The Programmatic Globe: Poland & CEE

Our head of Global Advisory Services goes deep on the state of programmatic and e-commerce in Poland and Central & Eastern Europe.

Here at Sociomantic, we’re lucky enough to get to work with marketers in over 60 countries, helping them from our 20 offices around the globe to take advantage of the many benefits of programmatic advertising technology powered by local market expertise.
In working across these diverse regions, one thing has become crystal clear: when it comes to e-commerce and programmatic marketing, no two countries are alike! And no one has a better view on the differences and eccentricities of these different markets than our VP Global Advisory Services, Lothar Krause.
That’s why we’ve invited him, with support from each of our local teams, to share unique, market-specific insights about the ins-and-outs, the ups-and-downs, the triumphs and challenges of programmatic advertising in each of the countries or regions that we are stationed. Next up: Poland & CEE!

Central and Eastern Europe (CEE) is without a doubt a culturally distinctive region that has required a custom-tailored approach since we began business here. Our Warsaw office, which serves as our CEE hub, was Sociomantic’s first satellite entity established outside of Berlin. After launching in October 2011 led by Maciej Wyszyński, our CEE team now manages campaigns in more than 10 countries. In November of this year, we had the pleasure of hosting the Digital Marketing Heroes, our first full-scale conference event for clients, prospects and partners in CEE – celebrating a successful past and hoping to pave the way for an even more successful future in the region.

A Truly Diverse Region

CEE extends to three coasts — the Baltic Sea in the north, the Mediterranean Sea in the southwest and the Black Sea in the southeast of Europe. The region includes more than 20 countries, each with its own exciting culture and thrilling history. While most of these countries have Slavic roots, all remain unique in terms of economy, politics, language and culture. Needless to say, every single market necessitates a high degree of tailored attention and localization. We have therefore placed great value on diversifying our CEE team as much as possible — at the moment, we speak nine languages, including Polish, Czech, Russian, Bulgarian and Hungarian in our Warsaw office. Moreover, to further strengthen our position in the region, we opened our second local office in Prague in October.

The region’s variety is especially clear when you take a look at the online marketing landscape. Internet penetration levels across CEE vary from 96 percent in the Czech Republic to about 54 percent in Romania and Ukraine (IAB Europe). This is, of course, not to mention the varying sizes of each of these markets purely in terms of population — for example, the Czech Republic has only 10.5 million inhabitants, while there are 45.4 million people living in the Ukraine.

A Shifting Media Landscape

Over last few years, we have observed a higher concentration of digital publishers in the marketplace. International and local media holding groups have increasingly extended their portfolio of websites, enlarging overall reach as well as the stock of thematically relevant advertising spaces. This development has caused a fiercely competitive playing field for key publisher networks.

In parallel, as the publisher market has gotten more crowded, the adoption of programmatic buying and selling has expanded. After a period of hesitation in the early years (while RTB was taking hold in Western Europe), CEE publishers are finally realizing that they can maximize their yield by offering at least some part of their inventories through real-time bidding. According to a report by IDC, RTB-based display ad spending in CEE will grow from $10.6 million in 2012 up to $242.6 million in 2017.

Another undeniable trend in the region is the visibly increasing dominance of multi-functional agencies. In the past, the advertising value chain was composed of multiple links between media agencies, interactive agencies, SEM/SEO agencies, social media agencies and many more. However, network and agency consolidation in the region in the past five years has led to the emergence of many large conglomerates that attempt to service the every need of the advertiser. With the rapid changes happening in the industry, especially as a result of advancements in programmatic technology and advanced data applications in marketing, it has become critical for these agencies to forge strong partnerships with leading technology vendors in order to service their clients with the latest innovations in the market.

CEE Pains and Gains

In addition to constant changes in the advertising industry, some CEE markets face extra-industry challenges as well. For example, some CEE advertisers must account for special tax policies that are applied to online business, such as taxes in Ukraine and Hungary that are specific to web advertising campaigns. Naturally, these taxes can pose a barrier to entry for some advertisers, and therefore such taxes once again stress the importance of implementing a highly localized approach that takes into account the varying financial and operational situations of each market.

It is also impossible to speak about the region without acknowledging the impacts of political turmoil on some of its markets in the past year. Most prominently, the conflict in Ukraine has had a significant impact on the country’s retail and e-commerce industry. Online and offline stores alike have suffered from a weakened currency and increasing difficulties with delivery and payment. During these difficult times, we at Sociomantic are doing our best to leverage our technology to help our clients drive performance when and where it is still beneficial for them and for their customers.

CEE’s Big Data Dilemma

During the programmatic panel at Digital Marketing Heroes 2014 (joined by representatives from ZenithOptimedia, nc+, Smart Adserver, Play and Sociomantic), it was revealed by the panelists that many of the region’s advertisers still struggle with the aggregation and segmentation of so-called “big data” in all its forms. CRM is one area where there is room for improvement among many of the region’s advertisers, who are still missing out on many of the opportunities made possible by documenting and leveraging data about existing customers to drive loyalty through personalization strategies. However, leading brands like Coca-Cola (with it’s Share a Coke campaign) and Stilago (which runs personalized retargeting campaigns across 10 countries) are setting an example for others in the region with their personalization strategies.

For Sociomantic, this lack of “big data” maturity from many in the market made it important for us to innovate our technology in order to help clients use as much data as possible even when their own data systems still have some growing to do. Therefore we have worked with many clients to leverage our data streaming technologies to make use of real-time behavioral data for personalized advertising, when there historical data is not accessible for the purposes of online marketing.

Mobile On the Rise

One of the fastest growth areas across CEE is mobile, especially the adoption of smartphones and tablets. In Poland, for example, there is already a relatively high level of smartphone penetration, although some data points to the fact that about three percent of Polish smartphone users don’t identify themselves as such (Jestem Mobi). Meanwhile, the average Czech person owns 2.4 mobile devices while Slovakians, Slovenians, and Croatians have 2.2 phones (Consumer Barometer).

That said, at the moment, the contractual offers for data plans in most CEE markets are not yet comparable with those of Western European markets, which shows that there is still a lot of room for growth when it comes to both media reach and e-commerce revenues on mobile. Many advertisers only launched sophisticated mobile sites in 2013, which means that throughout 2014 we have seen and through 2015 expect to see mobile growth as a strong trend in the region.

From a Local

Our Managing Director CEE, Maciej Wyszyński, weighs in on the trends:

“Across the CEE region, we have seen that it is critical to be able to adapt and tailor our programmatic solutions to each individual market’s — and indeed even each individual client’s — needs. It is a quickly growing and changing region, so we must be able to adapt to differing levels of maturity in terms of data strategies, mobile, programmatic adoption and much more. The things that tie our efforts in all of these markets together are the understanding of our clients’ growing demand for actionable insights and customer-centric media solutions. Thanks to our proprietary technology stack, the full-funnel range of campaign offers and a constantly innovating research and development team, we are pleased to be able to tailor campaigns to get the best results for our clients regardless of these differences.”

Want to learn more about using programmatic display to drive sales growth and customer loyalty in Poland and across CEE? Be sure to reach out to our Warsaw team or check out the wrap-up of our Digital Marketing Heroes conference to learn more.

Check out previous posts in the Programmatic Globe Series:

  1. United Kingdom
  2. France
  3. Turkey
  4. United States
  5. India
  6. Russia
  7. Brazil
  8. Germany