.
Мне хотелось бы построить в Украине эффективную NGO, которая не погрязла в бюрократии, которая спрашивает у рынка, где у него болит, и решает эту проблему
Speaking of user tracking — how much will the death of cookies reflect on the Ukrainian market?

I believe that if Google announced the cookies wouldn't be operating starting from 2022 then Google has a solution. Moreover, knowing how much Google has penetrated the world's economy, we will most likely have to accept this solution.

Cookies are now indeed the basis for everything: media planning, research, reach estimations, and forming of data science segment. Our entire system of media planning will go to hell, because if cookies don't work — nothing works. The question is: what Google offers in return.

I read all the articles that were available — both translated from other languages and local, and I have an impression that the experts often don't know themselves what happens after cookies. Most often all of these articles consist of assumptions. Only Google knows for sure. But we are not sure about that either.

The difficulty is that cookies violate a number of personal boundaries, a person can be identified by them. If we can aggregate data in a way that would hide the identity of a person, this will solve the problem.

Which areas are you expecting to grow the most in 2020?

In-app advertising will definitely be on the rise. This is something that entered media consumption, and as soon as we ignore it, we kill the ROI, we put nails in its coffin. As an industrial organization, we keep saying: look what is happening in the applications, you need to go there. We believe in applications.

Facebook won't disappear anywhere, it will be growing, too. We haven't even imagined the scale of Facebook advertising for a very long time, because the analysis is usually done with the help of information from agencies and cross check from the platform. However, Facebook doesn't provide a cross check. And only when we took data from Kantar and Gemius we were able to estimate the scale, but still we only see a part of it, like archaeologists who cleaned a part of a mosaic in a huge temple. There must be lots of money there.
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